• deliberating on conflicts of interest situations involving MUST, including situations where the Manager is required to decide whether or not to take any action against any person in relation to any breach of any agreement entered into by the Trustee for and on behalf of MUST with a Related Party (as defined herein) of the Manager and where the Directors, controlling shareholders of the Manager and associates are involved in the management of or have shareholding interests in similar or related businesses as the Manager, and in such situations, the ARC will monitor the investments by these individuals in MUST’s competitors, if any, and will make an assessment whether there is any potential conflict of interest; • reviewing the results and scope of external audit reports to ensure that where deficiencies in internal controls have been identified, appropriate and prompt remedial action is taken by the management; • reviewing the policy and arrangements by which staff and external parties may, in confidence, raise probable improprieties in matters of financial reporting or other matters, with the objective that arrangements are in place for the independent investigation of such matters and for appropriate follow-up action; • reviewing internal audit reports at least once a year to ascertain that the guidelines and procedures established to monitor Related Party Transactions have been complied with; • ensuring that the internal audit and accounting function is adequately resourced and has appropriate standing with MUST; • reviewing on an annual basis, the adequacy and effectiveness, independence, scope and results of the internal audit function in the overall context of MUST’s risk management system; • reviewing the statements included in MUST’s Annual Report on its internal controls and risk management framework; • the appointment, reappointment or removal of internal auditors (including the review of their fees and scope of work); • monitoring the procedures in place to ensure compliance with applicable legislation, regulations, the Listing Manual and the Property Funds Appendix; • making recommendations to the Board on the proposals for the selection, appointment, reappointment, resignation and removal of the external auditor based on a thorough assessment of the external auditors’ functioning; • reviewing the external audit fees (remuneration and terms of engagement of the external auditors) and making recommendations to the Board on the proposal; • reviewing the nature and extent of non-audit services performed by external auditors; • reviewing on an annual basis, the adequacy, effectiveness, independence and objectivity of external auditors; • meeting with external and internal auditors, without the presence of the executive officers, at least on an annual basis; • assisting the Board to oversee the formulation, updating and maintenance work of an adequate and effective risk management framework; • reviewing at least annually the adequacy and effectiveness of the system of internal controls including financial, operational, compliance and information technology controls and risk management processes; • reviewing the financial statements and the internal audit report; • reviewing and providing their views on all hedging policies and instruments to be implemented by MUST to the Board; • reviewing the assurances from the CEO and CFO on the financial records and financial statements; • reviewing and approving the procedures for the entry into any foreign exchange hedging transactions and monitoring the implementation of such policy, including reviewing the instruments, processes and practices in accordance with the policy for entering into foreign exchange hedging transactions; • investigating any matters within the ARC’s terms of reference, whenever it deems necessary; and • reporting to the Board on material matters, findings and recommendations. The ARC has direct and unfettered access to the external auditors and internal auditors. The ARC also meets (a) with the external auditors and (b) with the internal auditors, in each case without the presence of Management, at least annually to discuss matters or concerns, in accordance with Provision 10.5 of the CG Code. ARC meetings are attended by the key executive officers as well as the internal and external auditors. The ARC members are kept updated on changes to accounting standards and significant accounting matters involving the exercise of judgment. In addition, the ARC is entitled to seek independent professional advice, or attend relevant seminars and/or informative talks at the Manager’s expenses from time to time to apprise themselves of accounting standards/ financial updates. / 85 / MANULIFE US REIT
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