Committee purpose and how it contributes to value creation

The Committee is made up of only Non-Executive Directors and the MD only attends by invitation. The Head of Internal Audit reports directly into this committee which ensures independence of the Internal Audit function. The Corporation Secretary is the secretary of the Committee, the Head of Enterprise Risk Management and Head of Internal Audit may attend meetings upon request as ex-officio members.

The Committee helps the Board to effectively discharge its oversight responsibilities for financial reporting, risk management, internal controls, internal and external audit, regulatory compliance, and governance.

The ARC, on behalf of the Board, undertakes detailed monitoring of internal controls through the Internal Audit function. The Board has reviewed the system of internal control, including financial controls, for the year under review up to the date of approval of this Integrated Report.

Declaration

The Committee is satisfied that it has fulfilled its mandate as set out in the Committee’s terms of reference and work plan as required in the Board Charter during the period under review.

Key ARC Milestones in the FY 2023/2024:

• Considered the Internal Audit reports and evaluated the extent of implementation of corrective actions by Management. Most of the audit recommendations had been resolved by the end of FY 2023/24
• Considered the significant issues raised by Internal Audit including issues raised through investigations, whistleblower cases, management requests and risk-based audit processes
• Enhanced the independence of the internal audit and positioning of the enterprise risk management functions. The level of assurance and quality of reporting has improved through independent views, insights and challenges faced by the Fund
• Enhanced risk management through promotion of culture of risk awareness, understanding risk appetite and adequate risk response and management of strategic risks

ARC Committee’s key activities in FY2023/2024 included oversight, review, and consideration of:

• The quarterly reports of the Internal Audit, Enterprise Risk Management, Legal and Board Affairs departments
• The quarterly risk and insight reports on Technology and Enterprise Solutions department
• The draft Audited Financial Accounts, External Audit conclusion report and Management letter FY 2022/2023
• Proposed Interest Rate for FY 2022/23
• The proposed changes to the Board Charter 2020
• The external audit plan for FY 2023/24 and the related scope of work
• The Internal Audit Annual Plan and Balanced Scorecard (BSC) for FY 2024/2025
• The departmental budget highlights for the FY 2024/25 for the Internal Audit, Legal and Board Affairs, and Enterprise Risk Management
• The extension of the ARC Advisor’s contract
• The liquidity stress test and foreign exchange risk reports
• The contract renewal of the Head Internal Audit
• Update on various Fund land matters
• ARC training report on the Committee Development activities

Key engagements and considerations:

• Engagements were held between Members of the ARC and the Head of Internal Audit in confidence to appraise themselves on key audit matters
• The Committee met with the external auditors at the beginning of the audit and discussed the scope of their work, assessment of their independence, audit plan, findings, and recommendations of the previous audit
• The Committee undertook a customised training programme where key action points on the ARC mandate were adopted for implementation
• The Committee co-opted the Technology Enterprise Solutions Officer in the quarterly meetings to provide an understanding and awareness of the Information Technology risks especially cyber security risks
• The Committee engaged the litigation section to appraise themselves with the litigation risks faced by the Fund, especially the land related matters

Key focus for the following year FY 2024/2025

• Emphasise risk culture in the decision-making processes through continuous awareness and training on risk management
• Enhance due diligence processes during the acquisition and/or procurement of investments to ensure that risks are highlighted and mitigants put in place
• Provide oversight over information technology risks especially the stability of the core system and new innovations in the areas of Artificial Intelligence and machine learning
• Emphasise the review of management financial performance reporting to assure compliance with the international financial reporting standards and accounting practices

Risks

The key risks in FY2023/24 include:

• Foreign exchange risk
• Equity risk
• Information and cyber security risk
• Artificial intelligence risks
• Climate change risks