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  • HC-3 HC-3 Audit Committee and Financial Statements Certification

    • HC-3.1 HC-3.1 Principle

      • HC-3.1.1

        The board must have rigorous controls for financial audit and reporting, internal controls, risk management and compliance with the law.

        July 2011

    • HC-3.2 HC-3.2 Audit Committee

      • HC-3.2.1

        The board must establish an audit committee of at least three directors, of which the majority must be independent including the Chairman. The committee must:

        (a) Review the company's accounting and financial practices;
        (b) Review the integrity of the company's financial and internal controls and financial statements;
        (c) Review the company's compliance with legal requirements;
        (d) Recommend the appointment, compensation and oversight of the company's external auditor;
        (e) Recommend the appointment of the internal auditor;
        (f) Approve the internal audit policies and any reports and plans made in terms of such policies;
        (g) [This Subparagraph was deleted in January 2012];
        (h) Unless otherwise designated to another committee, review the risk management policies and procedures as well as any reports and plans issued in terms of such policies;
        (i) Unless otherwise designated to another committee, review the key persons dealing and market abuse policies and procedures as well as any reports and plans issued in terms of such policies;
        (j) Review and approve the interim financial statements where the board is unable to hold a meeting for this purpose;
        (k) Recommend any additional or specific audit required in respect of the financial statements and other specific part of the business; and
        (l) Recommend and table for discussion a management letter to be provided to the external auditor.
        Amended: January 2012
        July 2011

      • HC-3.2.2

        In its review of the systems and controls framework in Paragraph HC-3.2.1, the audit committee must:

        (a) Make effective use of the work of external and internal auditors. The audit committee must ensure the integrity of the company's accounting and financial reporting systems through regular independent review (by internal and external audit). Audit findings must be used as an independent check on the information received from management about the company's operations and performance and the effectiveness of internal controls;
        (b) Make use of self-assessments, stress/scenario tests, and/or independent judgments made by external advisors. The board should appoint supporting committees, and engage senior management to assist the audit committee in the oversight of risk management; and
        (c) Ensure that senior management have put in place appropriate systems of control for the business of the company and the information needs of the board; in particular, there must be appropriate systems and functions for identifying as well as for monitoring risk, the financial position of the company, and compliance with applicable laws, regulations and best practice standards. The systems must produce information on a timely basis.
        July 2011

      • HC-3.2.3

        Companies should set up an internal audit function, which reports directly to the Audit Committee and administratively to the CEO.

        July 2011

      • HC-3.2.4

        The CEO must not be a member of the audit committee

        July 2011

    • HC-3.3 HC-3.3 Audit Committee Charter

      • HC-3.3.1

        The audit committee must adopt a written charter which shall, at a minimum, state the duties outlined in rule HC-3.2.1 and the other matters included in Appendix A to this Module.

        July 2011

      • HC-3.3.2

        A majority of the audit committee must have the financial literacy qualifications stated in Appendix A.

        Amended: January 2012
        July 2011

      • HC-3.3.3

        The board should adopt a "whistleblower" programme under which employees can confidentially raise concerns about possible improprieties in financial or legal matters. Under the programme, concerns may be communicated directly to any audit committee member or, alternatively, to an identified officer or employee who will report directly to the Audit Committee on this point.

        July 2011

    • HC-3.4 HC-3.4 CEO and CFO Certification of Financial Statements

      • HC-3.4.1

        To encourage management accountability for the financial statements required by the directors, the company's CEO and chief financial officer must state in writing to the audit committee and the board as a whole that the company's interim and annual financial statements as prepared in accordance with IAS and IFRS present a true and fair view, in all material respects (including providing adequate provisions), of the company's financial condition and results of operations in accordance with applicable accounting standards.

        July 2011