managed by external service providers. Any material non-compliance or lapses in internal controls
together with corrective measures recommended by the internal auditors and external auditors are
reported to and reviewed by the AC. The adequacy and effectiveness of the measures taken by the
Manager in response to the recommendations made by the internal auditors and external auditors are
also reviewed by the AC.
The Board has received assurance from the CEO and the Head, Finance of the Manager that:
(a) the financial records for CRCT Group have been properly maintained and the financial
statements for the year ended 31 December 2014 give a true and fair view of CRCT Group’s
operations and finances; and
(b) the system of risk management and internal controls in place for CRCT Group is adequate and
effective in addressing the material risks faced by CRCT Group in its current business
environment including material financial, operational, compliance and information technology
risks. The CEO and the Head, Finance of the Manager have obtained similar assurance from the
respective risk and control owners.
In addition, in FY 2014, the Board has received quarterly certification by Management on the integrity
of financial reporting and the Board has provided a negative assurance confirmation to Unitholders
as required by the Listing Manual.
Based on the ERM Framework established and the reviews conducted by Management and both the
internal auditors and external auditors, as well as the assurance from the CEO and the Head, Finance
of the Manager, the Board concurs with the recommendation of the AC and is of the opinion, that the
system of risk management and internal controls addressing material financial, operational,
compliance and information technology risks established by the Manager is adequate and effective
to meet the needs of CRCT Group in its current business environment as at 31 December 2014.
The Board notes that the system of risk management and internal controls established by the
Manager provides reasonable assurance that CRCT Group, as it strives to achieve its business
objectives, will not be significantly affected by any event that can be reasonably foreseen or
anticipated. However, the Board also notes that no system of risk management and internal controls
can provide absolute assurance in this regard, or absolute assurance against poor judgement in
decision making, human error, losses, fraud or other irregularities.
Audit Committee
Principle 12:
The Board should establish an Audit Committee with written terms of reference which clearly
set out its authority and duties.
The AC comprises four non-executive Directors, the majority of whom (including the Chairman of the
AC) are independent. The members bring with them invaluable recent and relevant managerial and
professional expertise in accounting and related financial management domains.
The AC has explicit authority to investigate any matter within its terms of reference. Management is
required to provide the fullest co-operation in providing information and resources, and in
implementing or carrying out all requests made by the AC. The AC has direct access to the internal
auditors and external auditors and full discretion to invite any Director or executive officer to attend
its meetings. Similarly, both the internal auditors and external auditors are given unrestricted access
to the AC.
The AC is guided by its terms of reference, in particular, the AC:
(a) monitors and evaluates the effectiveness of the Manager’s system of risk management and
internal controls (including financial, operational, compliance and information technology
Corporate Governance
36 | CapitaRetail China Trust Annual Report 2014
