Group review
Sustainability
and governance
Annual financial statements
 

Audit committee report

 

Introduction

The audit committee comprises the following three independent non-executive directors:
  • ME King (Chairman);
  • Dr D Konar; and
  • MJ Shaw.

In addition to the committee members above, all directors of the Group have an open invitation (and in most instances do) attend meetings of the committee.

Background

The committee is pleased to present its report for the financial year ended 31 August 2009 as recommended by the King II report on Corporate Governance and in line with the Companies Act, 61 of 1973, as amended (the Act). The committee’s of reference that is in line with the Act and is approved by the board.

Duties carried out

During the financial year ended 31 August 2009 the audit committee carried out its duties as set out in the King II Report, the Act, the committee’s terms of reference and in accordance with its annual plan. As an overview only, and not to be seen as an exhaustive list, the committee:
  • reviewed the principles, policies and practices adopted in preparation of the financial statements of companies in the JD Group to ensure that the annual financial statements of the Group comply with all statutory requirements;
  • reviewed and commented on the Group annual financial statements and the accounting practices;
  • reviewed interim reports, result announcements and other releases of price sensitive information;
  • reviewed the quality and effectiveness of the external audit process;
  • reviewed the external auditor’s management letters and management’s responses;
  • reviewed significant judgements and/or unadjusted differences resulting from the audit, as well as any reporting decisions made;
  • monitored compliance with accounting standards and legal requirements;
  • ensured that all regulatory compliance matters have been considered in the preparation of the financial statements;
  • ensured that the sustainability issues in the integrated report are reliable and do not conflict with the financial information;
  • satisfied itself through enquiry that Deloitte & Touche and X Botha, the designated auditor, are independent as defined in terms of prescribed legislation;
  • satisfied itself through enquiry that X Botha need not retire in terms of the legislative auditors’ and that he is qualified to serve as the designated auditor;
  • nominated the reappointment of Deloitte & Touche and X Botha as the registered independent auditors;
  • ensured that the appointment of Deloitte & Touche complied with the provisions of all other legislation relating to the mandate is guided by a formal detailed terms appointment of auditors;
  • set the terms of Deloitte & Touche’s engagement;
  • determined the fees to be paid to Deloitte & Touche and ensured that the fees are fair and equitable;
  • maintained a non-audit services policy which determines the nature and extent of any non-audit services that Deloitte & Touche may provide to the Group;
  • preapproved a number of proposed contracts with Deloitte & Touche for the provision of non-audit services to the Group;
  • is satisfied that the independence of the independent auditors was not compromised by the scale of non-audit related work and fees paid to them;
  • ensured that the monetary scope of the non- audit services carried out by Deloitte & Touche has been disclosed in the annual financial statements of the Group;
  • ascertained whether Deloitte & Touche has reported any reportable irregularities to IRBA;
  • considered and satisfied itself of the appropriateness of the expertise and experience of the Group financial director;
  • reviewed the management of risk and the monitoring of compliance and legal governance effectiveness within the Group and ensured that the Group’s existing combined assurance model addressed the significant risks facing the Group;
  • ensured that close cooperation exists between Internal Audit, Risk Management and the Legal/Compliance functions;
  • formed an integral component of the risk management process and, amongst others, monitored:
    • financial reporting risks;
    • internal financial controls;
    • fraud risks as they relate to financial reporting; and
    • IT risks as they relate to financial reporting;
  • played an oversight role in respect of the Internal Audit function to ensure its effectiveness;
  • reviewed developments in corporate governance and best practice and considered their impact and implications on the Group and in particular ensured that the principles of the King II Report are embedded within the Group;
  • monitored the application and effectiveness of the Code of Conduct (ethics) within the Group;
  • secured feedback from the audit/risk committees of subsidiaries in the Group in fulfilling its oversight role in this respect;
  • reviewed and aligned the committee’s terms of reference with the latest applicable legislation and governance codes; and
  • reviewed the text of various reports, including the corporate governance statement and the sustainability report, for inclusion in this annual report.

Annual financial statements

The audit committee has evaluated the consolidated annual financial statements for the year ended 31 August 2009 and concluded that it complies, in all material aspects, with the requirements of the Act and International Financial Reporting Standards. The committee has therefore recommended the annual financial statements for approval to the board.

Conclusion

Given the above, the committee is of the opinion that it has appropriately addressed its key responsibilities in respect of:
  • internal control;
  • financial accounting control; and
  • stakeholder reporting.

On behalf of the audit committee
13 November 2009