audit committee
//report
the _Perishable Products Export Control Board
This report provides an overview of the Committee’s activities, key financial considerations, and the effectiveness of our financial controls and reporting systems. Our primary objective is to ensure transparency, accuracy, and compliance in our financial operations. This report highlights our efforts in maintaining robust financial governance and safeguarding the interests of all stakeholders.
1. Role of the Audit Committee
The Audit Committee is provided with sufficient resources to perform its duties, including support, when necessary, from the internal and external auditors, legal and corporate governance specialists and the Executive Management. The Committee’s role includes examining all matters relating to the PPECB’s accounting principles and practices, as used to review all material financial, operational and compliance controls.
The Audit Committee is formally appointed and comprises four non-executive Board members, who provide a diverse range of competent perspectives based on their expertise and experience. An understanding of how management develops essential internal controls, applies effective accounting policies and presents important financial information is a primary responsibility of the Audit Committee. Additional responsibilities include being well-informed on accounting principles, industry knowledge and the assessment of the completeness and accuracy of reports, which are jointly evaluated by the Committee members.
The members are independent and are not involved in the day-to-day management of the PPECB. The Audit Committee members serve for a period of three years and the Committee Chairperson is appointed by the Chairperson of the PPECB Board.
Up until 31 January 2023, the Committee comprised the following members, with the necessary skills and experience to fulfil the duties of the Audit Committee:
- Ms M Slabber Independent non-executive Board member: Chairperson;
- Mr K Khatoo Independent non-executive Board member;
- Ms M Kotze Independent non-executive Board member; and
- Mr M Ramasodi Independent non-executive Board member.
- Ms M Kotze Independent non-executive Board member: Chairperson;
- Mr I Beukes Independent non-executive Board member;
- Mr B Mavume Independent non-executive Board member; and
- Dr. C Nkuna Independent non-executive Board member.
2. Audit Committee’s Statement of Responsibility and Mandate
The Committee operates independently of management and has a rolling agenda, which ensures full oversight of all matters within its delegated mandate.
The roles and responsibilities of the Audit Committee, as set out in the Audit Committee Charter, are reviewed and approved annually, with consideration given to the relevant regulatory changes and recommended best practices. The Charter, compliant with section 51(1)(a)(ii) of the Public Finance Management Act (Act No. 1 of 1999) (PFMA) and Treasury Regulation 27.1, directs the Committee in terms of its objectives, authority, and responsibilities, both statutory and those assigned by the Board.
The Audit Committee keeps the PPECB Board informed of its activities and recommendations after each committee meeting. Matters of interest and concern are promptly reported to the PPECB Board, where action or improvement is required regarding any aspect of financial reporting, risk management, internal control, compliance, or auditrelated activities. The Audit Committee recognises the importance of the oversight role required on matters such as internal controls, financial sustainability, integrated reporting, and the maintenance of corporate governance standards.
Activities
Reports related to internal audits conducted by the in-house and outsourced internal auditors are reviewed quarterly and management’s responses and conclusions to the various audit findings are reviewed and measured for appropriateness. We are satisfied with the content and quality of quarterly reports prepared and issued by the internal auditors during the year under review.
Engagement with management was conducted in a robust and transparent manner where discussions were held on the progress of key issues related to financial reports, internal controls and financial risk exposure. Sufficient time was spent confirming that all information provided was balanced, understandable and provided the necessary information for the Board to assess the PPECB’s position and performance, objectives and strategy. All reports are critically assessed for consistency and all business and regulatory requirements are met.
The following key activities were performed:
Reporting
- Considered the integrity of the quarterly financial statements;
- Reviewed accounting policies and practices, including compliance with accounting and reporting standards;
- Reviewed management’s assessment of going concern and longer-term viability;
- Reviewed the internal controls in relation to financial reporting;
- Advised the PPECB Board of the Committee’s assessment of the financial statements; and
- Confirmed the fairness, comprehensibility, and completeness of the statements and that they provide the necessary information for decision-making.
RISK MANAGEMENT AND INTERNAL CONTROL
- Monitored the effectiveness of the PPECB’s risk management and internal control system, with a specific focus on Information and Communications Technology (ICT) risks;
- Assessed management’s response to significant audit findings and recommendations;
- Evaluated the quality, efficiency and effectiveness of the internal audit function;
- Assessed the performance of the internal and external auditors and Chief Financial Officer
- Discussed significant matters arising from the internal audit; and
- Considered and noted compliance with applicable external legal and regulatory requirements.
EXTERNAL AUDITORS
- Assessed the independence and objectivity of PKF Cape Town;
- Reviewed and approved the engagement letter for PKF Cape Town’s annual audit;
- Considered the annual external audit plan and monitored the execution and results of the audit; and
- Monitored the expertise and resources of PKF Cape Town to perform their duties effectively.
COMPLIANCE AND GOVERNANCE
- Performed its statutory duties as prescribed in the Act and by the PPECB Board;
- Reviewed the Audit Committee charter;
- Considered progress in respect of the Fraud Plan; and
- Monitored compliance with applicable laws, regulations and accounting standards.
External audit
The following criteria were included in the evaluation:
- Professionalism and competence;
- Integrity and objectivity;
- Audit quality priorities;
- Constructive responses to management and key judgements;
- Efficiency of service delivery in the audit process; and
- Compliance with all relative legislation and regulations.
The Audit Committee considered the external audit fee appropriate for the financial year ended 31 March 2023. The external auditors did not provide non-audit services during the period under review.
A meeting held with the external auditors, without management present, satisfied the Audit Committee that there are no matters of concern. The Audit Committee was satisfied with the audit conducted by PKF Cape Town and thanked them for the professional services rendered to the PPECB over the year they have served as external auditors.
Internal audit
The PPECB has an in-house internal audit division which is enhanced by a co-sourced internal audit model to ensure optimal efficiency of this function. KPMG was appointed as the internal audit co-sourced department, whose annual audit plan was guided by the PPECB’s risk register, as well as previous internal and external audit reports. The primary role of the internal audit function, through its assurance and enquiry activities, is to safeguard value by protecting the PPECB’s assets, reputation and sustainability in relation to its goals and strategic objectives.
The responsibility and scope of the audit function is approved annually by the Audit Committee. The internal audit function reports functionally to the Chairperson of the Audit Committee and administratively to the Chief Financial Officer (CFO). Official meetings are held with internal audit throughout the year to confirm that the function is executed effectively and objectively.
The Audit Committee was satisfied with the content and quality of the quarterly reports prepared and issued by the internal auditors of the PPECB. The Board also considered the suitability of KPMG as PPECB’s auditors and their availability of capacity to monitor and guide management and the Board on ICT risks. In line with the PFMA and the King IV Report on Corporate Governance for South Africa 2016 (King IV) requirements, internal audit provides the Audit Committee and management with assurance that the PPECB’s internal controls are appropriate and effective. This was achieved by means of a risk management process, as well as the identification of corrective actions and identified opportunities for improvement to the controls and processes.
Based on assurance obtained throughout the year, the Audit Committee confirmed that the system of internal control employed by the PPECB for financial and risk management was considered effective, efficient and transparent.
Combined assurance and risk management
A complete assessment of the risk management function and framework was performed regularly to confirm the effectiveness of the risk management and internal control systems. Furthermore, regular monitoring of the effectiveness of procedures for internal control over financial reporting, compliance and operational matters was conducted.
Whistleblowing
Performance management
In-year management and quarterly reporting
Financial statements and accounting practices
The Audit Committee recognised areas of financial management that required improvement and recommended that management consider actions to mitigate any risk. All actions to improve on the below areas must be reported on quarterly:
- Irregular and Wasteful Expenditure;
- Asset Management;
- Contract Management; and
- Supply Chain Management (SCM).
Emerging financial issues and industry trends
Regulatory Changes: We have stayed abreast of regulatory developments and changes that affect financial reporting and disclosure requirements. We work closely with management to ensure timely compliance and address any potential impact on the entity’s financial position.
Sustainability Reporting: We have recognised the growing importance of sustainability reporting and have encouraged the integration of environmental, social, and governance (ESG) factors into financial reporting to provide a more comprehensive view of the PPECB’s performance.
Evaluation of the expertise and experience of the Chief Financial Officer
and finance function
Martli Slabber
Chairperson of
the Audit
Committee / PPECB
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