The Audit Committee
Table of Contents
3. SET Rules
5. Qualifications of the Committee Members
6. Duties and Responsibilities
7. Term of Service and Remuneration
10. Secretary of the Audit Committee
11. Effective date
PTT Exploration & Production Public Company Limited (PTTEP) has a strong determination to maintain an appropriate management with a highest effectiveness and efficiency. PTTEP has to be accepted by the shareholders and stakeholders as a Company with Good Corporate Governance.
The appointment of the Audit Committee is a part of PTTEP’s Good Corporate Governance. It is an important tool to alleviate the Board’s responsibility in order to monitor a smooth management, a vision and forthright opinions related to PTTEP’s financial reports, internal control and internal audit.
2.1 “PTTEP” means PTT Exploration & Production Public Company Limited which is a listed company.
2.2 “Board” means Board of Directors of PTT Exploration & Production Public Company Limited.
2.3 Independent Director means Independent Director of PTT Exploration & Production Public Company Limited as described in Good Corporate Governance and Business Ethics of PTTEP.
Independent directors: Reviewing and verifying their independence at least once a year.
2.4 “SET” means The Stock Exchange of Thailand.
2.5 “SET Rules” means Regulations, Notifications, Orders, Best Practices Guidelines, Governing Procedures, Statement or circulating letters by the Board of Governors or of SET that PTTEP has to comply with.
3. SET Rules
To adopt valid SET Rules and any revision to apply together with the present Audit Committee Charter.
The Board appoints the Audit Committee which is composed of three directors at the minimum and five directors at the maximum. And at least one audit committee member must have knowledge, understanding or experiences in accounting or finance.
The Board will appoint the Audit Committee’s Chairman and the Audit Committee appoints the Head of the Internal Audit or Senior Manager, Corporate Secretary Office to be Secretary of the Audit Committee.
5. Qualifications of the Committee Members
A Committee Member must possess qualifications according to the criteria as follows :
(1) Being appointed by the Board;
(2) All members must be Independent Director;
(3) To give adequate time for the Audit Committee’s performance;
(4) To have qualifications according to SET Rules in the Article 3 of this Charter;
(5) Not being a board member assigned to make decision on business operation in listed company, its parent company, subsidiaries, associated companies, or juristic person with possible conflicts of interest;
(6) Not being a board member of parent company or subsidiary company which is also a listed company;
(7) At least 1 committee member must have knowledge, understanding or experience in accounting or finance. The company must indicate such AC in the registration statement, Form 56-1 and annual report.
6. Duties and Responsibilities
6.1 The Audit Committee has the duties as follows :
(1) To review PTTEP’s financial reports with the external auditor on a quarterly basis to ensure accuracy and adequacy
(2) To ensure that PTTEP’s activities are performed in compliance with the securities and exchange laws, SET’s regulations, and other laws related to the business
(3) To review connected transactions or transactions that may lead to conflicts of interest to ensure that these transactions comply with the laws and SET’s regulations and that they are reasonable as well as in the best interests of the Company
(4) To ensure that PTTEP’s internal control and internal audit systems are efficient and appropriate as well as that audit reports, audit approaches and results are performed and noted based on generally acceptable standards and relevant best practices, in addition to coordinating with the external auditor
(5) To consider, select and propose an appointment of an external auditor, and to propose the audit’s remuneration, as well as attend a non-executive meeting with the auditor at least once a year
(6) To determine independence of the Internal Audit Unit as well as to endorse appointments, transfers, performance appraisal or punishments of the Head of the Internal Audit. The Audit Committee will appoint an Investigation Committee to investigate the Head of the unit in case he or she is suspected of noncompliance to laws, the Company’s rules and regulations, and good corporate governance
(7) To approve the annual audit plan
(8) To endorse budget, division structure and manpower of the Internal Audit Unit for the management to propose to the Board
(9) To approve the charter of the Internal Audit Unit
(10) To approve the Conflict of Interest Declaration Form when the Head of the Internal Audit has to conduct the audit field work
(11) To endorse the results from audits which were approved in the annual audit plan as well as special audit request
(12) Chairman of the Audit Committee or a member has to attend the shareholders’ meeting to answer questions in regard to the Committee’s duties or the appointment of the external auditor
(13) To annually review and update the Audit Committee Charter
(14) To review the correctness of self-assessment and related documents in regard to the Anti-Corruption measures in reference to Thailand’s Private Sector Collective Action Coalition Against Corruption (CAC)
(15) To perform other duties as assigned by the Board upon its consent
(16) To prepare and disclose the Audit Committee Report in the Company’s annual report, which must be signed by the audit committee’s chairman and consist of at least the following information:
(a) an opinion on the accuracy, completeness and creditability of the Company’s financial report,
(b) an opinion on the adequacy of the Company’s internal control system,
(c) an opinion on the compliance with the law on securities and exchange, the Exchange’s regulations, or the laws relating to the Company’s business,
(d) an opinion on suitability of an auditor,
(e) an opinion on the transactions that may lead to conflicts of interests,
(f) the number of the audit committee meetings, and the attendance of such meetings by each committee member,
(g) an opinion or overview comment received by the audit committee from its performance of duties in accordance with the charter, and
(h) other transactions which, according to the audit committee’s opinion, should be known to the shareholders and general investors, subject to the scope of duties and responsibilities assigned by the Company’s board of directors.
6.3 The Audit Committee is responsible directly to the Board according to the duties and responsibilities assigned in the Articles 6.1 and 6.2 by the Board, while the responsibilities for all activities of PTTEP towards third persons are still vested in the entire Board.
7. Term of Service and Remuneration
The term of service of the Committee Member is equivalent to the director’s Board term.
In case of any Committee Member’s vacating from Office or any unavailability before the expiration of his term of service, the Board must appoint another Audit Committee Member with is fully qualified to replace the resigning member not later than 3 months as of the date of incomplete composition of the Audit Committee.Upon the expiration of the term of service, if there is no appointment of a new Audit Committee Member, the resigning member has to standby to perform the duty until the arrival of a new Audit Committee Member.
The resigning Committee Members may be re-appointed for another term.
Besides the vacating from office by expiration of term of service, the Audit Committee member has to resign once he/she cannot possess the qualification according to the Article 5.The Audit Committee will receive an appropriate remuneration approved by the Shareholders Meeting for his duties and responsibilities and PTTEP has to disclose that remuneration in its annual report too.
The frequency of the meetings is at least once a-three-month-period.
The Audit Committee fixes the number of members required to attend a meeting to make it valid by not less than a half of the Committee Members. If the Chairman is absent, the attending committee members have to choose one Committee Member as Chairman of the meeting.
The voting in the meeting is exercised by a majority. A Committee Member has a casting vote. If the votes are equal, the Chairman will have an additional vote which becomes final and decisive. The Secretary of the Audit Committee has no right to vote.
Any Committee Member who has any personal interest or any conflict of interest in a matters being considered shall refrain from expressing his opinion and voting on such matter.The Audit Committee has an authority to invite the management, the external auditor or any other concerned parties or other appropriate persons to participate or to explain the concerned subjects in the meeting.
9.1 The Audit Committee must report to the Board the result of the meeting or the other necessary reports so that the Board is kept regularly informed.
9.2 In case that the Audit Committee finds or suspects anything which has material impact on the financial condition or results of operation, the Audit Committee must report it to the Board in order to rectify it within a reasonable period.
If the Audit Committee finds that such rectification has been unreasonably ignored according to the paragraph 1, a Committee Member must report such finding mentioned in that paragraph to the Office of Securities and Exchange Commission or the SET.
10. Secretary of the Audit Committee*
Secretary of the Audit Committee has the following duties:
(1) To carry all activities related to Audit Committee and liaise with all internal and external concerned parties in order to make the Audit Committee’s activities completed.
(2) To develop the information and data for the Audit Committee’s decisions so that the Audit Committee’s activities are efficient. The information related to Audit Committee will be also disclosed appropriately.
(3) To set the standard, guideline and procedure regarding the submission of any agenda items to the Audit Committee, its meeting and its resolutions.
(4) To study and make analyses from all information/data in order to propose any agenda items to the Audit Committee. This includes any queries or additional information from concerned parties to support the meeting in order to help the Audit Committee’s Chairman or the Audit Committee deliver any resolutions/instructions. Those resolutions/instructions will be informed to all concerned parties accordingly.
(5) To carry all meeting’s activities, to prepare complete and correct resolutions of the Minutes of the Audit Committee and also to give answers to the questions related to Audit Committee’s resolutions.
(6) To work together with or to support the other related working units or to do all other duties which are additionally assigned.
This Charter has taken effect on 30 November 2017.
The Audit Committee Report
The Audit Committee consists of at least three, but no more than five, independent directors, whereby at least one member must be a designated financial expert who is able to review the accuracy and reliability of the financial reports. In 2018, the Committee convened 16 times, when the majority of incumbent directors attended all the meetings, to discuss on related matters with the management, the Company’s internal auditors and external auditors. This includes the meetings that were conducted together with the Risk Management Committee to share information to ensure that their duties on monitoring the Company’s activities were in line with each other. In 2018, the Committee’s principal activities are as follows.
(1) Review of Financial Reports
The Committee reviewed the Company’s quarterly and annual financial statements, together with the management and the external auditor, namely, the State Audit Office of the Kingdom of Thailand, to ensure the statements’ accuracy, completeness, and compliance with all relevant laws and regulations as well as generally accepted accounting standards, including International Financial Reporting Standards (IFRS). The Committee also provided recommendations in regard to the Company’s Management Discussion and Analysis (MD&A) to provide an analysis of the factors affecting the Company’s operation and financial statements.
(2) Review of the Internal Controls System
The Committee reviewed and endorsed the assessment results of the Company’s system of internal controls. This review comprised an assessment questionnaire, as required by the Securities and Exchange Commission of Thailand (SEC), which found that the Company had incorporated a proper internal control system. The Committee promoted a proactive approach in internal auditing and also continued to encourage a continuous implementation of the preventive controls which help to prevent or reduce the business risks which may have an unfavourable impact on the Company.
(3) Review of Connected Transactions or Transactions with Potential Conflicts of Interest
The Committee reviewed the connected transactions or transactions with potential conflicts of interest prior to the Board’s consideration to ensure that they are reasonable and beneficial to the Company and the shareholders, particularly the minority shareholders. The Committee also reviewed the disclosure of the transactions and viewed that the transactions were correctly and completely disclosed, that the price and the conditions were fair, and that the transactions were appropriately approved by the management or the Board of Directors prior to their commencement.
(4) Review of Compliance with Laws and Related Regulations
The Committee reviewed the Company’s and the subsidiaries’ performance in terms of their compliance with the securities and exchange laws, SET’s regulations, including other related laws, both Thai laws, and other countries’ laws, in which the PTTEP Group operates or invests in. The Committee also acknowledged the compliance report relating to the Company’s and our subsidiaries’ business operations, as reported by the Compliance Department, in addition to the other compliance audit results as reported by the Internal Audit Division.
(5) Oversight of Internal Audit Activities
The Committee considers a revision of the Audit Committee Charter and Audit Charter every year. In addition to their responsibility to review the audit results and regularly monitor the management’s action plans for audit findings. In 2018, the Committee promoted improving the Company’s operational processes for example, establishing guidelines for supervision of cyber security to be the same standard across the entire organization, and monitored an auditing in joint venture projects both in Thailand and other countries which the PTTEP Group invests in, to ensure an efficiency of the operator’s work processes and the accuracy of expenses charged by the operator. In consequence, the Company saved investment costs and acquired cooperation between partners to enhance the efficiency of joint venture project management.
In addition, the Committee supported implementation of digitization method to monitor and detect irregularities on a continuous basis in order to resolve the matters in time. For example, the implementation of the Continuous Control Monitoring System on Procure to Pay process. In 2018, PTTEP has expanded the scope to include low-value procurement transactions or those below 500,000 Baht. Furthermore, Management dashboard has been developed in order to increase the effectiveness in control and monitoring.
(6) Nomination of/Meeting with the External Auditor
The Committee considered the nomination of the State Audit Office of the Kingdom of Thailand as the Company’s external auditor and, for 2018, determined that the external auditor performed its duties with independence, continued to exhibit the required experience in auditing the Company’s financial reports, and ensured the accuracy and reliability of the Company’s financial reports. In addition, the Committee proposed the audit’s remuneration for 2018 and met separately with the external auditor and the Internal Audit Division, without the management presented, to acknowledge and identify the auditor's approach and audit plan as well as to consider the key audit matters in the auditor’s report.
(7) Oversight of Fraud Prevention
The Committee encouraged improvement of the Company’s internal controls system to ensure optimal controls over fraud prevention. For example, the Committee promoted procurement through a competitive bidding process and supported the management to provide analysis of procurement report in order to get the information for preparing annual procurement plan in advance. As a result, the proportion of bidding transaction is significantly higher than direct negotiation transaction. As well as encouraging that the reference price should be reasonable, and well prepared effectively and efficiently, thus ensuring transparency and verifiability. The Committee also supported reporting and whistleblowing procedure which allows a person to raise a suspicious misconduct or a potential fraud. In addition, the Committee was responsible to verify results of the Company’s self-assessments relating to the anti-corruption process as required by CAC and as required by the Corporate Governance Code for Listed Companies 2017. The Company has also become certified as a member of Thailand’s Private Sector Collective Action Coalition Against Corruption (CAC), reflecting our determination to stand strongly and prominently against corrupt practices.
The Audit Committee reported the results of all meetings to the Board on a regular basis. The Committee conducted its work thoroughly, methodically and strictly according to the Audit Committee Charter to enhance the Company’s good corporate governance. This approach and its follow-through assured that the Company is able to deliver the best possible performance compared to our industrial peers. In addition, the Committee is confident in the competency of the Internal Audit Division, which consists of personnel with various qualifications, skills and experiences, enabling them to perform their duties in auditing to cover various aspects efficiently.
The Committee’s opinion regarding the work in 2018 is that the Company’s financial report was accurate, in compliance with the generally accepted accounting standards and in line with International Financial Reporting Standards. The Company also conducted the operations in compliance with the laws and related regulations by incorporating the proper systems of risk management, internal controls, internal audit, and corporate governance. The Audit Committee’s performance was graded “Very Good” by its own committee, the Board of Directors, and related parties.
(Mr. Achporn Charuchinda)
Chairman of the Audit Committee