Audit and risk
As we navigate the storms of COVID-19 and its economic impacts, it is my privilege and responsibility, on behalf of the Board, to present the Audit and Risk Committee report for the year ended 30 June 2020.
The Audit and Risk Committee ("Committee") is constituted as a statutory committee in respect of its duties in terms of section 94(7) of the Companies Act (71 of 2008) and has been delegated the responsibility to provide meaningful oversight of the internal and external audit, Finance and Information Technology functions.
A formal Audit and Risk Committee Charter ("Charter"), approved by the Board, guides the Committee in terms of its mandate (objectives, authority and responsibilities). The Charter is reviewed annually and, if necessary, amended to meet market, regulatory and statutory requirements.
The Committee provides independent oversight of the effectiveness of the Group's assurance and compliance functions, with particular focus on combined assurance arrangements (including external auditor, internal audit and the finance function) and the integrity of the annual financial statements and, to the extent delegated by the Board, other governance matters, and external reports issued by the Group.
The role of the Committee is, inter alia, to:
- review the effectiveness of the Group's systems of internal control, including internal financial control and risk management, and to ensure that effective internal control systems are maintained;
- oversee the risk management process;
- review financial statements for proper and complete disclosure of timely, reliable and consistent information and to confirm that the accounting policies used are appropriate;
- deal with concerns and complaints relating to accounting policies, internal audit, the audit or content of the IAR and internal financial controls;
- nominate the appointment of the external auditor as the registered independent auditor after satisfying itself through enquiry that the auditor is independent as defined in terms of the Companies Act;
- determine the fees to be paid to the external auditor and the terms of engagement;
- ensure that the appointment of the external auditor complies with the Companies Act, as well as the JSE Listings Requirements and any other legislation relating to the appointment of the auditor; and
- approve the scope of non-audit services which the external auditor may provide to the Group and pre-approve any non-audit services to be provided by the external auditor.
Attendance and Composition of the Committee
The Committee consists of four independent non-executive directors, with three forming a quorum. All members of the Committee have the requisite experience and qualifications to execute their responsibilities. At the date of this report there have been no changes in the composition of this Committee.
|Non-executive directors||Attendance at meetings||Attendance at meetings|
|Ms N V Mtetwa||Resigned 31 August 2019||0/5|
|Ms N Medupe||Resigned 14 November 2019||3/5|
|Ms S M du Toit||5/5|
|Mr S G Pretorius||4/5|
|Ms I Z Nyanga||Resigned 25 March 2020||4/5|
|Ms N P Khoza||3/5|
|Mr I N Malevu||Appointed 25 March 2020||1/5|
The Committee met five times during the year under review. The CEO, executive directors, external audit partner, the Head of Internal Audit and the Head of Information Technology attend meetings by invitation. The Company Secretary, Ms E J Willis, attends and minutes all meetings of the Committee.
Summary of key focus areas for year ended 30 June 2020
In the execution of our statutory duties and our Audit Charter, we effectively discharged the following activities in the reporting period.
COVID-19: Business impact, risk assessment and response
The Committee reviewed management's response and implementation protocols, including the measures taken to comply with the Disaster Management Act regulations and COVID-19 health and safety requirements. The Committee is satisfied that in the true spirit of partnership, the Group and executive leadership fully supported government's protocols by going beyond compliance with regulatory requirements and by collaboratively supporting and working with all stakeholders to mitigate risk.
Risk management and coordination of assurance activities
In providing oversight over risk management process, the Committee dedicates at least one meeting a year to perform a detailed review of the Group risk assessment including Information Technology risks. The Committee coordinates all assurance activities by means of the Group's combined assurance model.
The internal audit function provides assurance on the adequacy of the internal control environment across the Group's significant operations. The role of internal audit is contained in the internal audit charter which is reviewed annually by the Committee.
Independence and objectivity is maintained through internal audit's appropriate organisational positioning, reporting functionally to the Committee and administratively to the CFO and provides regular reports on work done to the Committee, joining each Committee meeting as an invitee. The Committee is responsible for the appointment and removal of the Head of Internal Audit and the assessment of his performance.
The Head of Internal Audit has direct and unrestricted access to the Chairman of the Committee.
The Committee has considered the above and is satisfied with the effectiveness of the internal audit function. The Committee has also considered and is satisfied with the expertise and experience of the Head of Internal Audit.
PwC was the Group's appointed external auditor for the reporting period and is replacing EY, who have been the Group auditor for the past number of years. The Committee is satisfied that PwC is independent of the Group. In reaching this conclusion, the Committee considered the following:
- The Group has a clearly defined non-audit services policy which is strictly followed; and
- The extent of non-audit services is minimal and is continuously monitored, with no excessive, unusual or unnecessary engagements noted.
The Committee was provided with the information detailed in paragraph 22.15(h) of the JSE Listings Requirements by PwC and Mr Thomas Howatt. This information was used by the Committee to assess audit quality and the suitability for appointment of both PwC and Mr Thomas Howatt.
The Committee is of the view that the Group received a high-quality external audit taking into account the standard of audit planning and scope of activities performed. The Committee met with PwC prior to the approval of this report to discuss key audit matters, the Group's annual financial statements, commentary thereon and general matters.
The Committee has ensured that the appointment of PwC is presented and included as a resolution at the AGM pursuant to section 61(8) of the Companies Act.
The independent external whistle-blowing lines operated effectively for the year under review. Instances of whistle-blowing are reported to the Chairman of the Committee. At the reporting date, the Committee is satisfied that there were no material matters reported.
In accordance with the JSE Listings Requirements, the Committee must consider the appropriateness of the expertise and experience of the CFO of the Company on an annual basis. The Committee believes that the newly appointed CFO, Mr Brandon Wood, possesses the appropriate expertise and experience to meet his responsibilities in that position.
The Committee is satisfied that the financial function of the Group incorporates the necessary expertise, resources and experience to adequately carry out its obligations. The Committee believes that the Group has established appropriate financial reporting procedures for all entities included in the consolidated financial statements of the Group, and that those procedures are operating effectively.
Internal financial controls
Based on the results of work done by the internal audit function and external auditor on the Group's system of internal financial controls, and considering feedback and information from management, the Committee is of the view that the Group's system of internal financial control was effective for the period under review and that it formed a reliable basis for the preparation of the Group financial statements.
The Committee reviewed the financial statements of the Company and the Group and is satisfied that they comply with International Financial Reporting Standards and that the accounting policies applied are appropriate.
The Committee periodically reviews the Group's maturity in respect of IT governance by considering reports from the Group's Head of Information Technology and assurance as provided by both the external and the internal audit function in accordance with the approved internal audit plan.
Recommendation of the Integrated Report and related sustainability information for approval by the Board
At its meeting held on 18 September 2020, the Committee reviewed and recommended the IAR and related sustainability information, as well as the annual financial statements for approval by the Board of directors. The Committee is satisfied that it has complied with its statutory responsibilities and the responsibilities assigned to it by the Board. The Board concurred with this assessment.
I N Malevu CA(SA)
Audit and Risk Committee Chairman
23 September 2020