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Report of the audit committee

for the year ended 30 June 2012

The audit committee has pleasure in submitting this report, which has been approved by the board and has been prepared in accordance with the South African Companies Act No 71 of 2008 (the Act) and incorporating the recommendations of King III.

Members of the audit committee and attendance at meetings

The audit committee consists of the non-executive directors listed below and meets at least four times per annum in accordance with its charter. All members are suitably skilled and experienced and act independently as described in the Act. The members of the committee in respect of the year ended 30 June 2012 comprised Mr MJ Leeming (chairman), Ms P Langeni, Mr RJA Sparks and Mr Y Waja (the committee), all of whom are independent non-executive directors of the company and whose appointments were approved by shareholders at the AGM held on 1 November 2011.

The same members are being recommended by the board for appointment for the financial year ending 30 June 2013. Their appointments are being put to shareholders for approval at the next AGM on 31 October 2012. The abridged curricula vitae of the members are included on pages 22 to 24 of the integrated annual report.

During the year under review, four meetings were held and attendance of those meetings is set out in the table below.

Member Meetings attended  
MJ Leeming (Chairman) 4  
P Langeni 4  
RJA Sparks 4  
Y Waja 4  

Functions of the audit committee

The audit committee has adopted a formal charter, approved by the board, setting out its duties and responsibilities as prescribed in the Act and incorporating additional duties delegated to it, by the board. The group applies a combined assurance model.

The committee is satisfied that, for the 2012 financial year, it has performed all the functions required to be performed by an audit committee as set out in the Act and the committee’s terms of reference.

The audit committee has discharged the functions in terms of its charter and ascribed to it in terms of the Act as follows:

Reviewed the interim, preliminary and year-end group financial statements and abridged financial statements, and integrated report, culminating in a recommendation to the board to adopt them. In the course of its review the committee:
  took appropriate steps to ensure the financial statements were prepared in accordance with International Financial Reporting Standards (IFRS), the AC 500 standards and the requirements of the Act;
  considered and, when appropriate, made recommendations on internal financial controls;
  dealt with any concerns or complaints on accounting policies, internal audit, the auditing or content of group annual financial statements, and internal financial controls; and
  reviewed matters that could have a significant impact on the organisation’s financial statements.
Reviewed external audit reports on the annual financial statements.
Reviewed the board-approved internal audit charter. No amendments were recommended to the board by the committee.
Reviewed and approved the internal audit plan.
Reviewed internal audit and risk management reports and, where relevant, made recommendations to the board.
Evaluated the effectiveness of risk management, controls and governance processes.
Considered reports relating to legal compliance and litigation, reported cases of fraud, and whistleblowing reports.
Reviewed sustainability requirements for external assurance of material sustainability issues.
The committee has satisfied itself that the external auditors, Deloitte & Touche, are independent of the group and that the appointment of Mr MJ Comber as the designated auditor and IFRS adviser is in compliance with the Auditing Profession Act, 2005 and the Listings Requirements of the Johannesburg Securities Exchange Limited (JSE) and recommending their reappointment by shareholders.
Approved audit fees and engagement terms of the external auditor.
Determined the nature and extent of allowable non-audit services and approved contract terms for non-audit services by the external auditor.

The functions of the committee are also performed for each subsidiary company of Imperial Holdings Limited that has not appointed an audit committee, provided that the committee delegates the performance of such functions to subcommittees referred to as finance and risk review committees. Divisional finance and risk review committees have been constituted and these committees report significant issues to the group audit committee. Each divisional finance and risk review committee is chaired by an independent chairman with no operational role in the group.

Internal audit

The audit committee has oversight of the group’s annual financial statements and reporting process, including the system of internal financial control. It is responsible for ensuring the group’s internal audit function is independent and has the necessary resources, standing and authority in the organisation to discharge its duties. The committee oversees cooperation between internal and external auditors, and serves as a link between the board of directors and these functions. The head of internal audit reports functionally to the chair of the committee and administratively to the chief executive.

Attendance

The internal and external auditors, in their capacity as auditors to the group, attended and reported at all meetings of the audit committee. The group risk management function was also represented by the head of risk. Executive directors and relevant senior managers attended meetings by invitation.

Confidential meetings

Audit committee agendas provide for confidential meetings between committee members and the internal and external auditors.

Independence of the external auditor

During the year the audit committee reviewed a representation by the external auditor and, after conducting its own review, confirmed the independence of the auditor, Deloitte & Touche.

Expertise and experience of financial director and the finance function

As required by 3.84(h) of the JSE Listings Requirements, the audit committee has satisfied itself that the financial director, Mr AH Mahomed, has the appropriate expertise and experience.

In addition, the committee satisfied itself that the composition, experience and skills set of the finance function met the group’s requirements.

Discharge of responsibilities

The committee determined that during the financial year under review it had discharged its legal and other responsibilities as outlined in its terms of reference. The board concurred with this assessment.

MJ Leeming
Chairman

21 August 2012

 

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