Audit committee report

Introduction

The audit committee presents its report for the financial year ended 30 September 2016. The committee has discharged all its responsibilities and carried out all the functions assigned to it in terms of section 94(7) of the Companies Act, No 71 of 2008, and as contained in the committee’s charter.

Membership

Shareholders appointed four members to the committee for the 2016 financial year at the annual general meeting on 3 February 2016. The current members are as follows:

Name Date of first appointment
CWN Molope (chairperson)* 1 June 2007
RC Andersen 21 November 2008
NV Lila 27 March 2014
IN Mkhari 27 March 2014

* Mrs Molope will step down as a member of the audit committee at the company’s annual general meeting on 1 February 2017.

Shareholders will be requested to approve the appointment of committee members for the 2017 financial year at the annual general meeting to be held on 1 February 2017. Following the decision of the chairperson to step down on 1 February 2017, the board has recommended that the remaining three members of the committee be re-elected by shareholders. A communication will be sent to shareholders in due course about the election of a fourth member to the committee.

The CVs of the committee members and their attendance at committee meetings can be found under board committees and Board of directors

Meetings

The committee meets at least twice per year and during the year under review the committee met six times. Out of the six meetings which were held, three were special committee meetings which considered Nampak Glass capitalisation and depreciation of furnace 3. The group chairman, chief executive officer (CEO), chief financial officer (CFO), internal auditors and external auditors all attend meetings of the committee by invitation. At its meetings, the committee reviews the group’s financial results, receives and considers reports from the internal and external auditors on the results of their work and attends generally to its responsibilities. The committee also meets separately with the internal and external auditors to obtain assurance that they have received full cooperation from management, while the committee chairperson meets regularly with key executives to review issues which require consideration by the committee.

Role of the committee

The committee operates within written terms of reference which are reviewed and updated regularly. A copy of the charter is available here. The responsibility of the committee includes:

  • the nomination for appointment as auditor of the company of a registered auditor who, in the opinion of the committee, is independent of the company;
  • the determination of the fees to be paid to the auditor and the auditor’s terms of engagement;
  • the determination of the nature and extent of any non-audit services which the auditor may provide to the company;
  • the pre-approval of any proposed contract with the auditor for the provision on non-audit services to the company;
  • the evaluation of the performance of the external auditor;
  • the review and evaluation of the effectiveness of the internal controls of the group (with reference to the findings of both the internal and external auditors);
  • monitoring and supervising the effective function of internal audit;
  • the appointment, performance assessment and dismissal of the chief internal audit executive;
  • the review of the annual financial statements, the interim reports and any other announcement regarding the group’s results or other financial information to be made public;
  • review of the process for financial reporting;
  • monitoring compliance with laws and regulations, material pending litigation, material defalcations, risk management, insurance covers, important accounting issues and specific disclosures in the financial statements; and
  • review and evaluation of the expertise and experience of the CFO.

Discharge of responsibilities

During the year under review the committee:

  • reviewed the interim and annual financial statements and recommended them for approval by the board;
  • reviewed the integrated report for 2016 and recommended it for approval by the board;
  • reviewed and satisfied itself that the company’s finance function was adequately resourced by people with appropriate expertise and experience and that the internal financial controls were effective;
  • satisfied itself that the CFO, Mr Glenn Fullerton, has appropriate expertise and experience;
  • resolved to continue to outsource the internal audit function to EY during the financial year;
  • approved the internal audit plans;
  • received and reviewed reports from both the internal and external auditors, which included commentary on effectiveness of the internal control environment, systems and processes and, where appropriate, made recommendations to the board;
  • reviewed the independence of the external auditors, Deloitte & Touche, and recommended them for appointment at the annual general meeting as auditors for the 2017 financial year, with Mr Trushar Kalan as the designated auditor. Mr Trushar Kalan was initially appointed as the individual registered auditor during the financial year ended 30 September 2015;
  • ensured that the appointment of the external auditors complied with the provisions of the Companies Act, No 71 of 2008, and other legislation relating to the appointment of auditors;
  • determined the fees to be paid to the external and internal auditors and their terms of engagement;
  • determined the nature and extent of non-audit services which may be provided by the external auditors and pre-approved the contract terms for the provision of non-audit services by the external auditors;
  • noted that it had not received any complaints, from within or outside the company, relating to the accounting practices and internal audit of the company, to the content or auditing of its financial statements, or any related matter;
  • was responsible for the oversight of financial reporting risks, internal financial controls, fraud risks as it relates to financial reporting and IT risks as it relates to financial reporting; and
  • reviewed with management legal and regulatory matters that could have a material impact on the group.
General

The internal and external auditors have unrestricted access to the committee.

During the year, the committee performed the functions required of an audit committee on behalf of all subsidiary companies in South Africa which are required to have an audit committee in terms of the Companies Act, No 71 of 2008.

CWN Molope
Chairperson of the audit committee

21 November 2016