INTEGRATED ANNUAL REPORT 2011 GRI RESPONSES  

Audit committee report

for the year ended 30 September 2011

The audit committee has conducted its work in accordance with the written terms of reference approved by the board, information about which is recorded in the corporate governance report and is pleased to present their report in terms of the Companies Act and the JSE Listings Requirements for the financial year ended 30 September 2011.

The committee is satisfied that it has performed both the statutory requirements for an audit committee as set out in the Companies Act as well as the functions set out in the terms of reference and that it has therefore complied with its legal, regulatory or other responsibilities.

Membership

In the 2011 financial year the audit committee consisted of the following independent non-executive directors appointed by the shareholders at the annual general meeting held on 26 January 2011: Messrs AGK Hamilton (Chairman), MJN Njeke and SS Ntsaluba. Advocate SAM Baqwa SC was nominated by the board to join the committee from 20 July 2011 subject to the approval of shareholders at the next annual general meeting.

Their full profiles including their qualifications are fully set out on page 104.

The committee met five times during the 2011 financial year. Details of the meetings and attendance are fully set out in the corporate governance section of the report on page 114.

External audit

The committee

Nominated and recommended to shareholders Deloitte & Touche as independent external auditors and the appointment of Mr G Berry as the independent designated auditor for the financial year ending 30 September 2011 in compliance with the Companies Act and the Listings Requirements of the JSE Limited;
Nominated Deloitte & Touche as independent external auditors and the designated audit partner for Barloworld's subsidiary companies;
Considered and confirmed the proposed external audit fees for each division and the group in consultation with group management and approved the external audit engagement letter;
Reviewed and approved the policy for non-audit services that can be provided by external auditors and the pre-approval authorisation process for those services that the external auditors may provide; and
Considered to its satisfaction the independence, objectivity and effectiveness of the external auditors and ensured that the scope of their additional (non-audit) services provided were not such that they could be seen to have impaired their independence.

Internal control and Internal audit

The committee

Considered the appropriateness of the internal audit charter and recommended the approval of the charter by the board;
Approved the one-year operational internal audit work plan as well as the capacity and resources within the internal audit function to execute its work plan and monitored adherence of internal audit to its annual plan;
Monitored and supervised the functioning and performance of internal audit, compliance with its charter and reviewed and approved the annual risk-based audit plans, resources and budgets;
Introduced a plan for an independent quality review of the internal audit function on at least a five-yearly basis;
Reviewed the appropriateness of the company’s combined assurance model to ensure that the significant risks identified in the high-level risk assessments are adequately addressed;
Received and reviewed reports from both internal and external auditors concerning the effectiveness of the internal control environment, systems and processes as well as their concerns arising out of their audits and requested appropriate responses from management;
Reviewed the results of the financial control management self-assessments as contained in the Barloworld internal control matrix which is completed in respect of all business units and operations in the Barloworld group;
Reviewed and evaluated the nature and extent of the documented review of internal financial controls performed by internal audit and evaluated whether any weaknesses identified in such financial controls were considered sufficiently material to be reported to the board and the stakeholders;
Reviewed the report prepared by internal audit regarding the risk management process in the company and the level of embeddedness of such processes within each operation division;
Reviewed the group information security policy and the results of the internal self-assessments of the levels of control in place across the group;
Reviewed the group fraud policy as well as the group policy covering how its officers and employees deal with public officials, agents, distributors, intermediaries, trade-related restrictions, export control and sanctions; and
Reviewed the results of divisional and business unit disaster recovery self-assessments, the testing of such plans and the internal audit review of such disaster recovery plans.

Based on the results of the formal documented review of the group’s system of internal controls and risk management, including the design, implementation and effectiveness of the internal financial controls conducted by the internal audit function during the 2011 year and considering information and explanations given by management and discussions with the external auditor on the results of the audit, nothing has come to the attention of the committee that caused it to believe that the company’s system of internal controls and risk management is not effective and that the internal financial controls do not form a sound basis for the preparation of reliable financial statements.

Expertise and experience of the finance director and the finance function

The committee

Reviewed the performance and confirmed the suitability and expertise of the group finance director, Mr DG Wilson; and
Considered the appropriateness of the expertise and adequacy of resources of the group’s financial function and experience of the senior members of management responsible for the financial function.

Financial statements

The committee

Considered accounting treatments, significant or unusual transactions and accounting judgements;
Considered the appropriateness of accounting policies and any changes made;
Met separately with management, external audit and internal audit and the chairman attended the risk and sustainability committee meetings;
Made appropriate recommendations to the board of directors regarding the corrective actions to be taken as a consequence of audit findings;
Reviewed the process in place for the reporting of concerns and complaints relating to accounting practices, internal audit, content of auditing of the company’s financial statements, internal controls of the company and any related matters. The committee can confirm that there were no such complaints during the year under review;
Reviewed and recommended for adoption by the board such financial information that is publicly disclosed which for the year included:
The audited interim results for the six months ended 31 March 2011;
The audited annual results for the year ended 30 September 2011; and
Reviewed the working capital packs prepared by management to support the board’s going-concern statement at reporting dates as well as the solvency and liquidity tests required in terms of the Companies Act 71 of 2008.

Integrated annual report

The audit committee considered the integrated annual report, incorporating the annual financial statements, for the year ended 30 September 2011. The audit committee has also considered the sustainability information as disclosed in the integrated annual report and has assessed its consistency with operational and other information known to audit committee members. The committee has also considered the external assurance provider’s report and is satisfied that the information is reliable and consistent with the financial results. The annual financial statements have been prepared using appropriate accounting policies, which conform to International Financial Reporting Standards.

The committee at their meeting held 9 November recommended the integrated annual report for approval to the board.

AGK Hamilton

Audit Committee Chairman

For and on behalf of the Barloworld Limited Audit Committee

14 November 2011