The ARC reviewed the independence of the external auditors, considering the non-audit services provided, and, 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 amount of audit fees paid or payable to the external auditors for FY 2024 amounted to S$632,564. The external auditors have also been engaged to provide non-audit services, which amount to $35,000. There was no payment of such services in FY 2024 and the non-audit fees are expected to be recorded and paid in FY 2025. No non-audit fees were paid in FY 2024. The ARC met four times in FY 2024. The ARC reviews CLCT’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 2024, 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 CLCT 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 2024, 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 the CLCT Group’s financial statements for FY 2024, 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 2024. Key Audit Matter How this Issue was Addressed by the ARC Valuation of investment properties The ARC considered the valuation methodologies and key assumptions applied by the valuers for investment properties in arriving at the valuations and also evaluated the valuers’ objectivity and competency. In order to provide fresh perspectives to the valuation process, the valuers do not value the same property for more than 2 consecutive years. This practice has been consistently adhered to over time. The ARC reviewed the outputs from the valuation process of the investment properties and held discussions with Management and the external auditors to review the valuation methodologies, focusing on significant changes in fair value measurement and key drivers of the changes including assessing the reasonableness of the capitalisation rates, discount rates and terminal yield rates adopted by the valuers. The valuation of investment properties was also an area of focus for the external auditors. The ARC considered the findings of the external auditors, including their assessment of the appropriateness of valuation methodologies and the key assumptions applied in the valuation of investment properties. The ARC was satisfied with the valuation process, the methodologies used and the valuation of the investment properties. The Manager confirms, on behalf of CLCT, that CLCT complies with Rules 712 and 715 of the Listing Manual in relation to the appointment of its external auditors. Internal Audit (IA) The Manager has an internal audit function supported by CLl’s Internal Audit Department (CLI IA). The head of CLI IA is Ms Jenny Tan. CLI IA is independent of the activities it audits and has unfettered access to the CLCT Group’s documents, records, properties and employees, including access to the ARC, and has appropriate standing with respect to the Manager. CLI IA’s primary reporting line for CLCT Group is the ARC7. The ARC monitors and assesses the role and effectiveness of the IA function through the review of IA’s processes from time to time. The ARC also reviews to ensure that the IA function is adequately resourced and skilled in line with the nature, size and complexity of the Manager and CLCT’s business. 7 While CLI IA’s primary reporting line is to the ARC for CLCT Group, the ARC does not determine the appointment, termination, or remuneration of the head of CLI IA, as such decisions are made at the CLI Group level. Despite this deviation from Provision 10.4, CLI IA is able to fulfill its role effectively, aligning with the intent of Principle 10 of the Code. 69 Annual Report 2024
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