AUDIT AND RISK COMMITTEE REPORT
The Audit and Risk Committee (“Committee”) presents its report for the year ended 30 June 2023. The report has been prepared in accordance with the requirements of the Companies Act, King IV and the JSE Listings Requirements.
The Committee is constituted as an independent statutory committee in respect of its duties in terms of section 94(7) of the Companies Act and has been delegated the responsibility to provide meaningful oversight of the effectiveness of the internal and external audit functions and ensure that a sound risk management and system of internal controls is maintained.
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 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 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 confirm that the accounting policies used are appropriate;
- deal with concerns and complaints relating to accounting policies, internal audit, external 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 nonaudit 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. The members have the necessary financial literacy, skills and experience to execute their duties effectively. The management team is regularly engaged, and the Group’s internal auditor and the external auditor have direct access to the Committee, including closed sessions without management, on any matters that they regard as relevant to the fulfilment of the Committee’s responsibilities.
The Committee provides independent oversight of the effectiveness of the Group’s assurance and compliance functions, with particular focus on a combined assurance model comprising management, internal audit and external audit. The Committee ensures 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.
|Non-executive directors||Attendance at
|Ms L C Prezens (Chairman)||5/5|
|Ms S M du Toit||5/5|
|Ms N P Khoza||5/5|
|Mr S G Pretorius||5/5|
|Ms L R Langenhoven*||5/5|
The Committee met five times during the year under review. The Chairman, CEO, CFO, external audit partner, the Head of Internal Audit and the Head of IT attend meetings by invitation. The Company Secretary, Ms E J Willis, attends and minutes all meetings of the Committee.
RISK MANAGEMENT AND COORDINATION OF ASSURANCE ACTIVITIES
The Committee oversees the risk management process. At least one Committee meeting a year is dedicated to the detailed review of the Group’s risk assessment including IT risks. The Committee coordinates all assurance activities using 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 are maintained through the internal audit’s appropriate organisational positioning, reporting functionally to the Committee and administratively to the CFO. Internal Audit regularly reports its findings and recommendations to the Committee and senior management and joins 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 and regular meetings are held between both.
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.
During the year under review, the Committee, in consultation with executive management, approved the external audit plan and fee proposal. 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 satisfied that PwC is independent of the Company whose review included the criteria for independence specified by the Independent Regulatory Board for Auditors and the Companies Act. The Chairman of the Committee has regular discussions and meetings with the external auditors, independently of management.
The Group has a clearly defined non-audit services policy, which is strictly followed. The extent of non-audit services is minimal and is continuously monitored, with no excessive, unusual or unnecessary engagements noted.
The Committee is of the view that the Group received a high-quality external audit considering 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.
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 is satisfied that Mr Brandon Wood possesses the appropriate expertise and experience to meet his responsibilities as the Group’s CFO.
The Committee confirmed that the finance function meets the King IV requirements to fulfil all financial reporting and control functions. Further, we are satisfied that the composition, experience, and skill set of the finance function are adequate to fulfil all financial, control and reporting requirements of the Group.
The independent external whistle-blowing lines operated effectively for the year under review. Instances of whistleblowing are reported to the Chairman of the Committee. At the reporting date, the Committee is satisfied that there were no material matters reported.
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’s financial statements.
The Committee reviewed the financial statements of the Company and the Group and is satisfied that they comply with IFRS and that the accounting policies applied are appropriate.
The Committee believes that the Company has, with consideration of all entities included in the consolidated Group IFRS financial statements, established appropriate financial reporting procedures and that those procedures are operating effectively.
The Committee periodically reviews the Group’s maturity in respect of IT governance by considering reports from the Group’s Head of IT and assurance as provided by both the external and the internal audit function in accordance with the approved internal audit plan.
RECOMMENDATION OF THE IAR AND RELATED SUSTAINABILITY INFORMATION FOR APPROVAL BY THE BOARD
At its meeting held on 20 September 2023, the Committee reviewed and recommended the IAR and related sustainability information for the year ended 30 June 2023 for approval by the Board of directors.
The Committee reports that it has discharged its legal and other responsibilities and duties in compliance with its Charter.
L C Prezens CA(SA)
Audit and Risk Committee Chairman
22 September 2023