90 CapitaLand Ascendas REIT Corporate Governance Under its terms of reference, the ARC's scope of duties and responsibilities includes: (a) reviewing the significant financial reporting issues and judgements so as to ensure the integrity of the financial statements of CLAR Group and any announcements relating to the CLAR Group’s financial performance; (b) reviewing and reporting to the Board at least annually the adequacy and effectiveness of the Manager’s internal controls (including financial, operational, compliance and IT controls) and risk management systems; (c) reviewing the assurances from the CEO and CFO on the financial records and financial statements; (d) reviewing the scope and results of the internal audit and external audit, and the adequacy, effectiveness, independence and objectivity of the Manager’s internal audit function and the external auditors respectively; (e) making recommendations to the Board on the proposals to Unitholders on the appointment, reappointment and removal of the external auditors, and approving the remuneration and terms of engagement of the external auditors; (f) reviewing and approving processes to regulate transactions between an interested person (as defined in Chapter 9 of the Listing Manual) and/ or interested party (as defined in the Property Funds Appendix) (each, an Interested Person) and CLAR and/or its subsidiaries (Interested Person Transactions), to ensure compliance with the applicable regulations. The regulations include the requirements that Interested Person Transactions (IPTs) are on normal commercial terms and are not prejudicial to CLAR’s interests and its minority Unitholders. In respect of any property management agreement which is an IPT, the ARC also carries out reviews at appropriate intervals to satisfy itself that the Manager has reviewed the asset / property manager’s compliance with the terms of the property management agreement and has taken remedial actions where necessary; and (g) reviewing the policy and arrangements for concerns about possible improprieties in financial reporting or other matters to be safely raised, and independently investigated, for appropriate follow up action to be taken. The ARC reviewed the independence of the external auditors taking into consideration, among other factors, the non-audit services provided as well as CLAR's relationships with the external auditors in FY 2025, as well as the processes and safeguards adopted by the Manager and the external auditors relating to audit independence. Based on the review, the ARC is satisfied that the independence of the external auditors is not affected by the provision of such services. The external auditors have also provided confirmation of their independence to the ARC. The fees paid or payable to the external auditors for FY 2025 amounted to S$1,358,000, of which audit (and audit-related) fees amounted to S$1,312,000 and nonaudit fees amounted to S$46,000. The ARC met five times in FY 2025. The ARC reviews CLAR’s half-yearly financial statements, including the relevance and consistency of accounting principles adopted and any significant financial reporting issues, and the quarterly business updates between such announcements, which are presented to the Board for approval. In FY 2025, the ARC also reviewed and assessed the adequacy and effectiveness of the internal controls and risk management systems established by the Manager to address the material risks faced by the CLAR Group, taking into consideration the outcome of reviews conducted by Management and both the internal and external auditors, as well as the assurances from the CEO and the CFO. The ARC meets internal and external auditors, separately and without Management’s presence at least once a year. In FY 2025, the ARC discussed the financial reporting process, internal controls and risk management systems, and significant comments and recommendations by the auditors at the meetings. Key Audit Matter In the review of CLAR Group’s financial statements for FY 2025, the ARC discussed with Management the accounting principles applied and their judgement of items that might affect the integrity of the financial statements and also considered the clarity of key disclosures in the financial statements. The ARC reviewed, amongst other matters, the following key audit matter as reported by the external auditors for FY 2025.
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