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AFRICAN DAWN 2015 Annual Report

Audit Committee Report AFRICAN DAWN 24 ANNUAL REPORT 2015 Introduction The Audit Committee (“the Committee”) has pleasure in submitting its report, as required by section 94 of the Companies Act, 2008, as amended, and by the JSE Listings Requirements. The committee acts for the Company and all its subsidiaries and is accountable to the Shareholders and the Board. It operates within its documented charter and complies with all relevant legislation, regulation and executes its duties in terms of substantially all the King III requirements. The committee was appointed by the AGM on the 12 December 2013. 1. Audit committee report The Committee has sought to re-establish the Group’s creditability and effective operation, through sound control and compliance. In the period under review the Committee has striven to uphold and improve upon the existing base with specific attention to risk management and sustainability within the Group. There have been some significant challenges during the year in that the occurrence of certain misstatements relating to the current and prior years came to light. The Committee was alerted by the Chief Executive that there were concerns in relation to the debtor’s book in Elite that came to light after the deal to sell this company fell through. The Company does not have an internal audit function and the policy is to obtain external specialists to review areas of concern. Together with the Board, it was agreed to obtain an independent external valuation of the debtors’ book. This revealed that there was a prior year error and that the value of the book was overstated. When this came to light it was decided to bring in external expertise to assist with the IFRS reporting of the issues as it was felt that it was important to ensure that the Annual Financial Statements fairly represent the results. Additional re-statements have been made in line with the recommendations of the external consultant. Due to the above challenges, further complications arose as the outcome of the internal investigation delayed the production of the Annual Financial Statements and due to the delay the Company was not in compliance with the JSE and applied to voluntarily suspend its shares from trading on the JSE until audit of the financial statements had been completed. The extended delay has resulted in a Reportable Irregularity arising because the financial statements were not issued within 6 months as required in terms of the Companies Act. The Committee and the Board have weekly meetings to monitor and discuss both the progress and implications of this process as they acknowledge the seriousness of the situation. The Committee assures Shareholders that it has taken all the steps necessary to ensure the appropriate process has been followed to resolve this difficult situation. The Committee has reviewed the Going Concern Assessment on which the Board has confirmed that it concludes that the Group and the Company are both going concerns. The Committee agrees that this conclusion is appropriate and that the basis of accounting for the Group and the Company as a going concern is appropriate. There are still some tough times ahead for the Group but the committee is confident that the business is sustainable at least for the next twelve months. Purpose The main purpose of the committee is to assist the Board in the oversight of: • the integrity of the financial statements; • the effectiveness of internal control over financial reporting; • independence and qualification of the independent registered auditor; • the Company’s compliance with legal and regulatory requirements; and • approving the expertise of the financial director.


AFRICAN DAWN 2015 Annual Report
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