Annual Financial Statements for the year
ended 31 December 2009

 
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Audit committee report to shareholders

1. Introduction
 

The audit committee comprises the following independent non-executive directors:

  • ZBM Bassa (Chairman);
  • AJ Morgan;
  • DD Mokgatle; and
  • ND Moyo.*

* Resigned on 12 January 2010

In addition to the committee members above, the chief executive officer and chief financial officer attend meetings of the committee.

   
2. Background
 

The committee is pleased to present its report for the financial year ended 31 December 2009 as recommended by the King II report on Corporate Governance and in line with the Companies Act 61 of 1973, as amended (the Act).

   
3. Companies Act 61 of 1973 (the Act) and King III compliance
 

The committee commenced the review of its terms of reference and workplan in order to comply with the relevant provisions of the Act and King III recommendations with respect to audit committees. The review process involved the following:

  • A half day training session on the new provisions offered by the Institute of Directors;
  • A gap analysis was conducted, and recommendations made by the company secretary, internal and external auditors. Of particular importance was the review of Kumba’s combined assurance model and IT governance framework.
  • Amended terms of reference and workplan were approved by the committee and the board in February 2010.

The 2010 audit committee report will report fully on its compliance with the provisions of the Act and King III.

   
4. Duties carried out in 2009
 

During the financial year ended 31 December 2009 the audit committee carried out its duties as set out in the King II Report, the Act, and the committee’s terms of reference and in accordance with its annual plan. As an overview only, and not to be seen as an exhaustive list, the committee:

  • Reviewed the group financial statements and declaration of compliance with statutory requirements;
  • Reviewed the appropriateness of the group’s dividend policy and made recommendations to the board;
  • Reviewed the interim reports, results announcements, dividend recommendations and release of price sensitive information;
  • Reviewed the going concern assessments by management and made recommendations to the board;
  • Reviewed quality and effectiveness of internal audit process;
  • Reviewed the external auditor’s management letters and management responses;
  • Reviewed significant judgements and unadjusted differences resulting from the audit, as well as any reporting decisions made;
  • Monitored compliance with accounting standards and legal requirements;
  • Reviewed and were satisfied that the external auditors and engagement partner were independent;
  • Nominated the reappointment of the external auditors and engagement partner;
  • Ensured that the appointments of the external auditors complied with all relevant legislation;
  • Determined the fees to be paid to the external auditors and ensured that they were fair and equitable;
  • Maintained a non-audit services policy;
  • Reviewed and were satisfied with the process of risk management and monitoring of legal governance compliance within the company and ensured that the combined assurance model addressed the significant risks within the company including:

               – Financial risks;
               – Internal financial controls; and
               – Fraud risks; and

  • Oversaw the effectiveness of the internal audit function.
   
5. Annual financial statements
 

The audit committee has evaluated the consolidated annual financial statements for the year ended 31 December 2009 and concluded that it complies, in all material aspects, with the requirements of the Act and International Financial Reporting Standards. The committee has therefore recommended the approval of the annual financial statements to the board.

   
6. Conclusion
 

Given the above, the committee is of the opinion that it has appropriately addressed its key responsibilities in respect of:

  • Internal control;
  • Financial accounting control; and
  • Stakeholder reporting.
   
ZBM Bassa

 

  A member of the Anglo American plc group