The Institute of Chartered Accountants HEAD OFFICE

of Pakistan

Circular No. 02/20 14 February 24,2014

ALL PRACTICING MEMBERS OF THE INSTITUTE

Dear Member

REVISED REVIEW REPORT TO THE MEMBERS ON STATEMENT OF COMPLIANCE OF THE CODE OF CORPORATE GOVERNANCE 2012

Under Clause (xli) of the revised Code of Corporate Governance (CCG) 2012, the external auditor is now required to highlight all non-compliances with the CCG requirements in the Review Report. This created a requirement to revise the existing Review Report format on Statement of Compliance (SOC) issued via ICAP circular No.9/2009 dated January 19, 2009.

Key revisions

• Where management has accepted and disclosed the non-compliances in the Statement of Compliance; the auditor would only have to reiterate what management has already accepted by highlighting the material non-compliances in the Review Report. Clean Review Report would be issued in this case.

• In case of clean report the non-compliances will be highlighted along with the note reference of the Statement of Compliance after the opinion paragraph in the Review Report.

• Where the non-compliance is on the part of the Company but management is neither accepting nor disclosing the fact, the auditor would issue Modified Review Report (similar to the earlier practice).

• In case of modified report, the auditor would report instances of non-compliances, on the basis of which report is modified, before the opinion paragraph in the Review Report.

• It may not be possible to highlight all non-compliances; hence it would be at discretion of the auditor to highlight the material non-compliances in the Review Report.

The Council of the Institute has approved the enclosed revised review report in its 250th meeting held on January 25,2014.

Members are advised to take note of the above.

Yours truly

Haroon Tabraze Director Technical Services Encl.: As above

(Established under the Chartered Accountants Ordinance, 1961-X of 1961)

Chartered Accountants Avenue, Clifton, Karachi-75600 (Pakistan) Ph: (92-21) 11 1 000422 Fax: 99251626 Website: www.icap.org.pk E-mail: info@icap.org.pk

CLEAN REVIEW REPORT

REVIEW REPORT TO THE MEIVIBERS ON THE STATEMENT OF COMPLIANCE WITH THE CODE OF CORPORATE GOVERNANCE

We have reviewed the enclosed Statement of Compliance with the best practices contained in the Code of Corporate Governance (the Code) prepared by the Board of Directors of Limited for the year ended to comply with the requirements of Listing Regulation No(s)__ of the ____Stock Exchange(s) where the Company is listed.

The responsibility for compliance with the Code is that of the Board of Directors of the Company. Our responsibility is to review, to the extent where such compliance can be objectively verified , whether the Statement of Compliance reflects the status of the Company's compliance with the provisions of the Code and report if it does not and to highlight any non-compliance with the requirements of the Code. A review is limited primarily to inquiries of the Company's personnel and review of various documents prepared by the Company to comply with the Code.

As a part of our audit of the financial statements we are required to obtain an understanding of the accounting and internal control systems sufficient to plan the audit and develop an effective audit approach. We are not required to consider whether the Board of Directors' statement on internal control covers all risks and controls or to form an opinion on the effectiveness of such internal controls, the Company's corporate governance procedures and risks.

The Code requires the Company to place before the Audit Committee, and upon recommendation of the Audit Committee, place before the Board of Directors for their review and approval its related party transactions distinguishing between transactions carried out on terms equivalent to those that prevail in arm's length transactions and transactions which are not executed at arm's length price and recording proper justification for using such alternate pricing mechanism. We are only required and have ensured compliance of this requirement to the extent of the approval of the related party transactions by the Board of Directors upon recommendation of the Audit Committee. We have not carried out any procedures to determine whether the related party transactions were undertaken at arm's length price or not.

Based on our review, nothing has come to our attention which causes us to believe that the Statement of Compliance does not appropriately reflect the Company's compliance, in all material respects , with the best practices contained in the Code as applicable to the Company for the year ended ____

* Further, we highlight below instance(s) of non-compliance with the requirement(s) of the Code as reflected in the note/paragraph reference where iUthese is/are stated in the Statement of Compliance

Note/paragraph reference Description

i­ii­ii i-

Chartered Accountants Place: Date:

* Required when the Company's Statement of Compliance refers to a noncompliance. In terms of paragraph xli of the Code, the statutory auditors of a listed company shall ensure that any non­compliance with the requirements of the Code as referred to in the Statement of Compliance is also highlighted in their review report. In a situation where the Statement of Compliance does not mention the non-compliance with a material requirement of the Code the statutory auditor shall then issue a modified report, a format for which is attached.

MODIFIED REVIEW REPORT

REVIEW REPORT TO THE MEMBERS ON STATEMENT OF COMPLIANCE WITH THE CODE OF CORPORATE GOVERNANCE

We have reviewed the enclosed Statement of Compliance with the best practices contained in the Code of Corporate Governance (the Code) prepared by the Board of Directors of Limited for the year ended to comply with the requirements of Listing Regulation No(s) __ of the ____Stock Exchange(s) where the Company is listed.

The responsibility for compliance with the Code is that of the Board of Directors of the Company. Our responsibility is to review, to the extent where such compliance can be objectively verified, whether the Statement of Compliance reflects the status of the Company's compliance with the provisions of the Code and report if it does not and to highlight any non-compliance with the requirements of the Code. A review is limited primarily to inquiries of the Company's personnel and review of various documents prepared by the Company to comply with the Code.

As a part of our audit of the financial statements we are required to obtain an understanding of the accounting and internal control systems sufficient to plan the audit and develop an effective audit approach. We are not required to consider whether the Board of Directors' statement on internal control covers all risks and controls or to form an opinion on the effectiveness of such internal controls, the Company's corporate governance procedures and risks.

The Code requires the Company to place before the Audit Committee, and upon recommendation of the Audit Committee, place before the Board of Directors for their review and approval its related party transactions distinguishing between transactions carried out on terms equivalent to those that prevail in arm's length transactions and transactions which are not executed at arm's length price and recording proper justification for using such alternate priCing mechanism. We are only required and have ensured compliance of this requirement to the extent of the approval of the related party transactions by the Board of Directors upon recommendation of the Audit Committee. We have not carried out any procedures to determine whether the related party transactions were undertaken at arm's length price or not.

Following instance(s) of non-compliance with the requirement(s) of the Code was /were observed which is/are not stated in the Statement of Compliance:

i­ii­iii-

Based on our review, except for the above instance(s) of non-compliance, nothing has come to our attention which causes us to believe that the Statement of Compliance does not appropriately reflect the Company's compliance, in all material respects, with the best practices contained in the Code as applicable to the Company for the year ended ____

.. Further, we highlight below instance(s) of non-compliance with the requirement(s) of the Code as reflected in the note/paragraph reference where iUthese is/are stated in the Statement of Compliance:

Note/parag raph reference Description i­ii­iii­

Chartered Accountants

Place:

Date

* Required when the Company's Statement of Compliance refers to a noncompliance. In terms of paragraph xli of the Code, the statutory auditors of a listed company shall ensure that any non ­compliance with the requirements of the Code as referred to in the Statement of Compliance is also highlighted in their review report. In a situation where the Statement of Compliance does not mention the non-compliance with a material requirement of the Code the statutory auditor shal l then issue a modified report in accordance with the above format.