Based on the ERM Framework established and the reviews conducted by the Management and both
the internal auditors and external auditors as well as the assurance from the CEO and the VP Finance,
the Board concurs with the recommendation of the AC and is of the opinion, that the system of risk
management and internal controls addressing material financial, operational, compliance and
information technology risks established by the Manager is adequate and effective to meet the needs
of Ascott Reit Group in its current business environment as at 31 December 2014.
The Board notes that the system of risk management and internal controls established by the
Manager provides reasonable assurance that Ascott Reit 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.
Audit Committee
Principle 12:
The Board should establish an Audit Committee with written terms of reference which clearly
set out its authority and duties.
All the members of the AC, including the Chairman of the AC, are non-executive independent
Directors. The members bring with them invaluable recent and relevant managerial and professional
expertise in accounting and related financial management domains.
The AC has explicit authority to investigate any matter within its terms of reference. The Management
is required to provide the fullest co-operation in providing information and resources, and in
implementing or carrying out all requests made by the AC. The AC has direct access to the internal
auditors and external auditors and full discretion to invite any Director or executive officer to attend
its meetings. Similarly, both the internal auditors and external auditors are given unrestricted access
to the AC.
The AC is guided by its terms of reference, in particular, the AC:
(a) monitors and evaluates the effectiveness of the Manager’s system of risk management and
internal controls (including financial, operational, compliance and information technology
controls and risk management policies and systems) through reviewing written reports from the
internal auditors and external auditors to ensure that where deficiencies in internal controls have
been identified, appropriate and prompt remedial action is taken by Management;
(b) reviews the significant financial reporting issues and judgements so as to ensure the integrity of
the financial statements of Ascott Reit Group and any announcements relating to Ascott Reit
Group’s financial performance;
(c) reviews the effectiveness of the internal audit function;
(d) reviews the scope and results of the external audit and also assesses the cost effectiveness, the
independence and objectivity of the external auditors;
(e) makes recommendations to the Board on the proposals to Unitholders on the appointment,
re-appointment and removal of the external auditors, and approving the remuneration of the
external auditors;
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