External Auditors The appointment of external auditors is subject to approval at each AGM. In making its recommendations to shareholders on the appointment and reappointment of external auditors, the Board relies on the review and recommendations of the AC. The AC reviews the adequacy, effectiveness, independence, scope and results of the external audit and makes recommendations to the Board on the appointment, removal, remuneration and the terms of engagement of the external auditors. In compliance with the SGX-ST Listing Manual, an audit engagement partner may only be in charge of an audit for up to five consecutive years. PricewaterhouseCoopers LLP, first appointed in 2020, has met this requirement, and the current audit engagement partner also took over ST Engineering’s audit in 2020. Fees paid to the external auditors for audit and non-audit services of the Group for FY2022 totalled $5.9m, of which $0.55m or 9% were for nonaudit services. The AC was satisfied that the non-audit services provided by the external auditors did not compromise their independence. The Company has complied with Rules 712 and 715 of the SGX-ST Listing Manual in relation to the engagement of its auditors. During the year, the AC held five meetings, including a joint meeting with the RSC to review significant risks of the Company and related key controls. The AC also met with the external auditors, and with the internal auditors, in each case without the presence of Management. Significant matters How the AC reviewed these matters Impairment assessment of non-financial assets – goodwill The AC reviewed the reasonableness of cash flow forecasts, the long-term growth rates and discount rates used in the valuation models in goodwill impairment assessments, as well as how the impact of COVID-19 has been considered in the cash flow forecasts. The AC also reviewed the stress testing of the valuation and its sensitivity to changes in key assumptions used in the valuation model. Revenue recognition based on stage of completion The AC reviewed the various controls that were designed and applied by the Group in the recognition of revenue and profit from contracts with customers to ensure that the estimates used in determining the amount of revenue and costs recognised for the performance obligations were appropriate. Purchase price allocation relating to the acquisition of TransCore The AC reviewed the reasonableness of the key assumptions and estimates used in the determination of the fair values of the identifiable assets and liabilities of TransCore acquired by the Group. The AC reviewed the financial statements of the Group before the announcement of the Group’s half-yearly and full-year results. Amongst the matters discussed with Management and the external auditors, the following significant matters having impact on the financial statements were reviewed by the AC in relation to their materiality and appropriateness in approach, methodology and assessment: standards and their implications on the financial statements. Whistleblowing Policy The AC has reviewed the ST Engineering Whistleblowing Policy and is satisfied with the procedures through which employees and other stakeholders may, in confidence, raise concerns about possible improprieties in business conduct, financial report or other matters without the fear of reprisals. No form of retaliation to the informant (internal or external) is tolerated for any report made in good faith. The AC concluded that the accounting treatment and estimates used by the Group were appropriate for the above significant matters. All the key audit matters (KAMs) that were raised by the external auditors for the financial year ended 31 December 2022 have been addressed by the AC and discussed in the above commentary. The KAMs in the audit report for the financial year ended 31 December 2022 can be found on pages 126 to 128 of this Annual Report. The AC was kept updated on relevant changes in accounting CORPORATE OVERVIEW PERFORMANCE REVIEW SUSTAINABILITY FINANCIAL REPORT 103
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