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The committee assists the Board to fulfil its supervisory role relating to the integrity of financial reporting in terms of accounting standards and the Listings Requirements of the JSE Limited. It does so by evaluating the findings of the internal and external auditors, remedial actions taken and the adequacy and effectiveness of the system of internal financial controls required to form the basis for the preparation of reliable financial statements. The audit & sustainability committee operates under approved terms of reference. The committee chairman reports on committee deliberations and decisions at the Board meeting immediately following each committee meeting. The internal and external auditors have unrestricted access to the committee chairman. The independence of the external auditor is regularly reviewed and all non-audit related services are pre-approved and notified. The committee reviews the quality and effectiveness of the external audit process. The committee is satisfied that the external auditor is independent and has nominated Deloitte & Touche for re-election at the forthcoming Annual General Meeting of shareholders. Deloitte & Touche is an accredited auditing firm, with AJ Zoghby as the individual registered auditor. MEMBERSHIP The composition of the committee complies with the Companies Act and King III, and comprises of four independent non-executive directors. DD Barber served as chairman of the committee with AA Routledge and M Sello as members, all of whom are suitably skilled and experienced to discharge their responsibilities. ADVC Knott-Craig resigned as a member during the year under review. TCP Chikane was appointed a member effective 15 June 2012. The committee members are appointed annually by shareholders. M Sello will be stepping down as a member when appointed chairman of the Company, effective 1 March 2013. The Group chairman, Group chief executive, Group financial director, Group commercial executive, Group chief audit executive, external auditors and KPMG all attend meetings by invitation. The chairman of the committee also serves on the risk management committee. This ensures that overlapping responsibilities are appropriately addressed. The committee met six times during the year. TERMS OF REFERENCE The committee’s responsibilities include:
The Board reviewed and approved the committee’s terms of reference and policy for non-audit services during the year. ASSESSMENT In addition to the formal Board evaluation process, the committee also evaluates its performance and effectiveness by way of selfassessment questionnaires. Based on the results, the Board believes that the committee functions effectively and complies with its terms of reference in all material respects. STATUTORY DUTIES In addition to the duties set out in the terms of reference, the committee performed the required statutory functions in terms of Section 94(7) of the Companies Act. FINANCIAL DIRECTOR AND FINANCE FUNCTION The committee considered and satisfied itself of the appropriateness of the expertise, experience and performance of the Group financial director during the year. The committee also considered and satisfied itself of the appropriateness of the expertise and adequacy of resources of the finance function as well as the experience of senior members of management responsible for the finance function. INTERNAL AUDIT The internal audit function is led by the Group chief audit executive and comprises both internal employees and resources from KPMG. It serves management and the Board by performing independent evaluations of the adequacy and effectiveness of risk management, internal controls, financial reporting mechanisms and records, information systems and operations, safeguarding of assets and adherence to laws and regulations. The internal audit function is tasked with providing assurance by performing risk-based audits throughout the Group, and adjusts its coverage and focus based on changing strategic and operational needs. Internal audit coverage includes a review of strategic risk mitigations, a risk-based review of major projects, key business processes and systems, the Group’s sustainability information, IT governance and IT general controls. An integrated assurance model was applied to ensure a coordinated approach to all assurance activities, appropriate to address the significant risks the Group faces. The purpose, authority and responsibility of the internal audit function are formally defined in an internal audit charter, which was reviewed by the committee and approved by the Board. INTERNAL FINANCIAL CONTROLS The internal audit plan works on a multi-year programme. Even though this programme has identified certain financial control weaknesses, which are currently being addressed, the Group’s system of internal financial controls continues to provide a basis for the preparation of reliable annual financial statements in all material respects. AUDIT AND ADMINISTRATION Financial leadership in Murray & Roberts is continuously strengthened to cater for growth in the business, including ongoing employment and redeployment of senior financial executives. The Group financial director and lead external audit partner attend selected project and operating activity reviews throughout the year. Audit close-out meetings are held between external auditors and management at year-end. A detailed audit summary memorandum is prepared for all Group operating entities and a consolidated report is presented to the committee. There is an agreed procedure for the committee to seek professional independent advice at the Company’s expense. INTEGRATED REPORTING During the year, external service providers were appointed to assist in the preparation of the annual integrated report and to provide a partial assurance framework for sustainability information. The committee recommended for Board approval the annual integrated report and the Group’s annual financial statements. It is satisfied that they comply with International Financial Reporting Standards on a going concern basis following an assessment of solvency and liquidityrequirements. The Group’s annual financial statements will be open for discussion at the forthcoming Annual General Meeting where the committee chairman will be present to answer questions on the activities of the committee. ASSURANCE Group assurance has expanded its activities and made significant progress to ensure effective coverage of the Group’s operations, implementation of King III principles and recommendations, and sustainability assurance. The Group’s commitment to continuous improvement in achieving acceptable levels of assurance is underscored by various policy frameworks that were developed and implemented, including a stakeholder management framework, regulatory compliance and information management frameworks. Currently 15 of the Group’s operating companies utilise the opportunity management system (OMS). This project portfolio management system was developed in-house and continues to be enhanced to highlight project risks entering the Group’s environment. The multi-year rolling internal audit plan is designed to provide assurance that the major risks and key processes are effectively mitigated and managed, to recommend improvements and track the implementation of audit recommendations. The Group Integrated Assurance Framework governs and co-ordinates the overall approach to Group risk management. This entails understanding, identifying, reporting, managing and mitigating Group risk, and includes the process of independently auditing Group policies, plans, procedures, practices, systems, controls and activities to ensure that the Group achieves the level of operational efficiency and compliance required by the Board. The efforts of the various internal and external assurance providers are coordinated to ensure coverage of agreed risk areas and to minimise duplication and eliminate gaps. |
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