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Annual integrated report 2011


Audit Committee report

FOR THE YEAR ENDED 30 SEPTEMBER 2011

Introduction

The Audit Committee reviews the principles, policies and practices adopted in the preparation of the annual financial statements. The Committee also endeavours to ensure that the interim and annual financial statements and any other formal announcements relating to the Group’s financial performance comply with all statutory and JSE Listings Requirements.

This report is presented to shareholders in compliance with the requirements of the South African Companies Act No 71 of 2008 (Companies Act).

Role of the Audit Committee

The objectives and functions of the Committee are contained in the terms of reference which are reviewed on a regular basis and approved by the Board. In summary, during the year under review, the Committee performed the following roles:

Reviewed and recommended for approval the interim and annual financial statements and related SENS and press announcements;
Monitored and reviewed the effectiveness of internal control systems, including IT financial auditing;
Monitored and reviewed the staffing, work plan, resources and activities of the internal audit function;
Reviewed and evaluated the effectiveness of the internal audit, financial risk management and compliance functions and provided adequate assurance of the Group’s IT internal control framework;
Reviewed the Internal Audit charter for recommendation to the Board
Considered the implementation of a combined assurance model which is intended to be rolled out in 2012;
Reviewed and evaluated reports relating to findings of internal audit investigations and whistle blowing arrangements;
Reviewed developments in the Companies Act and corporate governance in relation to the Audit Committee’s functions;
Reviewed and, where appropriate, updated the Audit Committee’s own terms of reference;
Assessed the effectiveness of the external audit process following the end of the annual audit cycle;
Reviewed the integrated reporting process so as to consider factors and risks that may impact the integrity of the annual integrated report; and
Recommended the annual integrated report to the Board for approval.

Structure of the Audit Committee

The Committee was appointed by the Board of directors to hold office in respect of the financial year under review. The Committee also performs statutory duties on behalf of all relevant subsidiary companies of Netcare. The Committee members are all non-executive directors with adequate knowledge and experience to equip the Committee to perform its functions. The Committee satisfies the requirements as stipulated in the Companies Act.

Details of the Committee members and their attendance can be found on page 110 of the annual integrated report. The fees paid to the Committee members for the year ended 30 September 2010 were approved by the shareholders at the Annual General Meeting held on 21 January 2011. The Board has approved the suitable candidates for election as Audit Committee members in 2012. This will be tabled to the shareholders on 27 January 2012 for approval as outlined in the notice of annual general meeting on page 235.

The head of Netcare Group internal audit as well as Grant Thornton, in their capacity as auditors to Netcare and its South African (SA) subsidiaries, attended and reported at all the Audit Committee meetings. Divisional Internal Audit Committee meetings are also held twice a year and Grant Thornton in their capacity as auditors of Netcare also attend these meetings. The Chief Financial Officer and the Chief Executive Officer attend by invitation. The Group risk management function is also represented at the meetings and relevant senior managers attend by invitation. To ensure an integrated and coordinated approach to the risk management process, a member of the Audit Committee is also a member of the Risk Committee.

In the United Kingdom, General Healthcare Group (GHG) operates an independent Audit Committee that reports through the Group Audit Committee. The GHG Audit Committee is chaired by Sir PO Gershon and its members are all non-executive directors of GHG.

External auditors

Grant Thornton is the appointed auditor for the Group and Company, with the audit partner, EFG Dreyer, appointed as the designated registered auditor in terms of the Companies Act. The Committee satisfied itself that both the audit firm and audit partner are independent of the Group and the Company.

The Committee approved the terms of engagement, the audit plan and the audit fees payable, as well as the nature and extent of non-audit services which Grant Thornton are permitted to provide to Netcare. The Committee also preapproved, where relevant, proposed contracts with Grant Thornton for the provision of non-audit services to the Group. The fees paid to Grant Thornton for the financial year ended 30 September 2011 amounted to R12 million for audit services and R1 million for other services.

Deloitte LLP are the appointed auditors for GHG in the United Kingdom. The fees paid to Deloitte for the financial year ended 30 September 2011 amounted to £0.4 million for audit services and £0.1 million for other services.

Internal Audit

The Committee monitors and reviews the effectiveness of the Internal Audit function and endeavours to ensure that it is adequately resourced to provide assurance on the effectiveness of the Group’s internal controls and risk management. Internal Audit has the appropriate authority within the Group to perform and discharge its duties in terms of the Internal Audit charter approved by the Committee. There is an annual audit plan, approved by the Committee, which includes an IT component to provide assurance over the IT internal control framework. Internal Audit works closely with the Audit Committee and is able to meet with the Audit Committee independent of management if and when required.

Chief Financial Officer

In terms of the JSE Listings Requirements, the Committee is satisfied that the acting Group Chief Financial Officer, KN Gibson, has the appropriate experience and expertise to meet the responsibility to fulfil the duties of a financial director.

Annual financial statements

The Committee reviewed the accounting policies and annual financial statements (of which this report forms part) and endeavoured to ensure that the annual financial statements comply with International Financial Reporting Standards and are appropriate for recommendation to the Board of directors for approval.

Approval of Audit Committee report

The Committee hereby confirms that it has functioned in terms of its charter and discharged all its duties for the financial year under review.

HR Levin
Audit Committee Chair

Sandton

9 November 2011