Annual Integrated Report 2019

Audit and risk committee report continued Duties carried out The committee has successfully performed its duties during the financial year under review. In the fulfilment of these duties, the major areas of focus were assessing the impact of the new accounting standards on revenue recognition, financial instruments and leases; reviewing the application of JSE proactive monitoring and other pronouncements to group reporting; reviewing accounting for acquisitions and the valuation of put option liabilities; assessing the carrying value of property, goodwill, intangibles and investments; reviewing the characterisation of assets held for sale and discontinued operations; assessing the recoverability of trade receivables, valuation of inventory, customer and supplier rebates, as well as other matters requiring significant judgement. The committee assessed risks associated with management override of controls, the ability of the group to continue as a going concern, review of related-party transactions, the overall presentation of the financial information to shareholders and review of the annual integrated report. The committee reviewed the risks that could materially impact the ability of the group to deliver against its objectives and the related mitigation plans, providing feedback where appropriate. The committee spent considerable time during the year reviewing its position in respect of the continuing retention of the services of KPMG Inc as its external auditor. The committee decided to change auditors, and following a competitive tender, the committee appointed PricewaterhouseCoopers Inc (PwC) in January 2019. The committee confirms the following statutory and delegated duties were adequately addressed and sets out the results below: Financial statements The committee: • • confirmed, based on management’s review, that the consolidated and separate Bidcorp company financial statements were prepared on the going concern basis; • • examined the consolidated and separate financial statements and other financial information made public, prior to their approval by the board; • • considered accounting treatments, significant or unusual transactions and accounting judgements; • • considered the appropriateness of accounting policies and any changes made thereto; • • considered any problems identified as well as any legal and tax matters that could materially affect the financial statements; • • met separately with management, external audit and internal audit, and satisfied themselves that no material control weakness exists; and • • successfully closed out queries from the JSE in respect of their proactive monitoring of annual financial statements, and incorporated their recommendations into the 2019 annual financial statements. External audit The committee: • • recommended PwC to be appointed as the Bidcorp external auditors and Mr E Gerryts as the independent and accredited auditor respectively to the shareholders for appointment for the financial year ended June 30 2019, of the group and company, and ensured that the appointments comply with legal and regulatory requirements for the appointment of an audit firm and auditor; • • approved the external audit engagement letter, the audit plan and the budgeted audit fees payable to the external auditors; • • determined the nature and extent of all non-audit services provided by the independent auditors and pre-approved all non-audit services undertaken; • • obtained assurances from the independent auditors that adequate accounting records were being maintained; • • confirmed that no reportable irregularities had been identified or reported by the independent auditors under the Auditing Profession Act; and • • recommended that PwC be reappointed as the Bidcorp external auditors for the year ended June 30 2020 at the 2019 annual general meeting. Independence of external auditors, PwC The committee: • • reviewed representations made by PwC to the committee; • • confirmed that the auditors did not, except as external auditors or in rendering permitted non-audit services, receive any remuneration or other benefit from the group; • • confirmed the auditors’ independence was not impaired by any consultancy, advisory or other work undertaken; • • determined the auditors’ independence was not prejudiced as a result of any previous appointment as auditors; and • • considered the criteria specified for independence by the Independent Regulatory Board for Auditors and international regulatory bodies and found no cause for concern or doubt of the independence of the external auditors, PwC. Internal control and internal audit The committee: • • reviewed the annual internal audit plans and evaluated the independence, effectiveness and performance of the internal audit function; • • considered the reports of the internal auditors on the group’s systems of internal control including financial controls, business risk management and maintenance of effective internal control systems; • • received assurances that proper accounting records were maintained and that the systems safeguarded the group’s assets against unauthorised use or disposal; • • reviewed issues raised by internal audit and the adequacy of corrective action taken by management in response thereto; • • assessed the adequacy of the performance of the internal audit function and found it satisfactory; and • • concluded the opinion recommended to the board at year-end that there were no material breakdowns in internal control. 74 / Bid Corporation Limited Annual integrated report 2019