AUDIT ENGAGEMENT LETTER GROUP COMPANY

Date:

Board of Directors

«Client»

(Company No.: «CoNum»)

«ClientAddress1»

«ClientAddress2»

«ClientAddress3»

«ClientAddress4»

Dear Sirs / Madams,

AUDIT ENGAGEMENT LETTER

Following our appointment as auditors of «Client» (“Company”), with responsibilities to report on the audited financial statements of the Company as well as the audited consolidated financial statements of the Company and its subsidiaries (“Group”), we are pleased to confirm our acceptance and the terms of our engagement for the financial year ending «YPEDate».

1      Scope of Audit

1.1    Our audit will be conducted in accordance with approved standards on auditing in Malaysia. Those standards require that we plan and perform the audit to obtain reasonable assurance that the financial statements are free of material misstatements.

1.2    An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by the directors, as well as evaluating the overall financial statements presentation.

1.3    The nature and extent of our procedures will vary according to our assessment of what is material in the context of the Company’s financial statements, our assessment of the Company’s accounting system and, where we wish to place reliance on it, the system’s internal control, and may cover any aspect of the business’s operations that we consider appropriate.

1.4    Our audit is not designed to identify all significant weaknesses in the Company’s systems or matters of governance interest. However we shall bring to the attention of the board if such matters come to our notice during the course of our audit and shall report accordingly. We expect to provide you with a separate letter concerning any material weaknesses in accounting and internal control systems or matters of governance interest that come to our notice.

1.5    Because of the test nature and other inherent limitations of an audit, together with the inherent limitations of any accounting and internal control system, there is an unavoidable risk that some material misstatements, including those resulting from fraud and error, may remain undiscovered. Our audit should not be relied on to detect and disclose fraud and error that may exist.

1.6    Because our responsibilities are to report on the financial statements as a whole, rather than those individual units or divisions, the nature and extent of our tests and enquiries at each unit or division will vary according to our assessment of its circumstances.

1.7    Our audit opinion is intended for the benefit of those to whom it is addressed. The audit will not be planned or conducted in contemplation of reliance by any third party or with respect to any specific transaction. Therefore, items of possible interest to a third party will not be specifically addressed and matters may exist that would be assessed differently by a third party, possibly in connection with a specific transaction.

1.8    As part of our audit process, we will request from management written confirmation concerning representations made to us in connection with the audit.

1.9    Approved standards on auditing in Malaysia require that we read any annual report and other document that contains our audit opinion. We therefore request sight of all documents or statements, including the chairman’s statement, operating and financial review and the directors’ report, which are due to be issued with the financial statements. The purpose of reading the documents containing our audit opinion is to consider whether other information contained therein, including the manner of its presentation, is materially inconsistent with information appearing in the financial statements. We assume no obligation to perform procedures to verify such other information as part of our audit.

1.10  In order to assist us with the examination of your financial statements, we look forward to full co-operation with your staff and we trust that they will make available to us whatever records, documentation and other information requested in connection with our audit.

1.11  As auditors of the holding company, in accordance with the Companies Act, 1965 (“Act”) and professional standards, we accept full responsibility for our opinion on the consolidated financial statements. To fulfill this responsibility, it will be necessary for us, with management’s cooperation and full support, to carry out certain procedures on the work performed by the auditors of any group companies where we have not been appointed.

2      Responsibilities of Directors

2.1    As laid down in the Act, the directors are responsible for the maintenance of the Company's accounting records and the preparation of annual financial statements which give a true and fair view in accordance with the Private Entity Reporting Standards (PERS) (“approved accounting standards”) and comply with the Act.

2.2    The directors are also responsible for making available to us, as and when required, all the Company's accounting records and all other records and related information, including minutes of all management and shareholders' meetings.

2.3    The responsibility for the prevention and detection of fraud and error remains with the directors and management of the Company mainly through the implementation and continued operation of an adequate system of internal control.

2.4    Directors of a holding company have an additional responsibility under the Act to prepare consolidated financial statements consisting of the holding company and its subsidiaries.

3      responsibilities of auditors

3.1    The objectives of the audit are to examine in accordance with approved standards on auditing and report to the members of the Company on the financial statements produced by the directors.

3.2    We shall, as required by the Act, report to the members of the Company whether in our opinion:

(a)  the financial statements have been properly drawn up in accordance with the  approved accounting standards so as to give a true and fair view of:

(i)    the matters required by Section 169 of the Act to be dealt  with in the financial statements;

(ii)   the state of affairs of the Group and the Company as at the balance sheet date and the results and the cash flow of the Group and the Company for the year ended on that date.

(b)  the accounting and other records and registers of the Company and the subsidiaries of which we have acted as auditors have been properly kept in accordance with the provisions of the Act.

3.3    Where, in our opinion, the financial statements have not been drawn up in accordance with the approved accounting standards in Malaysia, we are required by law to state in accordance with Section 174(2)(a) of the Act:

(a)  whether in our opinion the financial statements, would, if drawn up in accordance with the approved accounting standards, have given a true and fair view of the matters required by Section 169 of the Act to be dealt with in the financial statements;

(b)  whether in our opinion the financial statements, if drawn up in accordance with the approved accounting standards, would not have given a true and fair view of the matters required by Section 169 of the Act and the reason for holding that opinion;

(c)  if the directors have given the particulars of the quantified financial effect under Section 166A(5) of the Act, our opinion concerning the particulars; and

(d)  in a case which neither subparagraph (b) nor (c) applies, particulars of the quantified financial effect on the financial statements of the failure to so draw up the financial statements.

3.4    We are also required by the Act to state in our report to the members whether:

(a)  we have considered the financial statements and the auditor's reports of those subsidiaries of which we have not acted as auditors;

(b)  we are satisfied that the financial statements of the subsidiaries that have been consolidated with the Company's financial statements are in form and content appropriate and proper for the purposes of the preparation of the consolidated financial statements and we have received satisfactory information and explanations required by us for those purposes; and

(c)  the auditors' report on the financial statements of any subsidiary was made subject to any qualification (other than a qualification that is not material in relation to the consolidated financial statements), or included any comment made under subsection (3) of Section 174 of the Act and, if so, to state particulars of the qualification or comment.

3.5    In arriving at our opinion, we are required by the Act to consider the matters set out below and to state in our report, particulars of any deficiency, failure or shortcoming arising thereof:

(a)  whether proper accounting records, other records and registers have been properly kept by the Company;

(b)  whether the returns received from branch offices of the Company are adequate for the purpose of our audit;

(c)  whether we have obtained all the information and explanations which we require for the purpose of our audit; and

(d)  whether the procedures and methods used by the Company or a subsidiary in arriving at the amount taken into any consolidated financial statements were appropriate to the circumstances of the consolidation.

3.6    In the course of our audit, we are required by law to report in writing to the Companies Commission of Malaysia if we are satisfied that:

(a)  there has been a breach or non-observance of any of the provisions of the Act; and

(b)  the circumstances are such that in our opinion the matter has not been or will not be adequately dealt with by comment in our report or by bringing the matter to the notice of the directors of the Company or, if the Company is a subsidiary, of the directors of its holding company.

4      confidentiality

4.1    The conduct of our audit in accordance with approved standards of auditing means that information acquired by us in the course of our audit is subject to strict confidentiality requirements. Information will not be disclosed by us to other parties except as required by law, or professional standards and by-laws.

5      other matters

5.1    The working papers and files for this engagement created by us during the course of the audit, including electronic documents and files, are the sole property of our firm.

5.2    We shall not be liable in any way for failure or delay in performing our obligations under this engagement if the failure or delay is due to causes outside our reasonable control.

                        

6      Governing Law and Jurisdiction

6.1    These terms of business shall be governed by and construed in accordance with the laws of Malaysia and any dispute arising out of this engagement or these terms shall be subject to the exclusive jurisdiction of the Malaysian courts.

7      Fees

7.1          Our fees are based upon the degree of responsibility and skill involved and the time spent by the partners and our staff necessarily occupied on the work, and shall be reviewed from time to time.

7.2          Our fees do not include any specialized and outsourcing services such as internal control review, interim special audit or any other financial statements review or certification that you may require us to perform.

7.3          Service tax, traveling and other out-of-pocket expenses incurred in connection with the work will be for your account.

 

8      agreement of terms

8.1          Once it has been agreed, this letter will remain effective unless it is terminated, amended or superseded. We shall be grateful if you would confirm your agreement to the terms of this letter by signing and returning the duplicate copy.

8.2          If the contents are not in agreement with your understanding of our term of engagement, we shall be pleased to receive your comments and to give you any further information you require.

Yours faithfully,

___________________________

«Auditor»

Partner of the Firm

Acknowledged, and in agreement with the terms of engagement as set out above:

____________________

[Director’s Name]

Director

____________________

Company Stamp

Date: