Agenda items of the 42
ndOrdinary General Assembly
1. Reviewing the Board of Directors’ report for the fiscal year ending on 31-12-2022G. and discussing it.
2. Reviewing the financial statements for the fiscal year ending on 31-12-2022G. and discussing it.
3. Voting on the auditor report on the company’s accounts for the fiscal year ending on 31-12-2022 4. G. Voting on the discharge of the Board members with respect to their performance in 2022G.
5. Voting on paying an amount of (SAR 2,651,000) two million six hundred fifty-one thousand Saudi Riyal as remuneration to the Board members for the fiscal year ending on 31-12-2022 G.
6. Voting on appointing the auditor for the Company from among the candidates based on the Audit Committee's recommendation. The appointed auditor shall examine, review, and audit the (second and third) quarter and annual financial statements, of the fiscal year 2023 G., and the first quarter of the fiscal year 2024 G., and the determination of the auditor’s remuneration.
7. Voting on delegating the Board of Directors to distribute interim dividends on a biannual or quarterly basis for the fiscal year of 2023G.
8. Voting on the Board of Directors decision to appoint Mr. Ibrahim bin Mohammad Al-Issa as a (Non- Executive Director) board member starting from the date of his appointment on 28-02-2023 G. to complete the Board term until the end of the current term on 31-12-2023 G., succeeding the former member Dr. Walid bin Mohammad Al-Issa (Non-Executive Director). (Attached)
9. Voting on delegating to the Board of Directors the authorization powers of the General Assembly stipulated in paragraph (1) of Article 27 of the Companies Law, for a period of one year starting from the date of the approval by the General Assembly or until the end of the delegated Board of Directors’ term, whichever is earlier, in accordance with the conditions set forth in the Regulatory Rules and Procedures issued pursuant to the Companies Law relating to Listed Joint Stock Companies.
10. Voting on delegating to the Board of Directors the authorization powers of the General Assembly stipulated in paragraph (2) of Article 27 of the Companies Law, for a period of one year starting from the date of the approval by the General Assembly or until the end of the delegated Board of Directors’ term, whichever is earlier, This is for business and activities related to hotels and real estate.
11. Voting on the participation of the Chairman of the Board Mr. Ibrahim bin Mohammad Al-Issa in a business competing with the Company’s business. (Attached)
12. Voting on the participation of the Deputy Chairman Eng. Anas bin Mohammad Saleh Serafi in a business competing with the Company’s business. (Attached)
AUDIT COMMITTEE ANNUAL REPORT
2022
CONTENTS
DESCRIPTION PAGE
INTRODUCTION
3AUDIT COMMITTEE'S ROLES & RESPONSIBILITIES
4FORMATION OF AUDIT COMMITTEE
5KEY ACTIVITIES IN THE YEAR 2022
6AUDIT COMMITTEE'S REPORT ON THE EFFECTIVENESS OF INTERNAL CONTROLS SYSTEM
9
INTRODUCTION
To the Esteemed Shareholders of Taiba Investments Company
It is my pleasure to present the Taiba Investment Company’s Audit Committee's Report for the fiscal year 2022, which aims at sharing with you a comprehensive overview of the Audit Committee's performance during the past year. The Audit Committee is a fundamental pillar of corporate governance, as its formation was approved by the General Assembly to assist the Board of Directors in fulfilling its monitoring responsibilities in areas such as the integrity of financial reporting, the effectiveness of the risk management & internal controls systems and related matters of compliance.
The Audit Committee would not had been able to fulfil its duties without the efforts and contributions of the committee members, the executive management team, and the external auditor "Ernst &
Young" to its meetings and activities.
For Taiba Investments, the year 2022 was characterized by the gradual recovery of TAIBA business activities from the effects of the COVID 19 pandemic especially that this period witnessed an increase in the number of pligrims of the 1443H Hajj season which helped increase hospitality revenues and improve lease performance of the company's properties in addition to the reversal of ECL provision further to better collection levels from customers.
During 2022 company reclassified of one of its subsidiaries to discontinued operations in accordance with IFRS
.The audit committee followed up on the corrective actions taken by Taiba Investments Company to mitigate the risks on its business and its financial performance and position. The Audit Committee will continue to monitor along with management's efforts in strengthening the monitoring environment and in implementing the corrective actions as recommended by the committee and the internal audit department.
Eng. Mohammed A. Al-Grenees
Audit Committee Chairman
AUDIT COMMITTEE'S ROLES & RESPONSIBILITIES
The Audit Committee of Taiba Investments Company ("TIC") fulfils its entire responsibilities in light of its approved charter along and the relevant applicable laws and regulations. The audit committee charter was approved by the extraordinary general assembly held on Ramadan 9th, 1438H (corresponding to June 4th, 2017), and it basically determines the purpose, authority, framework for committee responsibilities and activities, criteria for members' selection and renumeration policies. This charter was prepared in compliance with the legal and regulatory requirements stemming from the Companies Law and the Saudi Capital Market Authority rules & regulations.
The charter defined the committee's objectives as below:
Assistance to the Board in the oversight of financial, administrative and operational control processes.
Review of preparation protocols for financial reporting and statements, and evaluation of internal and external audit activities
Review of compliance to codes of conduct and corporate governance guidelines
Verification of company's adherence to the relevant laws, regulations, policies & procedures and guidelines.
Furthermore, the roles & responsibilities of the committee entails the following:
I. FINANCIAL STATEMENTS & REPORTS:
Examine the accounting policies implemented by the company and any change thereof, and provide the Board of directors with relevant advice and recommendations.
Review & discuss the company's preliminary quarterly and annual financial statements, including disclosures & financial performance announcements prior to submission for Board approval and express opinion and provide recommendations to ensure their integrity, fairness and transparency.
Study and review any material changes and accounting estimates that may impact the financial statements, discuss them with the executive management and the external auditors, and express its opinion regarding the same.
Provide a technical opinion upon request from the Board of Directors, on whether the report of the Board of Directors and the financial statements of the company are fair and include information that allows shareholders and investors to evaluate the financial position of the company, its performance, business model and strategy.
II. INTERNAL AUDIT:
Oversee and supervise the performance and activities of the internal audit activity in the company to ensure the availability of the necessary resources and their effectiveness in performing the assigned responsibilities and activities.
Review and approve the annual internal audit plan for the internal audit department.
Review the internal audit reports and perform follow up on the implementation of corrective actions for the observations entailed in the reports.
Recommend to the Board of Directors for the appointment or dismissal of the Chief Audit Executive, suggest his remuneration and conduct his annual performance appraisal.
III. INTERNAL CONTROLS AND RISK MANAGEMENT:
Examine the internal risk and financial control systems in the company and report as necessary with its opinion on its adequacy.
Study the reports issued by regulatory bodies and ensure management takes necessary actions.
Review the proposed related parties' contracts and transactions that the company will conduct with the interested parties and submit its views to the Board of Directors.
Verify the company's compliance with the relevant laws, regulations, policies & procedures, and guidelines.
IV. THE EXTERNAL AUDITOR:
Recommend to the Board of Directors to nominate or dismiss external auditors, determine their fees and evaluate their performance, verify their independence, review their scope of work and contractual terms, and advise as necessary.
Evaluate the external auditors' performance and review their audit plan, review and discuss their reports and observations on the financial statements and follow up regarding the updates with the executive management.
FORMATION OF AUDIT COMMITTEE
The Audit Committee for TIC Board of Director’s 11th term – starting from January 1st, 2021 and ending on December 31st, 2023 – was formed and approved by the Ordinary General Assembly during its 38th meeting held on Jumada Awwal 1st, 1442H corresponding to December 16th, 2020G. TIC Audit Committee consists of three members:
NAME POSITION
Eng / Mohammad bin Abdul Mohsen Al-Grenees Committee chairman
Mr / Firas bin Salah Al-Deen Al-Qurashi Committee member
Mr / Eid bin Faleh Al-Shamri Committee member
KEY ACTIVITIES IN THE YEAR 2022
In its endeavor to fulfill its mission in the year 2022, the audit committee carried out the following activities:
I. AUDIT COMMITTEE MEETINGS:
COMMITTEE MEMBER MEETINGS ATTENDEES RATIO
Eng / Mohammad bin Abdul Mohsen Al-Grenees 5 5 100%
Mr / Firas bin Salah Al-Deen Al-Qurashi 5 5 100%
Mr / Eid bin Faleh Al-Shamri 5 5 100%
The committee ensures meetings are appropriately organized & prepared by reviewing and approving its agenda in advance and by inviting all required attendees, especially the representative from the external auditor, the CEO and VP financial affairs besides the director of internal audit department.
II. FINANCIAL STATEMENTS AND ACCOUNTING POLICIES:
In the committee meetings with the executive management and the external auditor, the audit committee discussed important accounting policies and reviewed the preliminary, quarterly & annual financial statements and company’s financial data (along with the accounting estimates and Policies) and the
disclosures pertaining to the financial performance prior to their submission to the Board of Directors with committee recommendations for approval.
III. THE EXTERNAL AUDITOR:
The audit committee supervised the processes for external auditors’ search, nomination and selection, and then the approval from the General Assembly of TIC for the external auditor. In this fiscal year, the committee met with the external auditor to review and discuss their scope of work and action plan. It has also discussed with them and ensured all the audit requirements have been fulfilled by the executive management by inquiring about the following:
The extent to which sufficient information was made available
Any instance of potential fraud or deception
Any observations related to the accounting policies
Any potential impairment of external auditor’s independency or objectivity
Any deficiencies in the published financial information
IV. INTERNAL AUDIT ACTIVITIES:
In the fiscal year 2022, the Audit Committee continued its efforts to upgrade and enhance internal audit activities in TIC through:
Review the outputs of the risk assessment and approve the annual action plan for the internal audit department.
Review the internal audit reports and follow up on the corrective actions plan implemented by the executive management.
V. REPORTING VIOLATIONS:
The committee made sure that a whistleblowing policy is implemented and that appropriate channels are made available for reporting various types of violations, with the required protection and confidentiality, The policy for reporting violations and the graphic track of violations have also been updated and approved by the Board of Directors.
VI. RISK MANAGEMENT:
The committee has reviewed with the executive management the processes for identifying and assessing risks and the corrective and mitigating actions that are being implemented or planned to be implemented through the company's strategy.
The committee diverted the attention of the executive management to the accelerating or emerging risks that have or may have an impact on the financial performance of the company.
AUDIT COMMITTEE'S REPORT
ON THE EFFECTIVENESS OF INTERNAL CONTROLS SYSTEM
The Board of Directors of TIC continuously endeavors at various levels to establish the necessary policies, mechanisms, controls and systems, and performs follow-up monitoring on their effectiveness, their proper implementation and enhancement. This is to ensure the integrity, transparency and accuracy of reporting systems, financial controls, risk management, and the efficiency and effectiveness of internal operational and administrative controls in order to protect TIC assets and mitigate the effects of any risks on its business along the way to achieve TIC's strategic objectives. Some major examples of such controls are the organizational structure, the authority matrix, the approved policies and procedures, and the ERP system as the automated system to manage resources, accounting and reporting.
Accordingly, TIC has set up the appropriate framework across different levels to ensure the effectiveness and adequacy of internal controls and risk management systems through:
The selection of Audit Committee members and approval of its composition by the General Assembly.
Approval of audit committee's charter (including tasks & appropriate authority level) by the General Assembly
The audit committee's supervision over the internal audit activities.
The execution of the internal audit plan with periodic checks to assess the adequacy and effectiveness of the internal controls system and reporting of any observations to the executive management and the audit committee, and follow-ups on the implementation of corrective and preventive measures.
The appointment of a competent and independent external auditor and monitoring of his works.
Monitoring of risk management processes.
Confidential reporting channels are created to employees and related parties to provide observations.
Through the aforementioned levels of assurance and based on the activities the audit committee performs and the reports it receives and its continuous efforts to carry out its duties, no material observations or deficiencies were identified in the company’s internal and financial control and risk management systems which were not addressed through corrective or preventive measures. The audit committee ascertains the adequacy and effectiveness of the company's internal and financial control and risk management systems for the fiscal year 2022 with the absence of any fundamental deficiency requiring disclosure.
Mohammed A. Al-Grenees Audit Committee Chairman Firas S. Al-Qurashi
Audit Committee Member Eid F. Al-Shamri
Audit Committee Member
Form No. 1 : Resume
1. Personal Details of the Nominated Board Member Full Name Ibrahim bin Mohammed bin Ibrahim Al-Issa Nationality Saudi Date of Birth 08/04/1951
2. Academic Qualifications of the Nominated Board Member
# Qualification Specialization When Acquired Academic Institution
1 Bachelors business management 1974 Chapman University - California
- USA 2
3. Work Experience of the Nominated Board Member
Period of Employment Professional Experience
30 years Banks & real estate investments & general contracting & advertising & Commercial Business
4. Current memberships at the boards of joint stock companies (publicly listed or non-listed) or other companies with any legal structure or memberships in the board sub-committees
# Company Name Main Activity
Membership Category (Executive, Non-Executive,
Independent)
Membership Capacity (Personal, Representing a
Legal Person)
Board Sub- Committees’
Membership
Legal Structure
1 Makkah Construction and Development Company
Real estate management development and
Independent Personal
Capacity Audit Committee Public Joint Stock Company
2 Assila Investment
Company Hotels and real
estate Independent Personal
Capacity -- Closed
Joint Stock Company
3 Umm Al-Qura Development and
Reconstruction Company real estate Independent Personal Capacity
Renumeration &
Nomination Committee
Closed Joint Stock
Company
4 5
