Corporate Governance Key audit matter How this issue was addressed by the ARC Valuation of investment properties, land and buildings and investment properties under development The ARC considered the valuation methodologies and key assumptions applied by the valuers for investment properties, land and buildings and investment properties under development in arriving at the valuations and also evaluated the valuers’ objectivity and competency. In order to provide fresh perspectives to the valuation process, the valuers do not value the same property for more than two consecutive years. This practice has been consistently adhered to over time. The ARC reviewed the outputs from the valuation process and held discussions with Management and the external auditors to review the valuation methodologies, focusing on significant changes in fair value measurement and key drivers of the changes including assessing the reasonableness of the discount rates, terminal capitalisation rates, capitalisation rates, revenue per available unit and gross development costs adopted by the valuers. The valuation of investment properties, land and buildings and investment properties under development was also an area of focus for the external auditors. The ARC considered the findings of the external auditors, including their assessment of the appropriateness of valuation methodologies and the key assumptions applied in the valuation. The ARC was satisfied with the valuation process, the methodologies used and the valuation of the investment properties, land and buildings and investment properties under development. The Managers confirm, on behalf of CLAS, that CLAS complies with Rules 712 and 715 of the Listing Manual in relation to the appointment of its external auditors as Deloitte is registered with the Accounting and Corporate Regulatory Authority. Internal Audit (IA) The Managers have an internal audit function supported by CLI’s Internal Audit Department (CLI IA). The head of the CLI IA is Ms Jenny Tan. CLI IA is independent of the activities it audits and has unfettered access to CLAS’ documents, records, properties and employees, including access to the ARC, and has appropriate standing with respect to the Managers. CLI IA’s primary reporting line for the Stapled Group is the ARC8. The ARC monitors and assesses the role and effectiveness of the IA function through the review of IA’s processes from time to time. The ARC also reviews to ensure that the IA function is adequately resourced and skilled in line with the nature, size and complexity of the Managers and CLAS’ business. In FY 2024, the ARC reviewed the IA function and was satisfied that the IA function is adequately resourced, effective and independent. In addition, CLI IA has passed the quality assurance review conducted by an external independent auditor. CLI IA formulates its internal audit plan in consultation with, but independently of, Management. Its plan is submitted to the ARC for approval prior to the beginning of each year. CLI IA also reviews compliance with the CLI Group’s and CLAS’ policies, procedures and regulatory responsibilities, performed in the context of financial and operational, and information system reviews. CLI IA is guided by the International Standards for the Professional Practice of Internal Auditing (Standards) developed by the Institute of Internal Auditors Inc. (IIA), Singapore, and has incorporated these Standards into its audit practices. During FY 2024, the ARC reviewed the results of audits performed by CLI IA based on the approved audit plan. All significant findings are reported to Management and the ARC. CLI IA also reviews the status of implementation of the audit recommendations, and reports the same to Management and the ARC. The ARC reviewed reports on whistle-blower complaints reviewed by CLI IA to ensure independent and thorough investigation and adequate follow up. The ARC also received reports on Interested Person Transactions reviewed by CLI IA that they were on normal commercial terms and are not prejudicial to the interests of CLAS and its minority Stapled Securityholders. This is pursuant to 8 While CLI IA’s primary reporting line is to the ARC for the Stapled Group, the ARC does not determine the appointment, termination, or remuneration of the head of CLI IA, as such decisions are made at the CLI Group level. Despite this deviation from Provision 10.4, CLI IA is able to fulfill its role effectively, aligning with the intent of Principle 10 of the Code. 84 CapitaLand Ascott Trust
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