This is the report of the audit committee (committee) of The Bidvest Group Limited appointed for the financial year ended June 30 2011 in compliance with the Companies Act, 2008 as amended (the Act) and in terms of the JSE listing requirements.
The committee has detailed terms of reference that comply with the Act and King III and are approved by the board. Copies of the terms of reference are available from the company secretary on request.
The board of directors appointed the committee for the 2011 financial year. At the annual general meeting scheduled for November 21 2011, shareholders will be asked to approve the appointment of the chairman and members of the committee for the 2012 financial year.
The committee consists solely of independent non-executive directors who are all financially literate.
The members are NG Payne (chairman), D Masson, NP Mageza and JL Pamensky.
The purpose of the committee is:
- To assist the board in discharging its duties relating to the safeguarding of assets, the operation of adequate systems, control and reporting processes, and the preparation of accurate reporting and financial statements in compliance with the applicable legal requirements and accounting standards,
- To provide management, external and internal auditors access to the chairman or any other member of the committee about any matter within the committeeâ€™s scope,
- To meet separately with the external and internal auditors at least once a year,
- To provide a forum for discussing business risk and control issues and developing recommendations for consideration by the board,
- To monitor enterprise-wide, operational, market, regulatory, safety and other risks, and to monitor controls designed to minimise risk,
- To review the Companyâ€™s integrated annual report, including the annual financial statements, as well as its interim report and any other public reports or announcements containing financial information,
- To consider and recommend to the board whether external assurance should be provided on the sustainability report and, in conjunction with the risk committee, to ensure that the report is consistent with the annual financial statements,
- To oversee the activities of, and to ensure coordination between, the activities of internal and external audit,
- To perform duties assigned to it under the Act and other legislation, including statutory audit committee functions for subsidiary companies,
- To receive and deal with any complaints concerning the accounting practices, internal audit or the content and audit of its financial statements or related matters, and
- To annually review the committeeâ€™s work and terms of reference and to make recommendations to the board to ensure its effectiveness.
Duties carried out
The committee has performed its duties and responsibilities during the financial year according to its terms of reference.
- Nominated Deloitte & Touche as auditors and TJ Brown as the independent auditor and designated audit partner, respectively to the shareholders for appointment as auditors for the financial year ended June 30 2011, and ensured that the appointments complied with legal and regulatory requirements for the appointment of an auditor,
- Confirmed that the independent auditor and the designated audit partner are accredited by the JSE,
- Approved the external audit engagement letter, the audit plan and the budgeted audit fees payable to the external auditors,
- Reviewed the audit and evaluated the effectiveness of the independent auditors,
- Obtained a statement from the independent auditors confirming that its independence was not impaired,
- Determined the nature and extent of all non-audit services provided by the independent auditors and preapproved all non-audit services undertaken,
- Obtained assurances from the independent auditors that adequate accounting records were being maintained,
- Confirmed that no reportable irregularities had been identified or reported by the independent auditors under the Auditing Profession Act, and
- Nominated the independent auditors and the designated audit partner for each of Bidvestâ€™s South African subsidiary companies.
- Confirmed, based on managementâ€™s review, that the interim and annual financial statements were prepared on the going concern basis,
- Examined the interim and annual financial statements and other financial information made public, prior to their approval by the board,
- Considered accounting treatments, significant or unusual transactions and accounting judgements,
- Considered the appropriateness of accounting policies and any changes made,
- Reviewed the independent auditorâ€™s audit report,
- Reviewed the representation letter relating to the annual financial statements signed by management,
- Considered any problems identified as well as any legal and tax matters that could materially affect the financial statements,
- Met separately with management, external audit and internal audit, and
- Concluded that the annual financial statements fairly present the financial position of the Group and Company at the end of the financial year and the results of its operations and cash flows for the financial year then ended.
Internal control and internal audit
- Reviewed and approved the annual internal audit plans and evaluated the independence, effectiveness and performance of the internal audit providers. The three year rolling internal audit and combined assurance plans are designed to enable full reporting in terms of King III by the end of the 2012 financial year,
- Considered the reports of the internal auditors and independent auditors on the Groupâ€™s systems of internal control including financial, controls, business risk management and maintenance of effective internal control systems,
- Received assurances that proper accounting records were maintained and that the systems safeguarded the Groupâ€™s assets against unauthorised use or disposal,
- Reviewed issues raised by internal audit and the adequacy of corrective action taken by management in response,
- Assessed the adequacy of the performance of the internal audit function and found it satisfactory, and
â€˘ Based on the above, the committee formed the opinion that the business units which have a high dependancy on internal financial controls have been assessed as being adequate and effective.
Risk management and information technology
- Reviewed the Groupâ€™s policies on risk assessment and risk management, including fraud risks and information technology risks and found them to be sound, and
- Received written assessments of the effectiveness of the Groupâ€™s system of internal controls and risk management from the internal auditors.
Legal and regulatory requirements
- Reviewed with management legal matters that could have a material impact on the Group,
- Reviewed with the Companyâ€™s legal counsel the adequacy and effectiveness of the Groupâ€™s procedures to ensure compliance with legal and regulatory responsibilities, and
- Considered reports provided by management, internal audit and the independent auditors regarding compliance with legal and regulatory requirements.
The committee reviewed the plans and reports of the external and internal auditors and other assurance providers including management, and concluded that these were adequate to address all significant financial risks facing the business. Our intention in future is to show a separate report on combined assurance.
Financial director and finance function
- Considered the appropriateness of the experience and expertise of the Group financial director and concluded that these were appropriate, and
- Considered the expertise, resources and experience of the finance function and concluded that these were appropriate.
Independence of independent auditors
The committee is satisfied that Deloitte & Touche is independent of the Group after taking the following factors into account:
- Representations made by Deloitte & Touche to the committee,
- The auditors do not, except as independent auditors or in rendering permitted non-audit services, receive any remuneration or other benefit from the Group,
- The auditorsâ€™ independence was not impaired by any consultancy, advisory or other work undertaken,
- The auditorsâ€™ independence was not prejudiced as a result of any previous appointment as auditors, and
- The criteria specified for independence by the Independent Regulatory Board for Auditors and international regulatory bodies.
Annual financial statements
Following the review by the committee of the annual financial statements of The Bidvest Group Limited for the year ended June 30 2011, the committee is of the view that, in all material respects, it complies with the relevant provisions of the Act and IFRS and fairly presents the financial position at that date and the results of its operations and cash flows for the year then ended. In conjunction with the risk committee, the committee has also satisfied itself as to the integrity of the remainder of the integrated annual report. Having achieved its objectives
for the financial year, the committee recommended the annual financial statements and annual integrated report for the year ended
June 30 2011 for approval to The Bidvest Group Limited board.
Signed on behalf of the committee by:
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