NTUC Income AR 2018

Audit Committee The Audit Committee (AC) comprises four members as follows: Chairperson Pang Wai Yin Members Richard Shermon Sim Hwee Hoon Sim Hwee Cher The AC operates within the Board-approved written terms of reference which set out the AC’s authority and responsibilities as prescribed in the Guidelines on Corporate Governance issued by MAS for all major insurers. The key duties and responsibilities of the AC are to: • Review the financial statements of the Co-operative with management and the external auditors • Review the effectiveness of material financial, operational, compliance and information technology controls, including the corporate fraud risk management policy/ framework and whistle-blowing arrangements which staff and other parties may in confidence raise concerns about possible improprieties relating to financial reporting, controls or any other matters • Assess the adequacy and effectiveness of the Internal Audit (IA) function in terms of its organisational independence, resources, capability, practices and work plans • Review the audit plan and results of external audits, as well as the independence and objectivity of external auditors, on both audit and non-audit services and recommend to the Board on the appointment, re-appointment or removal of external auditors • Review the effectiveness of the system for monitoring compliance with laws and regulations and the results of management’s investigation and follow-up (including disciplinary action) of any instances of non-compliance • Review all material related party transactions and keep the Board informed of such transactions The AC met four times during the year.  Internal auditors, the Chief Executive and certain senior management executives attended these meetings. The external auditors attended all four meetings. During the year, the AC reviewed with management the quarterly management reports, financial statements, significant accounting policies and estimates. The external auditors’ audit plan, the management letter and management’s response were presented to the AC and discussed with both the management and the external auditors. The AC also reviewed the internal audit plan, scope of internal audit activities, reports of internal audits and follow up reviews performed by internal audit. The AC ensures that there are processes in place for ensuring that recommendations made by internal audit, external audit and MAS are effectively dealt with on a timely manner. The AC reviewed its terms of reference and the IA Charter to ensure they are adequate and relevant. Income has a whistle- blowing policy whereby staff could raise concerns about possible improprieties in matters of financial reporting or other matters in confidence. The AC reviewed the arrangements in place for independent investigation of such matters and for appropriate follow-up action. The Chief Internal Auditor has a direct reporting line to the Chairman of the AC. The IA function resides in-house and is independent of the activities it audits. The IA function is staffed by suitably qualified executives. An external quality assurance review will be conducted periodically to ensure that IA’s activity conforms to the International Standards for the Professional Practice of Internal Auditing. On a quarterly basis, management reported to the AC significant related party transactions, contingent liabilities and regulatory compliance issues. In performing its functions, the AC had met up at least annually with the internal and external auditors without the presence of management. The AC believes that, in the absence of evidence to the contrary, the system of internal controls maintained by the Co- operative’s management which was in place throughout the financial year up to the date of this report provides reasonable, but not absolute, assurance against material financial misstatements or loss, and include the safeguarding of assets, the maintenance of proper accounting records, the reliability of financial information, compliance with appropriate legislation, regulation and best practices, and the identification and containment of financial risk. The AC notes that no system of internal controls can provide absolute assurance against the occurrence of material errors, poor judgment in decision-making, human error, losses, fraud or other irregularities. Corporate Governance 21 2018 ANNUAL REPORT