Audit and Risk Committee report
Introduction
The Audit and Risk Committee has pleasure in submitting this report in terms of the South African Companies Act.
Membership of the committee
The membership of the committee consists of the following three non-executive directors:
Mr CB Brayshaw is the Chairman of the committee and an independent non-executive director of Buildmax Limited.
He is a Chartered accountant (SA) and FCA and was previously managing partner and Chairman of Deloitte.
He serves on the Board of Directors of a number of
JSE Limited listed companies.
MD Lamola is an independent non-executive director of various companies. A former senior general manager in HR, SMMEs and Operations and CEO of a Development Corporation, he is also former senior lecturer in business finance and corporate governance at Unisa.
CJM Wood is an independent non-executive director and his career has included the role of Chairman of Boart Longyear Limited and LTA Limited and Deputy Chairman of Anglo American Industrial Corporation Limited. He formerly worked for 17 years in the accounting profession with Stewart Steyn (now Ernst & Young).
All three members were appointed to the committee on
28 March 2008.
Functions of the committee and attendance at meetings
The functions of the committee and attendance at committee meetings are included in the report on corporate governance on pages 21 and 22.
Performance of the committee
During the period under review the committee discharged its duties and responsibilities by:
In respect of the external auditors and
external audit:
• Evaluating and satisfying itself with the independence and effectiveness of PKF (Jhb) Inc. and its lead partner Mr RJ Lawson as its external auditor. The committee also ensured that PKF (Jhb) Inc. has been accredited by the
JSE Limited and the committee has recommended to the Board of Directors that they are appointed at the forthcoming annual general meeting;
• Obtaining assurance that no member of the external audit team was hired by the company or its subsidiaries during
the year;
• Approving the external auditors’ letter of engagement and determining the nature and extent of the non-audit services that they provide
to the group;
• Examining and approving the external auditors’ fees for last year’s audit and their budget for the current year’s audit including fees for non-audit services. The external auditors’ fees are disclosed on page 71 of the annual financial statements;
• Approving the external auditor’s plan and considering whether there were any significant operations not subject to external audit;
• Obtaining assurances from the external auditors that adequate accounting records were being maintained; and
• Considering whether there were any reportable
irregularities identified by the external auditors and determining that there were none.
In respect of the internal audit function:
• Appointing KPMG to execute the internal audit function for the company and its subsidiaries;
• Approving KPMG’s letter of engagement and determining the nature and extent of their audit plan for the current year;
• Examining and approving KPMG’s budget for the current
year’s internal audit;
• Reviewing the work of the outsourced internal audit function;
• Receiving assurance that proper and adequate accounting records were maintained for the focus areas in the approved internal audit plan and that the systems safeguarded the assets against unauthorised use or disposal thereof; and
• Assessing the adequacy of the performance of the internal audit function and the adequacy of the available resources and found them to be satisfactory.
In respect of risk management and information technology insofar as it was relevant to the committee:
• Reviewing and examining management’s policies on risk assessment and risk management, including fraud risks and information technology risks as they pertain to financial reporting and the going concern assessment and found them to be sound.
In respect of financial reporting:
• Examining and reviewing the interim financial results for the six months ended 31 August 2010 and the annual financial statements and preliminary announcement of results for the year ended 28 February 2011 and recommending their approval to the Board of Directors.
• Considering accounting treatments, significant unusual transactions and accounting judgement’s;
• Considered the appropriateness of accounting policies adopted and changes thereto.
• Examining all announcements regarding the group’s financial information that was to be made public prior to submission and approval
by the Board.
• Considered the expertise of Mr CS Els, the company’s CFO, and is of the opinion that he is suitably qualified to carry out his duties.
• The committee has satisfied itself that there are no material actions against the group that have not been provided for and/or disclosed in the annual financial statements for the year ended 28 February 2011.
In respect of the annual financial statements for the year ended 28 February 2011:
• Following upon review of the company’s and group’s annual financial statements for the year ended 28 February 2011 the committee is of the opinion that, in all material respects, they comply with the relevant provisions of the South African Companies Act as amended and International Financial Reporting Standards. On this basis, the committee recommended them for approval by the Board of Directors.
CB Brayshaw
Chairman of the committee
27 May 2011
