103
ANNUAL REPORT 2015
FRASERS HOSPITALITY TRUST
ACCOUNTABILITY AND AUDIT
Principle 10:
Accountability
The REIT Manager prepares the financial statements of FH-REIT in accordance with the recommendations of the
Statement of Recommended Accounting Practice 7 “Reporting Framework for Unit Trusts” (“
RAP 7
”) issued by the
Institute of Singapore Chartered Accountants and the applicable requirements of the Code on CIS issued by the MAS
and the provisions of FH-REIT Trust Deed. RAP 7 requires the accounting principles to generally comply with the
recognition and measurement principles of the Singapore Financial Reporting Standards prescribed by the Accounting
Standards Council.
The Trustee-Manager prepares the financial statements of FH-BT in compliance with the principles of the Singapore
Financial Reporting Standards and the provisions of the BTA and the FH-BT Trust Deed.
The Board, with the support of Management, is responsible for providing a balanced and understandable assessment
of FHT’s performance, position and prospects. Financial reports are provided to the Board on a quarterly basis and
monthly accounts will be made available to the Directors on request. Quarterly and annual financial reports and other
material information are disseminated to the Stapled Securityholders through announcements released via SGXNET,
FHT’s corporate website and where applicable, media releases and analysts’ briefings. Such financial reports are
reviewed by the Board before dissemination.
Principle 11:
Risk Management and Internal Controls
The Managers have established a sound system of risk management and internal controls comprising procedures
and processes to safeguard FHT’s assets and the Stapled Securityholders’ interests. The ARC Committee reviews
and reports to the REIT Manager’s Board on the adequacy and effectiveness of such controls, including financial,
compliance, operational and information technology controls, and risk management procedures and systems, taking
into consideration the recommendations of both internal and external auditors.
Internal Controls
The ARC Committee, through the assistance of internal and external auditors, reviews and reports to the Board on
the adequacy and effectiveness of the Managers’ system of controls, including financial (eg. for capital expenditure,
investments and divestments, and borrowings), compliance, operational and information technology controls. In
assessing the effectiveness of internal controls, the ARC Committee ensures primarily that key objectives are met,
material assets are properly safeguarded, fraud or errors in the accounting records are prevented or detected, accounting
records are accurate and complete, and reliable financial information is prepared in compliance with applicable internal
policies, laws and regulations.
Risk Management
The REIT Manager’s Board, through the ARC Committee, reviews the adequacy and effectiveness of the REIT Manager’s
risk management framework to ensure that robust risk management and mitigating controls are in place. The Manager
has adopted an enterprise-wide risk management (“
ERM
”) framework to enhance its risk management capabilities.
Key risks, control measures and management actions are continually identified, reviewed and monitored as part of the
ERM process. Financial and operational key risk indicators are in place to track key risk exposures. Apart from the ERM
process, key business risks are thoroughly assessed by Management and each significant transaction is comprehensively
analysed so that Management understands the risks involved before it is embarked upon. An outline of the Manager’s
ERM framework and progress report is set out on pages 94 and 95 of this Annual Report.
Periodic updates are provided to the ARC Committee on FH-REIT’s and the REIT Manager’s risk profile. These updates
would involve an assessment of FH-REIT’s and the REIT Manager’s key risks by risk categories, its current status, the
effectiveness of any mitigating measures taken, and any proposals and action plans by Management to manage such
risks.
In addition to the ERM framework, a comfort matrix of key risks, by which relevant material financial, compliance and
operational (including information technology) risks of FH-REIT and the REIT Manager have been documented to assist
the Board to assess the adequacy and effectiveness of the existing internal controls. The comfort matrix is prepared
with reference to the strategies, policies, processes, systems and reporting processes connected with the management
CORPORATE GOVERNANCE REPORT
