LUXE Holdings Audit & Risk
GOVERNANCE

Audit and Risk Committee

 

This committee met five times during the year with special meetings called as and when required. The committee meets with the group’s external auditors and executive management periodically.

The committee comprises three independent non-executive directors. The CEO and CFO, who attend meetings by invitation, do not have a vote.

The external auditor also attends meetings by invitation.

The audit and risk committee ensures that appropriate checks and balances are in place to guarantee robust, independent and efficient audit processes and that financial reporting throughout the group is accurate and reliable. The audit and risk committee has updated, formal, board-approved terms of reference which are intended to ensure compliance with both governance recommendations and statutory requirements. The board is satisfied that the committee has complied with these terms and with its legal and regulatory responsibilities as set out in the Companies Act, King IVTM and the JSE Listings Requirements.

The board believes that the members collectively possess the knowledge and experience to exercise oversight of the company’s financial management, external auditors, the quality of the company’s financial controls, the preparation and evaluation of the company’s financial statements and financial reporting. The board has established and maintains internal controls and procedures, which are reviewed on a regular basis. These are designed to manage the risk of business failures and to provide reasonable assurance against such failures but this is not a guarantee that such risks are eliminated.

The Audit and Risk Committee’s Responsibilities are as Follows:

  • Reviews and oversees integrated reporting;
  • Reviews and monitors the adequacy and effectiveness of the system of internal controls;
  • Reviews the findings of the external auditors;
  • Oversee the internal audit function once established. A dedicated internal audit function is, however, not warranted at this stage;
  • Obtains external assurance on the financial statements included in the integrated annual report and recommends them to the board for approval;
  • Carries out its statutory duties set out in Section 90 of the Companies Act;
  • Satisfies itself as to the expertise and experience of the group’s financial director and the overall financial function. During the financial year under review, the committee agreed to an action plan in respect of areas of the group where financial skills and/or procedures require enhancement;
  • Satisfies itself that management regularly monitors the group’s compliance with the Franchise Association’s code of conduct;
  • Assists the board with its responsibility for IT governance by ensuring that the group manages its information assets effectively, that an adequate IT governance framework is in place and that management is implementing the framework; and
  • Monitors and evaluates significant IT investment and expenditure, if and when necessary.

The Risk Responsibilities are as Follows:

  • Considers risk in its widest sense;
  • Identifies and assesses all risks, their impact and the probability of occurrence;
  • Monitors the perceived effectiveness of the group’s existing controls and systems and assesses their integrity;
  • Ensures the company’s risk policies and strategies are adequate, effective and effectively managed;
  • Establishes and maintains a common understanding of the body of risks that need to be addressed if the company is to achieve its corporate objectives;
  • Reviews and confirms the company’s levels of risk tolerance and its risk profile;
  • Coordinates the group’s risk management efforts, identifying mitigating measures and reviews the results and ensures appropriate action is taken;
  • Monitors external development relating to corporate accountability, including emerging and prospective risks and opportunities; and
  • Reviews and discusses the group risk register, which is aggregated from the risk registers prepared by the risk officers of the company.

The audit and risk committee and the board formally evaluated the performance and effectiveness of the external auditor in terms of King IVTM and the JSE Listings Requirements. It confirmed the suitability and effectiveness of the external auditors and nominated BDO South Africa Inc. for re-appointment as external auditors for the coming financial year, having satisfied itself that the company and its individual auditors are properly accredited and independent. The re-appointment is to be ratified by shareholders at the upcoming annual general meeting.

The committee also determines and carefully monitors and pre-approves the use of the external auditor for non-audit-related services. The formal policy in place precludes the auditor from providing services that could impair audit independence.