Risk Management

Statutory duties

In the execution of its statutory duties during the past financial year, the Audit Committee:

  • Considered the audit firm PKF and the audit partner Andrew Hannington in the Committee’s opinion to be independent of the company and proposed to the shareholders for the approval that PKF be the Group auditors for the 2011 year
  • Determined the fees to be paid to PKF
  • Determined the terms of engagement for PKF
  • Believes that the appointment of PKF complies with the relevant provisions of the Companies Act, JSE Listing Requirements and King III
  • Pre-approved all non-audit service contracts with PKF.  The nature and extent of these services have been reviewed to ensure the fees for these services do not become so significant as to call into question their independence
  • Received no complaints relating to the accounting practices of the Group, the content or auditing of its financial statements, the internal financial controls of the Group, and any other related matters
  • Reviewed the draft audited financial statements and integrated report, the preliminary profit announcement and interim statements
  • Met with the external auditors to discuss the annual financial statements prior to their approval by the Board
  • Reviewed the valuation of goodwill before recommending any impairment to the Board for approval
  • Made submissions to the Board on matters concerning the Group’s accounting policies, financial control, records and reporting is appropriate

Oversight of risk management

The Audit Committee has:

  • Received assurance that the process and procedures followed by the Risk Management Committee are adequate to ensure financial risks are identified and monitored
  • Has satisfied itself that the following areas have been appropriately addressed:
    • Financial reporting risks
    • Internal financial controls
    • Fraud risks related to financial reporting
  • Reviewed tax and technology risks, and in particular how they are managed

Internal financial controls

The Audit Committee has:

  • Reviewed the effectiveness of the Group’s system of internal financial controls including receiving assurance from management and external audit
  • Reviewed significant issues raised by the external auditors in their reports
  • Reviewed policies and procedures for preventing and detecting fraud

Based on the processes and assurances obtained, we believe that the significant internal financial controls are effective

Regulatory compliance

The audit Committee has complied with all applicable legal and regulatory responsibilities

Risk Management Committee

The directors are responsible for risk management and ensuring that appropriate risk management processes are in place. This encompasses identifying, assessing, managing and monitoring all types of possible risk facing the group.

The Risk Management Committee during the year under review consisted of the following directors

  • MR Gahagan (Independent Chairman)
  • RM Crowie
  • ZB Ebrahim
  • MH Lobban
  • JJ Deeb
  • Lj Fosu
  • N Khambule (Resigned 27 March 2010)with the company secretaries in attendance at meetings

The Risk Management Committee, in consultation with the board, ensures that an effective and ongoing risk management process is in place, measuring the potential impact of a risk against a broad set of assumptions and introducing risk mitigation procedures to reduce the exposure to an acceptable level. Formal terms of reference outlining these responsibilities have been adopted by the committee and approved by the board.

The group’s risk management strategy includes the following key elements:

  • An appreciation of the importance of risk management;
  • Setting mission and risk management objectives;
  • Assessing existing solutions for vulnerabilities;
  • Establishing risk management infrastructure and assigning leadership;
  • Compiling a list of risks and assigning areas of responsibilities to various persons;
  • Selecting assessment techniques and defining risk appetite and tolerances;
  • Developing internal communication and reporting structures;
  • Monitoring the implementation and execution of risk management; and
  • Integrating risk management into existing operational systems.

The following key areas of risk have been identified:

  • Construction projects
    • tender phase
    • project implementation phase
  • Legal and regulatory compliance;
  • Safety, health and environment;
  • Human resources;
  • Economic projects;
  • Finance and administration;
  • Communication and information technology;
  • Procurement; and
  • Asset management
  • Cross-border construction projects and investments

The Risk Management Committee meets at least three times a year and the Board is satisfied that adequate measures and processes are currently in place to mitigate identified risks.