Page 39 - Integrated Annual Report

External auditors:
The external auditors for the period under review were BDO South Africa Incorporated and Mr Theunis Schoeman was the designated auditor.
The committee has:
• confirmed the independence of the external auditor as per section 92 of the Act; reviewed the performance of the external auditor and confirmed that the external auditor, the partner and the firm, have complied with the suitability requirements of the JSE as detailed in paragraph 22.15(h) of the JSE Listings Requirements;
• approved the fees to be paid to the external auditor and their terms of engagement;
• determined the nature and extent of any non-audit services that the external auditor may provide to the company and its wholly owned subsidiaries;
• pre-approved any proposed agreement with the external auditor for the provision of non-audit services to the company and its wholly owned subsidiaries;
• considered the key audit matters as identified by the external auditors;
• provided for regular confidential meetings between the committee members and the external and internal auditors; and
• considered all entities included in the consolidated financial statements in respect of financial reporting procedures.
Risk management:
The board acknowledges that it is accountable for the process of risk management and the system of internal control of the group. Mr D Levin holds the position of group risk officer. As HCI is an investment holding company, the risk management process considers the risks and opportunities within the company as well as those inherent in its portfolio of investments.
The committee is an integral component of the risk management process and, specifically, the committee ensures, by enquiry of management, external and internal auditors, that all material corporate risks have been identified, assessed, monitored and effectively managed.
The committee further enables the principle that risk management is also about analysing opportunities and not only guarding against downside possibilities. Internal control structures have been implemented to ensure that significant business and financial risk is identified and appropriately managed:
• it is management’s responsibility to design, implement and monitor the risk management policies;
• risk assessments are performed on a continual basis; • frameworks and methodologies are implemented to increase probability of anticipating unpredictable risks; • risk responses by management are considered and
implemented;
• risks are monitored continuously; and
• the board should receive assurance regarding
effectiveness of risk management.
The committee is accountable to the board for implementing and monitoring the processes of risk management and integrating this into day-to-day activities. The committee, however, does not assume the functions of management, which remain the responsibility of the executive directors, officers and other members of senior management.
A disciplined and timeous reporting structure enables the committee to be fully apprised of group company activities, risks and opportunities. This is achieved by requiring that subsidiary companies report their key risks and responses to the committee on a biannual basis, with additional exception reporting as required.
The focus of the committee is on those risks which may negatively impact the long-term sustainability of the business or have a material impact on short-term performance.
This continual emphasis on risk management assists the board to foster a culture in the HCI group that emphasises and demonstrates the benefits of a risk- based approach to internal controls and management of the group.
Effective risk management is seen as fundamental to the sustainability of the group’s interests.
Material risks:
A high-level description of all immediately identifiable material risks which are specific to the group, the industries in which it operates and/or its issued ordinary shares are listed below:
Channels through which South Africa and the HCI group have been affected by COVID-19:
• negative market sentiment compounded by slowing
economic recovery;
• substantial disruption to international and domestic
travel and tourism;
• slowing down and changes to consumer spending;
• disruptions to global supply chains and domestic
production;
• increased risk of workers being put on short-time or
retrenched due to lack of demand.
HOSKEN CONSOLIDATED INVESTMENTS LIMITED
INTEGRATED ANNUAL REPORT 2021 37