Audit Committee Report

MEETINGS

The AC held seven meetings in 2008 including one special AC meeting. The attendance of the AC members is set out on page 81 of the Annual Report.

All AC meetings were held without the presence of the Management unless their attendance was specifically requested. The Head of Group IA and Departmental Heads of the respective IA functions were present at all AC meetings to present the IA reports to the AC. Relevant management members of the auditee were invited to brief the AC on specific issues arising from unsatisfactory audit ratings.

The partner of the External Auditors attended four AC meetings in 2008 to present the auditors' report on the annual audited financial statements for FY2007 and auditors' review reports on the unaudited quarterly financial statements. The AC also met with the External Auditors on three occasions in 2008 - on 29 January 2008, 16 July 2008 and 21 October 2008 - without the presence of the Executive Director, Management or Internal Auditors, to make enquiries in relation to the Management's cooperation in financial reporting and to make known their views on any matter to the AC or, which in their opinion, should be brought to the AC's attention.

In respect of independent external consultants appointed to review or audit special engagements/projects, these external consultants were invited to attend AC meetings to present their reports.

Deliberations during the AC meetings, including the issues discussed and the rationale for decisions, were recorded. Minutes of AC meetings were tabled for confirmation at the next AC meeting and subsequently distributed to the Board for notation. The AC Chairman presented the AC's recommendation, together with rationale, to the Board for approval of the annual and quarterly financial statements as well as declarations of dividends. The AC Chairman also conveyed to the Board matters of significant concern as and when raised by the External Auditors or Internal Auditors.