Governance and Sustainability

Audit committee

Terms of reference





The audit committee (“the committee”) is constituted as a statutory committee in respect of its statutory duties in terms of section 94(7) of the Companies Act 2008 no. 71 of 2008 (“the Companies Act”) and a committee of the board in respect of all other duties assigned to it by the board. The duties and responsibilities of the members of the committee are in addition to those as members of the board.


The deliberations of the committee do not reduce the individual and collective responsibilities of board members (except with respect to the appointment, fees and terms of engagement of the external auditor) in regard to their fiduciary duties and responsibilities, and they must continue to exercise due care and judgement in accordance with their statutory obligations.


These terms of reference are subject to the provisions of the Companies Act, the Company’s Memorandum of Incorporation and any other applicable law or regulatory provision.





The mission of the committee is to assist the board in discharging its fiduciary duties relating to the safeguarding of assets, the operation of adequate and effective systems, control processes, the preparation of accurate financial reporting and statements in compliance with all applicable legal requirements and accounting standards and the oversight of the external and internal audit appointments and functions.


In addition to assisting the board as set out in paragraph 2.1, the committee shall perform all the functions required in law to be performed by the committee, including as required by section 94(7) of the Companies Act.


The committee shall perform the functions required under section 94(7) of the Companies Act on behalf of all South African subsidiaries of the company other than those subsidiaries whose board determines to appoint its own audit committee.


The terms of reference of the committee are summarised herein and should be reviewed at least annually for approval by the board.





The committee shall consist of no less than three members, all of whom shall be non-executive directors who act independently of the Company. Members of the committee shall not be:



involved in the day-to-day management of the Company’s business or have been so involved at any time during the previous financial year;



a prescribed officer, or full-time employee, of the Company or another related or inter-related Company, or have been such an officer or employee at any time during the previous three financial years;



a material supplier or customer of the Company, such that a reasonable and informed third party would conclude in the circumstances that the integrity, impartially or objectivity of that director is compromised by that relationship; or



related to any person who falls within any of the criteria in (i), (ii), and (iii) above.


At least one-third of the members of the Company’s audit committee at any particular time must have academic qualifications, or experience, in economics, law, corporate governance, finance, accounting, commerce, industry, public affairs or human resource management.


A quorum shall be a majority of the members comprising the committee from time to time, present throughout the meeting.


The committee shall be elected by the shareholders of the Company at each annual general meeting on recommendation of the Company’s nomination committee.


Decisions of the committee shall be carried by vote of the majority of members present at meetings.


The Chairman of the committee (“the Chairman”) (who shall not be the Chairman of the board of the Company) shall be appointed by the board.


The board shall be entitled to fill any vacancies.


The Company Secretary shall be the secretary of the committee.


Attendance at meetings



The board Chairman, the Chief Executive, Financial Director or Chief Financial Officer, Head of Internal Audit and representatives of the external auditors shall be invited to attend the meetings. Other board members shall also have the right of attendance.


However, at least once a year the committee shall meet with the external auditors without other board members, the Chief Financial Officer or the Head of Internal Audit being present. Likewise, the committee should meet at least once a year with the Head of Internal Audit without the external auditors, other board members or the Chief Financial Officer being present.


Minutes of the committee meetings shall be circulated to all the directors by the Company Secretary.


The committee may hold its scheduled and/or ad hoc meetings either in person and/or via suitable electronic means including, without limitation, telephone conference or video calls or a combination as may be deemed appropriate by the members.


Responsibility and accountability



The primary responsibility of the committee is to oversee the integrated financial reporting process of the Company and of such companies in the Group as are identified by the committee from time to time on behalf of the board. While the committee has the responsibilities and powers set forth in this terms of reference, it is not the duty of the committee to plan or conduct audits or to determine that the Company’s financial statements are complete and accurate and are in accordance with the applicable accounting standards. Management is responsible for preparing the Company’s financial statements and the external auditors are responsible for auditing those financial statements in terms of generally accepted auditing standards.


The committee has an independent role with accountability to both the board and shareowners regarding the manner in which it discharges its duties.


The Chairman, or in his/her absence, another member of the committee nominated by the Chairman, shall report to the board at each board meeting on matters relating to the committee in accordance with its terms of reference.


The Chairman, or in his/her absence, another member of the committee nominated by the Chairman, shall attend the annual general meeting to answer questions on matters falling within the ambit of the committee.


All members of the committee should be present at the annual general meeting.


Frequency of meetings



Meetings shall be held not less than four times a year and as many times as the committee deems necessary. The four compulsory meetings should be held:



prior to the commencement of the annual external audit to approve the audit plan, approach and audit fee estimate;



prior to the board’s approval of the interim results, for recommendation to the board;



after the completion of the annual external audit to approve the profit and dividend announcement for recommendation to the board (the designated auditor, i.e. the audit partner, must attend this meeting); and



to approve the integrated annual financial statements for recommendation to the board (the designated auditor, i.e. the audit partner, must attend this meeting which must take place not more than one month before the board meeting at which these financial statements are submitted for approval).


The board or any member thereof, the external auditors or the Head of Internal Audit may request the Chairman to call a meeting if they consider that one is necessary.





The committee acts in accordance with its statutory duties and in terms of the delegated authority of the board as recorded in these terms of reference.


The committee is authorised by the board to perform and investigate any activity within its terms of reference. It is authorised to seek any information it requires from any employee in the Group and any Company records, facilities and other resources necessary to discharge its duties. All employees are directed to cooperate with any requests made by the committee.


The committee is authorised by the board to obtain outside legal or other independent professional advice and to secure the attendance of outsiders with relevant experience and expertise if it considers this necessary.





The duties of the committee shall be:



to nominate the external auditors annually for appointment by shareowners at the annual general meeting (including any vacancies and/or rotation of such external auditors), to determine the fees payable to the external auditors and their terms of engagement and to evaluate their performance as well as ensure their appointment (including that of the individual/designated auditor and IFRS advisor) to the Company and to its major subsidiaries complies with the Companies Act, the Auditing Profession Act, 2005 and the Listings Requirements of the JSE Limited (“the JSE”);



to satisfy and report on the independence of the external auditors in the annual financial statements. In considering whether the external auditors are independent, the committee must, in relation to the Company and any other member of the Group: ascertain that the external auditors do not, except as external auditors or in rendering non-audit services
pre-approved by the committee, receive any direct or indirect remuneration or other benefit;

consider the extent of any consultancy, advisory or other work undertaken by the external auditors;

consider whether the external auditors’ independence may have been prejudiced as a result of any previous appointment as external auditors; and

consider compliance with other criteria specified for independence or conflict of interest by the
Independent Regulatory Board for Auditors.


To discuss with the external auditors and approve the overall scope and plan for their audits, including the adequacy of staffing and levels of compensation as well as any other terms of engagement.


To evaluate the independence and effectiveness of the external auditors and to consider any non-audit services rendered by them to ensure their independence is not substantially impaired. To determine the nature and extent of any non-audit services to be rendered to the Group and to pre-approve any proposed contract with the external auditors for such services.


To consider and satisfy itself, on an annual basis, of the appropriateness of the expertise and experience of the
Chief Financial Officer and of the expertise and adequacy of the finance function.


To overview the Annual Integrated Report and have regard to all factors that impact on the integrity of the Annual Integrated Report. In particular, the committee shall:



review the disclosure of sustainability issues in the Annual Integrated Report to ensure such disclosure is reliable and does not conflict with the financial information;



ensure that the findings of the annual finance function review are disclosed in the Annual Integrated Report;



include the committee’s view on the annual financial statements and accounting practices;



provide a report to shareowners regarding the manner in which the committee has discharged its statutory duties;



include an opinion on effectiveness of internal financial control;



to oversee the findings of the external assurance provider on material sustainability issues; and



recommend the Annual Integrated Report for approval by the board.


To review the interim report (and determine whether the interim report should be subject to an independent review by the external auditors), the preliminary profit announcement and the annual financial statements, before submission to the board, focusing particularly on:



  • the valuation of unlisted investments and loans;

  • contingent liabilities;

  • tax and litigation matters involving uncertainty;

  • any changes in accounting policies and practices;

  • significant financial estimates based on judgement which are included in the financial statements;

  • significant adjustments resulting from the annual external audit;

  • significant transactions which are not a normal part of the Company’s business;

  • the going concern assumption;

  • compliance with accounting standards, local and international;

  • compliance with stock exchange, statutory and other relevant requirements; and

  • internal control.


To discuss problems and reservations arising from the external audits and any matters the external auditors may wish to discuss (in the absence of management where necessary).


To receive and deal appropriately with any concerns or complaints (whether from within or outside the Company or on its own initiative) relating to:



  • the accounting practices and internal audit of the Company;

  • the content or auditing of the Company’s financial statements;

  • the internal financial controls of the Company; or

  • any related matter.


To review the external auditors’ interim and final reports to the committee, to identify key issues arising and to ensure their follow-up.


To review and evaluate the internal audit activities and to discuss the overall scope and plan for the internal audit, its independence and effectiveness and programme; to review compliance with the internal audit mandate, as approved by the committee and the board and to review and approve same at least annually; to ensure coordination between the internal and external auditors; and to ensure that the internal audit function is adequately resourced and has appropriate standing within the Group. In addition, where major deficiencies or breakdowns in controls or procedures have been identified, ensuring that appropriate action is taken by management and to review corrective action taken; and to consider the appointment, dismissal or re-assignment of the Head of Internal Audit.


To consider the major findings of any internal investigations and management’s response.


To make submissions to the board on any matter concerning the Company’s accounting policies, financial control, records and reporting.


To monitor compliance with the Group’s code of conduct, to review it and any significant breaches of such a code.


To consider other topics, or other matters or oversight functions as defined or requested by the board.


To review the adequacy of the systems of internal financial control in operation in the Company and in the Group’s subsidiary companies.


To consider, along with the Group’s legal counsel, any legal matters that could have a significant impact on the Group financial statements.


To review and report to the board on the Group’s compliance with the King Code of Corporate Practice and Conduct in terms of the JSE Listings Requirements for compliance insofar as this relates to the annual, interim and preliminary profit reports.


To prepare and ensure inclusion in the financial statements to be issued in respect of that financial year, a report:



describing how the committee carried out its functions;



stating whether the committee is satisfied that the external auditors were independent of the Company;



confirming that it has considered and satisfied itself of the appropriateness of the expertise and experience of the Chief Financial Officer; and



commenting in any way the committee considers appropriate on the financial statements, the accounting practices and the internal financial control of the Company.


To receive and consider the report of the risk committee on matters relating to risks and related controls which have been dealt with by that committee in terms of its mandate.


To oversee and review the risk areas of the Company’s operations to be covered in the scope of internal and external audits including internal financial controls, fraud and information technology risks as they relate to financial reporting risks.


To ensure that a combined assurance model is applied to provide a coordinated approach to all assurance activities and which addresses the significant risks facing the Company.


To evaluate the performance of the committee by way of an annual self-evaluation as part of the board’s review of the committee’s performance and effectiveness.