The Board is responsible for the governance of risks and for ensuring that management maintains a sound system of risk management and internal controls with a view to safeguarding the Company’s assets and shareholders’ interests.
F&N prepares its financial statements in accordance with the Singapore Financial Reporting Standards (International) (“SFRS (I)”) prescribed by the Accounting Standards Council. The Board is responsible for presenting a balanced and understandable assessment of the Group’s performance, position and prospects and the Board provides shareholders with financial statements and business updates in compliance with the requirements under the Listing Rules.
The Board releases its financial results through announcements, press releases and presentation packs to the SGX-ST. In communicating and disseminating its results, the Board aims to present a balanced and clear assessment of the Company’s performance, position and prospects. The Company has ceased to announce quarterly financial statements and has instead adopted half-yearly reporting of its financial statements beginning from the date of release of the Company’s first half financial statements for the period ended 31 March 2020. During the year, the Company provided voluntary business updates for the first and third quarter performance of the Group and by way of these updates the Company kept the investing public informed of material developments concerning the Group during the relevant periods, including details on the impact of the COVID-19 pandemic on the Group’s business operations and performance.
In order to enable the Board to obtain adequate and timely information, management provides the Board Exco with management accounts at every Board Exco meeting. Minutes of all such Board Exco meetings are circulated to the Board. This is in addition to such other information as the Board may require from time to time to make a balanced and informed assessment of the Company’s performance, position and prospects.
Sustainability and Risk Management Committee and Audit Committee
During the year, the Board, through the Audit Committee and the Sustainability and Risk Management Committee, reviewed the adequacy and effectiveness of the Company’s internal controls and risk management systems.
The Audit Committee (“AC”), with the assistance of internal and external auditors, reviews and reports to the Board on the adequacy and effectiveness of the Company’s system of internal controls (including financial, operational, compliance and information technology controls) established by management. In assessing the adequacy and effectiveness of internal controls, the AC ensures primarily that key objectives are met, material assets are properly safeguarded, fraud or errors in the accounting records are prevented or detected, accounting records are accurate and complete, and reliable financial information is prepared in compliance with applicable internal policies, laws and regulations.
The importance and emphasis placed by the Group on internal controls is underpinned by the fact that the key performance indicators for management’s performance takes into account the findings of both internal and external auditors and the number of unresolved or outstanding issues raised in the process.
Risk Management Systems
The Sustainability and Risk Management Committee (“SRMC”), reviews and reports to the Board on the adequacy and effectiveness of the Group’s risk management framework to ensure that robust risk management and internal controls systems are in place.
The Company has adopted an enterprise-wide risk management (“ERM”) framework to enhance its risk management capabilities. An outline of the Group’s ERM framework and progress report is set out here.
Key risks, mitigating measures and management actions are continually identified, reviewed and monitored as part of the ERM process. Financial and operational key risk indicators are in place to track key risk exposures. Key business risks are thoroughly assessed by management and each significant transaction is comprehensively analysed so that management understands the risks involved before it is embarked upon.
The SRMC also assists the Board in carrying out its responsibility of overseeing the Company’s risk management framework and policies, in determining environmental, social and governance factors (“ESG Factors”) identified as material to the business, monitoring and managing of ESG Factors and overseeing standards, management processes and strategies to implement sustainability practices which are in compliance with the SGX-ST Listing Manual. The SRMC is responsible for, among other things, reviewing the Group’s ERM framework, processes and procedures for identifying, measuring, reporting and mitigating key risks in the Group’s businesses and operations. Together with the AC, the SRMC helps to ensure that management maintains a sound system of risk management and internal controls to safeguard the interests of shareholders and the assets of the Group. The SRMC also provides guidance to management, and renders assistance to the Board to oversee the ERM framework and for determining the nature and extent of significant risks which the Board would be willing to take in achieving the Group’s strategic objectives and value creation. The meetings of the SRMC are attended by senior management of the Company’s business divisions, and serve as a forum to review and discuss material risks and exposures of these businesses and their strategies to mitigate risks.
Periodic updates are provided by senior management of the Company’s business divisions to the SRMC on the Group’s risk profile, and on the status of key enterprise risk management and business continuity initiatives. These updates include the assessment of the Group’s key risks by major business units, risk categories, and the status and changes in plans undertaken by management to manage key risks. Risk tolerance statements, which set out the nature and extent of significant risks which the Group is willing to take in achieving its strategic objectives, are monitored and reported to the SRMC.
The SRMC comprises the following members:
To assist the Company in ascertaining the adequacy and effectiveness of the Group’s internal controls and risk management systems, management implements a control self-assessment exercise. Management also maps out key risks with the existing assurance processes in a comfort matrix every year. Using a comfort matrix of key risks, the material financial, operational, compliance and information technology risks of the Company have been documented and presented against strategies, policies, people, processes, systems, mechanisms and reporting processes that have been put in place.
The Board has received assurances from:
(a) Financial Records and Financial Statements
the CEOs, the chief financial officers or financial controllers of each of the Group’s business divisions (“Heads of Finance”) and the Company’s Director, Group Finance (“the Director, Group Finance”) that, as at 30 September 2022, the financial records of the Group have been properly maintained and the financial statements for the year ended 30 September 2022 give a true and fair view of the Group’s operations and finances;
(b) System of Internal Controls
the CEOs, the Heads of Finance and other key management personnel who are responsible in each of the Group’s business divisions, and the Director, Group Finance that, as at 30 September 2022, the system of internal controls in place for the Group is adequate and effective to address financial, operational, compliance and information technology risks which the Group considers relevant and material to its operations; and
(c) Risk Management Systems
the CEOs, the Heads of Finance and other key management personnel who are responsible in each of the Group’s business divisions, and the Director, Group Finance that, as at 30 September 2022, the risk management system in place for the Group is adequate and effective to address risks which the Group considers relevant and material to its operations.
Based on the internal controls established and maintained by the Group, work performed by internal and external auditors, reviews performed by the AC and SRMC and assurance from the CEOs, the Heads of Finance and other key management personnel who are responsible in each of the Group’s business divisions, and the CFO, the Board is of the view that, as at 30 September 2022, the Group’s internal controls were adequate and effective to address financial, operational, compliance and information technology risks, which the Group considers relevant and material to its operations.
Based on the enterprise-wide risk management framework adopted by the Company, reviews performed by the SRMC and assurance from the CEOs, the Heads of Finance and other key management personnel who are responsible in each of the Group’s business divisions, and the CFO, the Board is of the view that, as at 30 September 2022, the Group’s risk management system was adequate and effective to address risks which the Group considers relevant and material to its operations.
The Board notes that the system of internal controls and risk management provides reasonable, but not absolute, assurance that the Group will not be adversely affected by any event that could be reasonably foreseen as it works to achieve its business objectives. In this regard, the Board also notes that no system of internal controls and risk management can provide absolute assurance against the occurrence of material errors, poor judgment in decision making, human error, losses, fraud or other irregularities.
The AC concurs with the Board’s view that as at 30 September 2022, the Group’s internal controls (including financial, operational, compliance and information technology controls) and risk management systems were adequate and effective to address risks which the Group considers relevant and material to its operations.
The AC, on behalf of the Board, undertakes the monitoring and review of the system of internal controls. Its main responsibilities are to assist the Board in the discharge of its oversight responsibilities in the areas of internal controls, financial reporting, operational, compliance and information technology controls. Significant findings are reported to the Board.
The AC is guided by written Terms of Reference endorsed by the Board which clearly sets out its authority and duties. It is duly authorised to investigate any matter within such Terms of Reference, and has full access to and the co-operation of management, as well as the full discretion to invite any Director or executive officer to attend its meetings. Under the Terms of Reference of the AC, a former partner or director of the Company’s existing auditing firm or auditing corporation shall not act as a member of the AC (i) within a period of 2 years commencing on the date of his ceasing to be a partner of the auditing firm or director of the auditing corporation; and in any case (ii) for so long as he has any financial interest in the auditing firm or auditing corporation.
1 As announced on 25 May 2022, Mr Ng Tat Pun was appointed as the Chairman of the AC with effect from 1 June 2022.
2 As announced on 25 May 2022, Mr Chan Heng Wing was appointed as a Member of the AC with effect from 1 June 2022.
The AC is made up of non-executive Directors, the majority of whom, including its Chairman, are independent Directors. The members of the AC, including its Chairman are appropriately qualified and have recent and/or relevant accounting and related financial management expertise or experience. Their collective wealth of experience and expertise in accounting and financial management enables them to discharge their responsibilities competently.
The AC has reasonable resources to enable it to discharge its functions effectively. None of the members of the AC were previous partners or directors of the Company’s auditor, KPMG LLP (“KPMG”), and none of the members of the AC hold any financial interest in KPMG.
During the year, the key activities of the AC included the following:
Good corporate governance has been and continues to be the foundation on which Fraser and Neave, Limited ("F&N") operates. The firm commitment of the F&N Group to set and maintain high standards of corporate governance and corporate transparency can be seen in its sound corporate policies, business practices and internal controls. As part of this commitment, F&N has established this Tax Governance and Tax Risk Management Policy that articulates the F&N Group’s policy to manage its tax risks and safeguard shareholders’ interests while pursuing sustainable business growth.
Responsible Tax Management
F&N is committed to complying with applicable tax laws and regulations, and to building and maintaining a collaborative and constructive relationship with the tax authorities, across the jurisdictions we operate in. F&N’s Board of Directors provides oversight of tax governance and tax risk management.
The Head of Group Finance with the support from Group Tax, comprising the Head of Group Tax and a team of qualified tax professionals with the necessary skills and knowledge, oversees the F&N Group’s tax function and establishment of effective tax risk management policies as well as practices.
1. Approach to Tax Compliance
F&N is committed to comply with all relevant tax laws and regulations in the jurisdictions where we operate, and to adhere to applicable international standards and guidelines.
F&N endeavours to prepare and file all relevant tax returns timely and accurately in accordance with applicable local tax laws and regulations. We are committed to pay the right amount of tax in the jurisdictions we operate in, according to where value is created, and profits are made. We also maintain records and documentation in accordance with relevant Group policy(ies). In turn, this facilitates our compliance with requirements under applicable local law in the jurisdictions we operate in.\
2. Approach to Tax Risk Management
F&N’s tax governance and tax risk management framework lays out the Group’s core tax principles, has clearly defined roles and responsibilities concerning the tax function and institutionalises tax learning and development for F&N employees. The core tax principles are as follows:
3. Relationship with Tax Authorities
F&N is committed to build and maintain a transparent, collaborative and constructive relationship with the tax authorities across the jurisdictions we operate in, based on respect and trust. Besides ensuring compliance to applicable tax laws and regulations and tax filing requirements, we strive to provide timely responses to any reasonable information requests from tax authorities. Where appropriate, we will seek clarifications or rulings from tax authorities where there is significant uncertainty on material transactions or interpretation of tax laws relevant to our business.