Audit Committee report

17869

Richard Dunne

 
This report is provided by the Audit Committee appointed in respect of the 2012 financial year of Amplats in compliance with section 94(7)(f) of the Companies Act, 2008 (the Act).

The Committee’s operation is guided by a detailed charter that is informed by the Act and King III and approved by the board. A copy of the charter is available on the Company’s website.

MEMBERSHIP

The Committee was appointed by the shareholders at the annual general meeting held on Friday, 30 March 2012 in respect of the 2012 financial year. Shareholders will be requested to approve the appointment of the members of the Audit Committee for the 2013 financial year at the annual general meeting scheduled for 
26 April 2013. It comprises solely independent non-executive directors.

During the year under review the member were:

  • Richard Dunne (chairman)
  • Tom Wixley (retired 30 March 2012)
  • Valli Moosa 
    (appointed 25 September 2012)
  • John Vice 
    (appointed 30 November 2012)
  • Albertinah Kekana 
    (Resigned 25 September 2012)

Subsequent to year end Sonja Sebotsa resigned 1 February 2013.

PURPOSE

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 the finance director, external auditors and the head of internal audit access to the chairman of the Committee or any other member of the Committee as is required in relation to any matter falling within the remit of the Committee
  • to meet with the external auditors at least on an annual basis
  • to provide a forum for discussing business risk and control issues and developing recommendations for consideration by the board
  • to monitor enterprise-wide, operational and market, regulatory, safety and other risks, as well as to ensure adequate mitigation thereof by way of monitoring controls that have been implemented to curtail and minimise risk
  • to review the holding and Group company financial statements and reports and reports from subsidiary company and managed joint-venture audit committees where applicable
  • to consider the scope and conclusion of the report by the independent assurance providers in respect of the safety and Sustainable Development Report and to ensure that the report is consistent with the Group financial statements
  • to oversee the activities of and ensure co-ordination between the activities of internal and external audit
  • to perform duties that are assigned to it by the Act, as amended, and as governed by other legislative requirements, including the statutory Audit Committee functions required 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
  • to conduct annual reviews of the Committee’s work and terms of reference and make recommen­­­­dations to the board to ensure that the Committee operates at maximum effectiveness

EXECUTION OF FUNCTIONS

The Audit Committee has executed its duties and responsibilities during the financial year in accordance with its terms of reference as they relate to the Group’s accounting, internal auditing, internal control and financial reporting practices.

During the year under review:

  • In respect of the external audit, the Committee, among other matters:
  • nominated Deloitte & Touche and J Welch as the external auditor and designated auditor respectively to the shareholders for appointment as auditor for the financial year ended 31 December 2012, and ensured that the appointment complied with all applicable legal and regulatory requirements for the appointment of an auditor. The Committee confirms that the auditor and the designated auditor are accredited by the JSE
  • approved the external audit engagement letter, the plan and the budgeted audit fees payable to the external auditor
  • reviewed the audit, evaluated the effectiveness of the auditor and its independence and evaluated the external auditor’s internal quality control procedures
  • obtained an annual written statement from the auditor that its independence was not impaired
  • determined the nature and extent of all non-audit services provided by the external auditor and preapproved all non-audit services undertaken
  • obtained assurance that no member of the external audit team was hired by the Company or its subsidiaries during the year
  • obtained assurances from the external auditor that adequate accounting records were being maintained
  • considered whether any reportable irregularities were identified and reported by the external auditors in terms of the Auditing Profession Act, 2005, and determined that there were none
  • nominated the external auditor and the designated independent auditor for each of the South African subsidiary companies
  • In respect of the financial statements, the Committee, among other matters:
  • confirmed the going concern as the basis of preparation of the interim and annual financial statements
  • reviewed compliance with the financial conditions of loan covenants and determined that the capital of the Company was adequate
  • examined and reviewed the interim and annual financial statements, as well as all financial information disclosed to the public prior to submission and approval by the board
  • ensured that the annual financial statements fairly present the financial position of the Company and of the Group as at the end of the financial year and the results of operations and cash flows for the financial year and considered the basis on which the Company and the Group was determined to be a going concern
  • considered accounting treatments, significant unusual transactions and accounting judgements
  • considered the appropriateness of the accounting policies adopted and changes thereto
  • reviewed the external auditor’s audit report
  • reviewed the representation letter relating to the Group financial statements which was signed by management
  • considered any problems identified and reviewed any significant legal and tax matters that could have a material impact on the financial statements
  • met separately with management, external audit and internal audit
  • In respect of internal control and internal audit, including forensic audit, the Committee, among other matters:
  • reviewed and approved the annual internal audit charter and audit plan and evaluated the independence, effectiveness and performance of the Internal Audit Department and compliance with its charter
  • considered the reports of the internal auditor and external auditor on the Group’s systems of internal control including financial controls, business risk management and maintenance of effective internal control systems
  • received assurance that proper and adequate accounting records were maintained and that the systems safeguarded the assets against unauthorised use or disposal thereof
  • reviewed significant issues raised by the internal and forensic audit processes and the adequacy of corrective action in response to significant internal and forensic audit findings
  • assessed the adequacy of the performance of the internal audit function, and assessed the performance of the head of the internal audit function and the adequacy of the available internal audit resources and found them to be satisfactory
  • based on the above, formed the opinion that there were no material breakdowns in internal control, including financial controls, business risk management and maintaining effective material control systems
  • In respect of information technology, which will continue to be an outsourced shared service from Anglo Operations Limited, the board had officially delegated the responsibility of IT governance to the Audit Committee. The Committee, insofar as relevant to its functions:
  • conducted an assessment during the second quarter of 2012 to review the internal controls that management had instituted to ensure effective governance of information technology (IT) in line with the King III requirements. The Committee would continue to perform an oversight role to ensure enhanced governance of IT on behalf of the board. In accordance with the Approvals framework, an IT investment report for IT investments over R500 million and/or the top 10 IT investments would be submitted for consideration and approval by the board
  • implemented the COBIT (Control Objectives for Information and related Technology) framework as the official governance compliance framework for IT. A detailed mapping of the current maturity of the IT organisation against a desired end state maturity of the aforementioned COBIT areas was conducted. This mapping formed the mainstay and logical structure for the review of the Anglo American Platinum IM Governance arrangements. It also acted as the mechanism to monitor, evaluate and access the ongoing status and overall compliance with statements of intent and how gaps would be closed
  • reviewed IT risks and governance
  • reviewed the Group’s policies on information technology risks, and found them to be sound
  • In respect of risk management, the Committee has:
  • reviewed the Group’s policies on risk assessment and risk management, as they pertain to financial reporting and the going-concern assessment, and found them to be appropriate
  • considered and reviewed the findings and recommendations of the S&SD Committee
  • received a written assessment of the effectiveness of the Company’s system of internal controls and risk management from Anglo Business Assurance Services Department of Anglo Operations Limited
  • In respect of sustainability issues contained in the Sustainable Development Report, the Committee has:
  • overseen the process of sustainability reporting and considered the findings and recommendations of the S&SD Committee
  • met with PricewaterhouseCoopers (PwC), Company senior management and the internal auditors to consider the PwC findings on assurance, as well as to make appropriate enquiries from management and has, through this process, received the necessary assurances that material disclosures are reliable and do not conflict with the financial information
  • In respect of legal and regulatory requirements to the extent that it may have an impact on the financial statements, the Committee:
  • reviewed with management legal matters that could have a material impact on the Group
  • reviewed with the Company’s internal counsel the adequacy and effectiveness of the Group’s procedures to ensure compliance with legal and regulatory responsibilities
  • monitored complaints received via the Group’s ethics line, including complaints or concerns regarding accounting matters, internal audit, internal accounting controls, contents of the financial statements, potential violations of the law and questionable accounting or auditing matters
  • considered reports provided by management, the internal auditor and the external auditor regarding compliance with legal and regulatory requirements
  • In respect of the co-ordination of assurance activities, the Committee:
  • reviewed the plans and work outputs of the external and internal auditors and concluded that these were adequate to address all significant financial risks facing the business
  • considered the expertise, resources and experience of the finance function and concluded that these were appropriate
  • considered the appropriateness of the experience and expertise of the finance director and concluded that these were appropriate

INDEPENDENCE OF EXTERNAL AUDITOR

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 auditor does not, except as external auditor or in rendering permitted non-audit services, receive any remuneration or other benefit from the Company.
  • The auditor’s independence was not impaired by any consultancy, advisory or other work undertaken by the auditor.
  • The auditor’s independence was not prejudiced as a result of any previous appointment as auditor.
  • 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 Amplats for the year ended 31 December 2012, the Committee is of the view that in all material respects they comply with the relevant provisions of the Act and IFRS and fairly present the consolidated and separate financial position at that date and the results of operations and cash flows for the year then ended. The Committee has also satisfied itself of the integrity of the remainder of the integrated report. Having achieved its objectives, the Committee has recommended the financial statements and integrated report for the year ended 31 December 2012 for approval to the board. The board has subsequently approved the financial statements, which will be open for discussion at the forthcoming annual general meeting.

On behalf of the Committee

Richard Dunne_fmt

 Richard Dunne

Chairman of the Audit Committee

Johannesburg

1 February 2013