Governance review

Emma Mashilwane

Audit committee report

This report is provided by the audit committee appointed for FY18 in compliance with the Companies Act, No 71 of 2008, as amended.

Emma Mashilwane, Chairman

The committee's activities are guided by a detailed charter informed by the Companies Act and King IV, and approved by the board.

The committee has executed its duties and responsibilities for the group's accounting, internal control, external auditing and financial reporting practices for the review period in line with its approved charter.

Structure

The committee comprises three independent non-executive directors, and its chairman is not the chairman of the board. Members and attendance are here.

Biographical details of members are here, while fees are noted in the remuneration report.

The review period

External audit

The committee, among other matters:

  • Nominated Ernst & Young Inc. to shareholders for appointment as the external auditor, with Warren Kinnear as the designated auditor, for the financial year ended 30 September 2018. It ensured that the appointment complied with all applicable legal and regulatory requirements, and that the auditor and designated auditor are accredited by the JSE Limited
  • Approved the external audit engagement letter, plan and budgeted audit fees. Fees paid to the auditor are detailed in note 3 of the group annual financial statements
  • Reviewed the audit results, 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
  • Considered the reports of the external auditor on the group's systems of internal control, including financial controls
  • Determined the nature and extent of all non-audit services provided by the external auditor and pre-approved all non-audit services
  • 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 auditor in terms of
    the Auditing Profession Act, No 26 of 2005, and determined there were none.
Independence of the external auditor

The audit committee is satisfied that Ernst & Young Inc. is independent of the group after considering the following factors:

  • Representations by Ernst & Young Inc. 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
  • The auditor's independence was not prejudiced by any previous appointment as auditor
  • Criteria specified for independence by the Independent Regulatory Board for Auditors and international regulatory bodies.
Financial statements

For the financial statements, the committee:

  • Confirmed the going concern requirement as the basis of preparing interim and annual financial statements
  • Reviewed compliance with the financial conditions of loan covenants and determined that the capital and debt facilities of the group are adequate
  • Examined and reviewed the interim and annual financial statements, as well as all financial information disclosed to the public before submission to and approval by the board
  • Ensured the annual financial statements fairly present the financial position of the company and group at the end of the financial year and the results of operations and cash flows for that period, and considered the basis on which the company and group were determined to be a going concern
  • Considered accounting treatments, significant unusual transactions and accounting judgements
  • Considered the appropriateness of accounting policies adopted and any changes
  • Reviewed the external auditor's audit report including the key audit matters identified
  • Reviewed the representation letter on the group financial statements 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 and external audit to review and discuss the annual financial statements
  • Received and considered reports from the internal auditors.
Internal controls and internal audit

For internal controls and internal audit, including forensic audit, the committee:

  • Reviewed and approved the internal audit charter and annual audit plan, and evaluated the independence, effectiveness and performance of the internal audit function and compliance with its charter
  • Considered reports of the internal auditor on the group's systems of internal control including financial controls and business risk management
  • Received assurance that an adequate and effective system of internal control and risk management is being maintained
  • Received assurance that proper and adequate accounting records were maintained and that the group's systems safeguarded its assets against unauthorised use or disposal
  • Reviewed significant issues raised by internal and forensic audit functions and the adequacy of corrective action taken
  • Assessed the performance of the internal audit function and found it to be satisfactory.

The committee confirms it has no reason to believe there were any material breakdowns in the design and operating effectiveness of internal financial controls in the period that have not been addressed or are not being addressed by management.

In terms of risk management and information technology relevant to its functions, the committee:

  • Reviewed the group's policies on risk assessment and management, including fraud risks and information technology risks as they relate to financial reporting and the going-concern assessment, and found them to be adequate and effective
  • Considered and reviewed the findings and recommendations of the risk and sustainability committee.

For sustainability issues, the committee:

  • Considered the findings and recommendations of the risk and sustainability committee
  • Met with senior management to consider findings on assurance, and made appropriate enquiries from management. Through this process, it has received the necessary assurances that material disclosures are reliable and do not conflict with financial information.

For legal and regulatory requirements, where these may affect 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 concerns on 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 external auditor on compliance with legal and regulatory requirements.

In terms of coordinating assurance activities, the committee reviewed the plans and work outputs of the external and internal auditors and concluded these were adequate to address all significant risks facing the business.

There is an enterprise-wide system of internal control and risk management in all key operations to manage and mitigate risks. The combined assurance approach is integrated with the risk management process to assess assurance activities across the various lines of defence.

Chief financial officer expertise and experience

The committee considered the expertise, resources and experience of the chief financial officer, Noel Doyle, and concluded that these were appropriate. Biographical details appear here.

Company secretary

The board is satisfied that Advocate Kgosi Monaisa has the necessary skills and experience for this position. Biographical details appear on the website.

All directors have unlimited access to the services of the company secretary, who is responsible to the board for ensuring proper corporate governance principles are applied.

The company secretary also ensures the proper administration of proceedings and matters relating to the board, the company and shareholders in line with applicable legislation and procedures. He is responsible for director training and induction, as well as the annual board evaluation.

The committee confirms that the company secretary maintains an arm's-length relationship with the board and directors, taking into account that the company secretary is not a director of the company nor related to any directors.

Annual financial statements

Following its review of the annual financial statements of Tiger Brands Limited for the year ended 30 September 2018, the committee believes that, in all material respects, these comply with the relevant provisions of the Companies Act and IFRS and fairly present the consolidated and separate financial position of the company at that date and the results of its operations and cash flows for that year. The committee has also satisfied itself on the integrity of the remainder of this integrated annual report for the year ended 30 September 2018.

Having achieved its objectives, the audit committee recommended the annual financial statements and integrated report for approval by the board. The board has since approved the annual financial statements and integrated report 2018, which will be open for discussion at the upcoming annual general meeting.

On behalf of the committee

Emma Mashilwane

Chairman – Audit committee
21 November 2018