ST Engineering Sustainability Report 2020

CORPORATE OVERVI EW PERFORMANCE REVI EW SUSTAINABI L ITY CORPORATE GOVERNANCE F INANCIAL REPORT Independent and Non-Executive Directors Quek See Tiat (Chairman) Lim Ah Doo Song Su-Min The Audit Committee (AC) comprises all independent Directors with majority, including the AC Chairman, having relevant accounting or related financial management experience. The AC does not comprise any former partner or director of ST Engineering's existing audit firm within two years preceding their appointment to the AC and none of them have any financial interest in the audit firm. The duties of the AC include the following: • reviewing the significant financial reporting issues and judgements so as to ensure the integrity of the financial statements and all announcements relating to financial performance; • reviewing at least annually the adequacy and effectiveness of internal controls and risk management systems; • reviewing the assurance from the Group President & CEO and the Group CFO on the financial records and financial statements; • making recommendation to the Board on the appointment, removal, remuneration and the terms of engagement of the external auditors; • reviewing the adequacy, effectiveness, independence, scope and results of both the external and internal audit functions; and • reviewing the whistle-blowing policy and arrangements and all significant whistle-blowing cases; the AC Chairman also chairs the Whistle Blowing Committee and is supported by the Group CFO, Group General Counsel, Group Chief Human Resource Officer, Group Head, R&A and Group Head, Internal Audit (Group Head, IA). The Whistle Blowing Committee reviews the contents of the concerns raised, deliberates and determines if any action is to be taken, including making enquiries and pursuing internal investigations. The AC will review the adequacy of every investigation instituted. The AC ensures that the Group Head, IA has direct and unrestricted access to the Chairman of the Board and the AC. The AC reviews the appointment, remuneration and resignation of the Group Head, IA. ST Engineering's IA function is staffed with individuals with the relevant qualifications and experience and comprises a team of 20 staff members, including the Group Head, IA, who reports to the AC. IA is a member of the Singapore Chapter of the Institute of Internal Auditors (IIA) and adopts the International Standards for the Professional Practice of Internal Auditing (the IIA Standards) laid down in the International Professional Practices Framework issued by the IIA. IA continues to meet or exceed the IIA standards in all key aspects. The AC is satisfied that IA is independent, effective and adequately resourced. The AC considered and approved the 2020 Audit Plans for the external and internal audits. In addition, the AC reviewed the adequacy of internal control procedures including cybersecurity issues, interested person transactions and the issues raised in all IA reports. Based on the internal controls and risk management process established and maintained by the Group, work performed by the internal and external auditors, and reviews performed by management and various Board Committees, the Board is satisfied that the Group’s framework of internal controls (including financial, operational, compliance and information technology controls) as well as the risk management systems are adequate and effective as at 31 December 2020. The AC concurs with the Board on the adequacy and effectiveness of the internal controls and risk management systems established and maintained by the Group as at 31 December 2020. The Board is satisfied that issues are identified on a timely basis and follow up actions are taken promptly to minimise lapses. The Board, through the Board Committees, is supported in these areas by the IA and R&A teams of the Company. In this regard, the Board also notes that no system can provide absolute assurance against the occurrence of material errors, poor judgment in decision making, human error, fraud or other irregularities. Audit Committee (Principle 10) 12 1 ANNUAL REPORT 2 02 0 /