The Manager recognises that there is a significant amount of risk inherent in making property investment
decisions. Accordingly, the Manager sets out clear procedures when making such decisions. For instance, an
investment and risk management committee (comprising key members of the management, the investment
officer and the compliance officer) was set up to ensure comprehensive due diligence is carried out in relation
to each proposed investment. All property purchases require the prior approval of the Board.
Control self-assessments in key areas of operations are conducted by the management on a periodic basis.
Internal auditors are also engaged to perform independent reviews of the adequacy and effectiveness of
the risk management processes and internal controls (see Principle 13). The Manager also has a business
continuity plan and a comprehensive insurance coverage in accordance with industry standards.
Compliance Risk
The Trust is subject to various rules and regulations stipulated by SGX-ST and other regulatory bodies. Any
changes to the rules and regulations may affect the Trust’s business.
The Manager holds a CMS licence and its key officers hold representatives’ licences issued by MAS under the
SFA. Failure to comply with the regulations imposed by MAS may result in the licences being revoked or not
renewed, adversely affecting the Trust’s operations.
The Manager has policies and procedures for ensuring compliance with the applicable provisions of the
SFA and all other relevant legislations, the Listing Manual of the SGX-ST, the Code on Collective Investment
Schemes issued by the MAS including the Property Funds Appendix, the Manager’s obligations under the
Trust Deed, Singapore Financial Reporting Standards, any tax ruling and the relevant contracts.
To mitigate non-compliance, the compliance officer regularly consults the regulatory bodies and works closely
with the auditors, legal counsels, Company Secretary, senior management and AC to ensure adherence to all
stipulated rules and regulations.
Board’s Opinion on Internal Controls
Based on the internal controls and risk management framework established and maintained by the
management, work performed by the internal and external auditors, the assurance from the CEO and Chief
Financial Officer (“CFO”) that the financial records have been properly maintained, that the financial statements
give a true and fair view of the Trust’s operations and finances, and the assurance from the CEO and CFO
regarding the effectiveness of the Manager’s risk management and internal control systems, the Board, with
the concurrence of the AC, is of the view that the Trust’s financial, operational, compliance and information
technology controls, and risk management systems were adequate and effective as at 31 December 2014.
In this regard, the Board notes that the system of internal controls and risk management provides a reasonable
but not absolute assurance that the Trust will not be severely affected by any event that could be reasonably
foreseen. Neither can any system of internal controls and risk management provide absolute assurance against
the occurrence of material errors, poor judgment, human error, losses, fraud or other irregularities.
AUDIT COMMITTEE
Principle 12: The Board should establish an AC with written terms of reference which clearly set out
its authority and duties.
The AC assists the Board in fulfilling responsibilities relating to corporate governance and interested party
transactions.
CORPORATE GOVERNANCE
SABANA REIT
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ANNUAL REPORT 2014
78
