Report in terms of the Public Finance Management Act, 1 of 1999

The audit and risk committee reports that it has adopted appropriate formal terms of reference as its audit and risk committee charter, has regulated its affairs in compliance with this charter, and has discharged all of its responsibilities contained therein.

In the conduct of its duties, the audit and risk committee has, inter alia, reviewed the following:

• the adequacy, reliability and accuracy of financial information provided by management
• accounting and auditing concerns identified as a result of internal and external audits, including reportable irregularities
• the effectiveness of the system and process of risk management including the following specific risks:
  – financial reporting
  – internal financial controls
  – fraud risks relating to financial reporting
  – information technology risks relating to financial reporting
• all factors and risks that may impact on the integrity of the integrated report
• the disclosure of sustainability issues in the integrated report to ensure that it is reliable and it does not conflict with the financial information
• the expertise, resources and experience of the finance function
• the independence of and objectivity of the external auditors
• the effectiveness of the internal control systems
• the effectiveness of the assurance and forensic department
• the activities of the assurance and forensic department, including its annual work programme, co-ordination with the external auditors, the reports of significant investigations and the responses of management to specific recommendations
• the effectiveness of the entity’s compliance with legal and regulatory provisions

Eskom is in the process of developing a combined assurance model to ensure that it is applied going forward, in order to provide a coordinated approach to all assurance activities.

The audit and risk committee is of the opinion, based on the information and explanations given by management and the assurance and forensic department and discussions with the independent external auditors on the result of their audits, that the internal accounting controls are adequate to ensure that the financial records may be relied upon for preparing the financial statements, and accountability for assets and liabilities is maintained. Having considered the matters set out in section 270A(5) of the Companies Act of South Africa as amended by the Corporate Law Amendment Act, the audit and risk committee is satisfied with the independence and objectivity of the external auditors.

Nothing significant has come to the attention of the audit and risk committee to indicate that any material breakdown in the functioning of these controls, procedures and systems has occurred during the year under review.

The audit and risk committee has evaluated the financial statements of Eskom Holdings Limited and the group for the year ended 31 March 2011 and based on the information provided to the audit and risk committee, considers that they comply, in all material respects, with the requirements of the Companies Act of South Africa, 61 of 1973, as amended, the Public Finance Management Act, 1 of 1999, as amended, and International Financial Reporting Standards. The audit and risk committee concurs with the board of directors and management that the adoption of the going-concern premise in the preparation of the financial statements is appropriate. The audit and risk committee has therefore, at their meeting held on 30 May 2011, recommended the adoption of the financial statements by the board of directors.

JRD Modise
Chairman
31 May 2011