CORPORATE GOVERNANCE REPORT Rex International Holding Limited 139 Audit Committee Principle 10 The Board has an Audit Committee (“AC”) which discharges its duties objectively. 10.1 The AC is guided by the following key terms of reference: (a) Reviewing the significant financial reporting issues and judgements, so as to ensure the integrity of the financial statements of the Company and any announcements relating to the Company’s financial performance. Where the external auditors (“EA”), in their review or audit of the Company’s year-end financial statements, raise any significant issues (for example, significant adjustments) which have a material impact on the interim financial statements or financial updates previously announced by the Company, the AC is to bring this to the Board’s attention immediately; (b) Advising the Board if changes are needed to improve the quality of future interim financial statements or financial updates; (c) Reviewing at least annually the adequacy and effectiveness of the Company’s internal controls and risk management systems; (d) Reviewing the assurance from the CEO and the CFO on the financial records and financial statements; (e) Making recommendations to the Board on: (i) the proposals to the shareholders on the appointment and removal of the EA; and (ii) the remuneration and terms of engagement of the EA; (f) Reviewing the adequacy, effectiveness, independence, scope and results of the Company’s IA and EA, the audit plans, scope of work, their evaluation of the system of internal accounting controls, their management letter and Management’s response, and results of the audits compiled by the IA and EA; (g) Reviewing the policy and arrangements for concerns about possible improprieties in financial reporting or other matters to be safely raised, independently investigated and appropriately followed up on. The Company publicly discloses, and clearly communicates to employees, the existence of a whistle-blowing policy and procedures for raising such concerns; (h) Assisting the Board of Directors in the discharge of its responsibilities on financial reporting matters; (i) Reviewing financial statements and results announcements before submission to the Board of Directors for approval, focusing in particular, on changes in accounting policies and practices, major risk areas, significant adjustments resulting from the audit, the going concern statement, compliance with financial reporting standards as well as compliance with the Listing Rules and any other statutory/regulatory requirements. Quarterly financial statements are prepared, but announcements are only made for half-year and annual results. Announcements on use of funds/ cash by mineral, oil and gas companies are made quarterly; (j) Reviewing the effectiveness and adequacy of the Group‘s internal control and procedures, including accounting and financial controls and procedures and ensure co-ordination between the IA, the EA and Management, reviewing the assistance given by Management to the auditors, and discussing problems and concerns, if any, arising from the interim and final audits, and any matters which the auditors may wish to discuss (in the absence of Management where necessary);
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