The Audit Committee
Mr.Achporn Charuchinda Chairman of the Audit Committee Mr. Dechapiwat Na Songkhla Member of the Audit Committee Mrs.Angkarat Priebjrivat Member of the Audit Committee Ms.Penchun Jarikasem Member of the Audit Committee
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The Audit Committee Report
The Audit Committee consisted of 4 independent directors, all of whom were designated financial experts who are able to review the accuracy and reliability of financial statements. In 2020, the Committee convened 13 times which included a meeting that was conducted together with the Risk Management Committee, and the majority of incumbent directors attended all the meetings to discuss related matters with the management, the Company’s internal and external auditors. This included the meetings with the Risk Management Committee to share information to ensure that their duties on monitoring the Company’s activities were appropriate for dynamic risk. In 2020, the Committee’s principal activities were 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 [PricewaterhouseCoopers ABAS Limited (PwC)] to ensure the statements’ accuracy, completeness, and compliance with all relevant laws and regulations as well as generally accepted accounting standards. The Committee also provided recommendations in regard to the Company’s Management’s 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 Control System
The Committee reviewed and endorsed the assessment results of the Company’s internal control system. 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 while taking into account the key risks and crucial lessons learned, and also continued to encourage a continuous implementation of the preventive controls which helped to prevent or reduce the business risks which may have an unfavorable 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 were 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 had been correctly and completely disclosed, that the prices and conditions were fair, and that the transactions had been 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 PTTEP Group’s compliance with the securities and exchange laws, SET’s regulations, including other related laws, both Thai laws and the laws of other countries 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 prepared by the Governance, Compliance, and Internal Control Department, in addition to the other compliance audit results 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 and reviews the performance according to the work plans and key performance indicators of the Internal Audit Division. It also regularly monitors the progress of the corrective or improvement actions plans in response to audit findings.
The Committee gave precedences to digital technologies and promoted the adoption of it in the audit process. This enabled audit work to adapt to transformation in the digital era, additionally, supported audit work to be accurate, complete and efficient as well as better analysis which led to precise and timely problem-solving. The example was the implementation of the Continuous Control Monitoring System on 1) Procure to Pay Process and 2) Warehouse and Inventory Management Process.
The Committee also focused on personnel development of the Internal Audit Division and adoption of new technology to ensure that internal audit activities are appropriate and effective.
(6) Nomination of/Meeting with the External Auditor
The appointment of the external auditor for 2020, the State Audit Office of the Kingdom of Thailand (SAO) requested the Company to outsource the external auditor in accordance with the State Fiscal and Financial Disciplines Act, B.E. 2561 (2018), Section 71, requiring the SAO or the external auditor endorsed by the SAO to audit the financial reports of the government agency. The Company then proposed Ms. Amornrat Pearmpoonvatanasuk, Certified Public Accountant Registration No. 4599 or Mr. Boonrueng Lerdwiseswit, Certified Public Accountant Registration No. 6552, the auditors from PricewaterhouseCoopers ABAS Limited (PwC), to serve as the Company’s external auditor. The Committee considered that PwC is a leading company with reliable performance and independence; furthermore, the audit fee is reasonable comparable to other companies in the same business. Therefore, the Committee agreed to propose PwC to be the Company’s external auditor. In addition, the Committee met with the external auditor to acknowledge the audit plan and observations as well as key audit matters in the auditor’s report, and also met separately with the external auditor in the absence of the management to acknowledge additional opinions from the auditor.
The Committee also assigned the management to set criteria of obtaining approval from the Committee for engaging the external auditor for significant Non-audit services. This is to ensure the external auditor's independence.
(7) Oversight of Fraud Prevention
The Committee encouraged improvement of the Company’s internal control system to ensure optimal control over fraud prevention. For example, the Committee promoted procurement through a competitive bidding process and supported the management to provide an analysis of past procurement reports in order to get information for preparing annual procurement plans in advance. As a result, the proportion of bidding transactions is significantly higher than direct negotiation transactions every year. The Committee also supported reporting and whistleblowing procedures, which allowed a person to raise a suspicious misconduct or a potential fraud. In addition, the Committee was responsible for verifying the results of the Company’s self-assessment relating to the anti-corruption process required by CAC and the Corporate Governance Code for Listed Companies (2017). The Company has also become a certified member of Thailand’s Private Sector Collective Action Coalition Against Corruption (CAC), reflecting our determination to stand strongly and prominently against corrupt practices.
In conclusion, in 2020, the Committee conducted its work thoroughly, methodically and strictly according to the Audit Committee Charter and reported the results of all meetings to the Board on a regular basis. The Audit committee enhanced the Company’s good corporate governance. This approach and its follow-through ensured that the Company is able to deliver the best possible performance in comparison with 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 overall opinion regarding the work in 2020 is that the Company’s financial reports were accurate, in compliance with generally accepted accounting standards and with International Financial Reporting Standards. The Company also conducted the operations in compliance with the laws and all obligations by incorporating proper systems of risk management, internal controls, internal audit, and corporate governance.
The Committee’s performance was graded “Very Good” by themselves, the Board of Directors, and related agencies.
(Mr. Achporn Charuchinda)
Chairman of the Audit Committee