CapitaLand Integrated Commercial Trust - Annual Report 2021

(d) reviewing the scope and results of the internal audit and the adequacy and effectiveness of the Manager’s internal audit and compliance functions; (e) making recommendations to theBoardon theproposals toUnitholders on theappointment, re-appointment and removal of the external auditors, and approving the remuneration and terms of engagement of the external auditors; (f) reviewing and approving processes to regulate transactions between an interested person (as defined in Chapter 9 of the Listing Manual) and/or interested party (as defined in the Property Funds Appendix) (each, an Interested Person) and CICT and/or its subsidiaries (Interested Person Transactions), to ensure compliance with the applicable regulations. The regulations include the requirements that Interested Person Transactions are on normal commercial terms and are not prejudicial to the interests of CICT and its minority Unitholders. In respect of any property management agreement which is an Interested Person Transaction, the AC also carries out reviews at appropriate intervals to satisfy itself that the Manager has reviewed the property manager’s compliance with the terms of the property management agreement and has taken remedial actions where necessary; and (g) reviewing the policy and arrangements for concerns about possible improprieties in financial reporting or other matters to be raised, and independently investigated, for appropriate follow up action to be taken. The AC undertook a review of the independence of the external auditors, taking into consideration, among other factors, CICT’s relationships with the external auditors in FY 2021, as well as the processes and safeguards adopted by the Manager and the external auditors relating to audit independence. Based on the review, the AC is satisfied that the external auditors are independent. The external auditors have also provided confirmation of their independence to the AC. The fees paid or payable to the external auditors for FY 2021 amounted to S$971,727, of which audit (and audit-related fees) amounted to S$712,295 and non-audit fees amounted to S$259,432. The AC holds at least four scheduled meetings in a year and met five times in FY 2021. At all scheduled AC meetings in FY 2021, the CEO and the CFO were in attendance. The Manager announced on 6 January 2021 that, with effect from FY 2021, CICT will adopt the practice of announcing its financial statements on a half-yearly basis and provide quarterly business updates in between such announcements or as and when necessary. Accordingly, during the AC meetings in January 2021 and July 2021, among other things, the AC reviewed the half-yearly financial statements, including the relevance and consistency of the accounting principles adopted and any significant financial reporting issues, and recommended the half yearly financial statements and corresponding announcements to the Board for approval. During the AC meetings in April and October 2021, the AC reviewed, among other things, the quarterly business and financial updates presented by Management. Such business updates contain, among other things, information on the CICT Group’s key operating and financial metrics. In FY 2021, the AC also reviewed and assessed the adequacy and effectiveness of the internal controls and risk management systems established by the Manager to manage risks, taking into consideration the outcome of reviews conducted by Management and both the internal and external auditors, as well as the assurances from the CEO and the CFO. The AC alsomeets with the external auditors and with the internal auditors, without the presence of Management, at least once a year. In FY 2021, the AC met with the external auditors and internal auditors twice, separately and without Management’s presence, to discuss the reasonableness of the financial reporting process, the internal controls and risk management systems, and the significant comments and recommendations by the auditors. Where relevant, the AC makes reference to the best practices and guidance for audit committees in Singapore including practice directions issued from time to time in relation to the Financial Reporting Surveillance Programme administered by the Accounting and Corporate Regulatory Authority of Singapore (ACRA). Key Audit Matter In the review of the financial statements of CICT Group for FY 2021, the AC has discussed with Management the accounting principles that were applied and their judgement of items that might affect the integrity of the financial statements and also considered the clarity of key disclosures in the financial statements. The AC reviewed, amongst other matters, the following key audit matter as reported by the external auditors for FY 2021. CapitaLand Integrated Commercial Trust 192 Corporate Governance