The Manager adopts an Enterprise Risk Management (ERM) Framework which sets out the required
environmental and organisational components for managing risk in an integrated, systematic and
consistent manner. The ERM Framework and related policies are reviewed annually.
The Manager consistently seeks to improve and strengthen its ERM Framework. As part of the ERM
Framework, the Management, amongst other things, undertakes and performs a Risk and Control
Self-Assessment (RCSA) process. As a result of the RCSA process, the Manager produces and
maintains a risk register which identifies the material risks Ascott Reit Group faces and the
corresponding internal controls it has in place to manage or mitigate those risks. The material risks
are reviewed annually by the AC and the Board. The AC also reviews the approach of identifying and
assessing risks and internal controls in the risk register. The system of risk management and internal
controls is reviewed and, where appropriate, refined, regularly by the Management, the AC and the
Board.
The Manager has established an approach towards how risk appetite is defined, monitored and
reviewed for Ascott Reit Group. Approved by the Board, the Risk Appetite Statement (RAS),
addresses the management of material risks faced by Ascott Reit Group. Alignment of Ascott Reit
Group’s risk profile to the RAS is achieved through various communication and monitoring
mechanisms (including key performance indicators set for Management) put in place across the
various functions within the Manager.
More information on Ascott Reit’s ERM Framework can be found in the Enterprise Risk Management
section on pages 46 to 48 of the Annual Report.
Internal auditors and external auditors conduct audits that involve testing the effectiveness of the
material internal controls for Ascott Reit Group addressing financial, operational, compliance and
information technology risks. This includes testing, where practical, material internal controls in areas
managed by external service providers. Any material non-compliance or lapses in internal controls
together with corrective measures recommended by the internal auditors and external auditors are
reported to and reviewed by the AC. The adequacy and effectiveness of the measures taken by the
Manager in response to the recommendations made by the internal auditors and external auditors are
also reviewed by the AC.
The Board has received assurance from the CEO and the Vice President, Finance (VP Finance) of the
Manager that:
(a) the financial records for Ascott Reit Group have been properly maintained and the financial
statements for the year ended 31 December 2014 give a true and fair view of Ascott Reit Group’s
operations and finances; and
(b) the system of risk management and internal controls in place for Ascott Reit Group is adequate
and effective in addressing the material risks faced by Ascott Reit Group in its current business
environment including material financial, operational, compliance and information technology
risks. The CEO and the VP Finance have obtained similar assurance from the respective risk and
control owners.
In addition, in FY 2014, the Board has received quarterly certification by the Management on the
integrity of financial reporting and the Board has provided a negative assurance confirmation to
Unitholders, as required by the Listing Manual.
Corporate Governance
36 | Ascott Residence Trust Annual Report 2014
