Audit and Risk Committee ~ Terms of Reference (Adopted by the Board in April 2005, revised on 16 March 2015, 16 February 2016 & 22 March 2017)
  1. Purpose
    1. The Audit and Risk Committee ("the Committee") will assist the Board of Directors of the Company ("the Board") in overseeing the integrity of Company's financial statements, financial reporting system, risk management and internal control systems, compliance with legal and regulatory requirements, the external auditors' qualifications and independence, and the performance of the internal audit function and the external auditors who are ultimately responsible to the Board.

    2. The Committee will keep an open line of communication between the Committee, external auditors, internal auditors and financial management.

    3. In carrying out its responsibilities, the Committee believes that the policies and procedures stated herein should remain flexible in order to adapt efficiently to changing business and regulatory requirements.

    4. Limitations inherent in the Committee's Role

      This provision is not intended to override the fiduciary duties of the Directors.

      It is not the duty of the Committee to plan or conduct audits or to determine that the Company's financial statements are complete and accurate and are in accordance with applicable accounting principles or other rules and regulations. This is the responsibility of management and the external auditors. It is not the responsibility of the Committee to determine the appropriate level of the Company's exposure to risk.

    5. Organization and Independence
      1. The members of the Committee shall be appointed by the Board from amongst the Non-Executive Directors of the Company and shall consist of not less than three members, the majority of whom must be independent non-executive directors.

      2. The Chairman of the Committee shall be an independent director.

      3. If a member of the Committee resigns or for any other reason ceases to be a member with the result that the number of members is reduced below three, the Board shall, within three months of that event, appoint such number of new members as may be required to make up the minimum number of three members.

      4. The term of office of the Committee members should be reviewed by the Board periodically.

      5. Authority
        1. The Committee is authorized by the Board to investigate any activities within its terms of reference. It is authorized to seek any information it requires from any employee and all employees are directed to co-operate with any requests made by the Committee.

        2. The Committee shall have unlimited access to all information and documents relevant to its activities as well as to the internal and external auditors and senior management of the Company.

        3. The Committee is authorized by the Board to obtain outside legal or other independent professional advice and to secure the attendance of outsiders with relevant experience and expertise when necessary, at the expense of the Company.

        4. Secretary

          The Company Secretary or its representative shall be the secretary to the Committee (the "Committee Secretary").

        5. Meeting Frequency

          The Committee shall meet as frequently as required and at least four times a year.

        6. Attendance of meetings by non-members

          Any non-executive Director who is not a member of the Committee shall be entitled to attend Committee meetings; at the invitation of the Committee others, including the Chief Executive Officer, may also attend Committee meetings.

        7. Meeting Minutes

          Following each meeting, the Committee will report the proceedings to the full Board. The Committee Secretary shall promptly circulate draft meeting minutes to the Committee Chairman for review and subsequently to all members of the Committee. Meeting minutes shall be confirmed at the next Committee meeting and tabled as soon as practicable thereafter at a Board meeting.

        8. Roles and Responsibilities

          The roles and responsibilities of the Committee shall be: Relationship with the external auditors

          1. To act as the key representative body for overseeing the Company's relation with the external auditors.

          2. To be primarily responsible for making recommendations to the Board on the appointment, reappointment and removal of the external auditors, to review and approve the remuneration and terms of engagement and the engagement letter for the appointment of the external auditors.

          3. To review and monitor the external auditors' independence, objectiveness and the effectiveness of the audit process in accordance with applicable standards. The Committee should discuss with external auditors the nature and scope of external audit and reporting obligations before an audit commences, and may request the audit plan of the external auditors for review.

          4. To develop and implement policy for engaging external auditors to provide non-audit services. The Committee should report to the Board, identifying and making recommendations for any matters where action or improvement is needed.

          5. To ensure that assistance and co-operation are properly given by the employees of the Company to the external auditors.

          6. To meet formally, at least twice a year, with the external auditors to discuss all matters related to the audit and any other matters which the external auditors may wish to discuss.

          7. The members of the Committee should liaise with the Board and senior management. The Committee must meet, at least once a year, with the external auditors, in the absence of management and the Executive Directors.

          8. The Committee should consider any significant or unusual items that may need to be reflected in the reports and accounts. It should give due consideration to any matters that have been raised by the Company's accounting and financial reporting staff, compliance officer or external auditors.

            Review of financial information

          9. To monitor the integrity of the Company's financial statements, annual report and accounts, half-year report and, if to be published, quarterly reports.

          10. To review significant financial reporting judgments and estimates contained in the financial statements, accounts and reports for :

            1. any changes in accounting policies and practices;

            2. major judgmental areas;

            3. significant adjustments arising from the audit;

            4. the going concern assumptions and any qualifications;

            5. compliance with accounting standards; and

            6. compliance with the Hong Kong Stock Exchange Listing Rules and legal requirements in relation to financial reporting.

            AAC Technologies Holdings Inc. published this content on 23 March 2017 and is solely responsible for the information contained herein.
            Distributed by Public, unedited and unaltered, on 23 March 2017 10:57:12 UTC.

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