Based on the ERM Framework established and the reviews conducted by Management and both the internal and external auditors, as well as the assurance from the CEO and the CFO, the Board is of the opinion that the systems of risk management and internal controls within CICT Group are adequate and effective to address the risks (including financial, operational, compliance and IT risks) which CICT Group considers relevant and material to the current business environment as at 31 December 2023. The ARC concurs with the Board in its opinion. No material weaknesses in the systems of risk management and internal controls were identified by the ARC and the Board in the review for FY 2023. The Board notes that the systems of risk management and internal controls established by the Manager provide reasonable assurance that the CICT Group, as it strives to achieve its business objectives, will not be significantly affected by any event that can be reasonably foreseen or anticipated. However, the Board also notes that no system of risk management and internal controls can provide absolute assurance in this regard, or absolute assurance against poor judgement in decision-making, human error, losses, fraud or other irregularities. Principle 10: Audit and Risk Committee With effect from 1 January 2024, the Audit Committee was renamed the Audit and Risk Committee. At present, the ARC comprises four members, all of whom (including the chairman of the ARC) are IDs. The ARC Chairman is a Director other than the Chairman of the Board. The members of the ARC are Mrs Quek Bin Hwee (ARC Chairman), Ms Jeann Low Ngiap Jong, Mr Leo Mun Wai and Mr Tan Boon Khai. The ARC Chairman and members bring with them invaluable recent and relevant managerial and professional expertise in accounting, auditing and related financial management domains. KPMG LLP (KPMG) is CICT's incumbent external auditor and will hold office until the conclusion of the upcoming AGM. It is proposed that Deloitte & Touche LLP (Deloitte) be appointed as CICT's external auditor commencing from FY 2024 at the upcoming AGM. The ARC does not comprise former partners of CICT's incumbent external auditor, KPMG, and its incoming external auditor, Deloitte, respectively, (a) within a period of two years commencing from the date of their ceasing to be partners of the respective firm; or (b) who have any financial interest in the respective firm. The ARC has explicit authority to investigate any matter within its terms of reference. Management provides the fullest co-operation in providing information and resources, and in implementing or carrying out all requests made by the ARC. The ARC has direct access to the internal and external auditors and full discretion to invite any Director or key management personnel to attend its meetings. Similarly, both the internal and external auditors have unrestricted access to the ARC. Under its terms of reference, the ARC's scope of duties and responsibilities includes: (a) reviewing the significant financial reporting issues and judgements so as to ensure the integrity of the financial statements of CICT Group and any announcements relating to the CICT Group's financial performance; (b) reviewing and reporting to the Board at least annually the adequacy and effectiveness of the Manager's internal controls (including financial, operational, compliance and IT controls) and risk management systems; (c) reviewing the scope and results of the external audit and the adequacy, effectiveness, independence and objectivity of the external auditors; (d) reviewing the scope and results of the internal audit and the adequacy, effectiveness, independence and objectivity of the Manager's internal audit and compliance functions; (e) making recommendations to the Board on the proposals to Unitholders on the appointment, 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 156 CAPITALAND INTEGRATED COMMERCIAL TRUST CORPORATE GOVERNANCE
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