AFRICAN DAWN ANNUAL REPORT 2019 Audit and Risk Committee Report Annual Financial Statements For the year ended 28 February 2019 24 Introduction The Audit and Risk Committee (“the Committee”) has pleasure in submitting its report, as required by section 94 of the Companies Act 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 the King IV™. The Committee was appointed at the AGM on 4 September 2018. 1. Audit and Risk Committee report The Committee continues to focus on ensuring effective operation, through sound control and compliance. In the period under review the Committee has focused its attention on the critical risks facing the group and sustainability of the group. It has been another difficult year and cash flow was a particular problem with the directors assisting the Company to remain liquid. The controls that were implemented to ensure the debtor’s book is appropriately valued were once again reviewed and the Board and Audit and Risk Committee believe they have the appropriate assurance that the results as audited are appropriate. The Company does not have an internal audit function and the policy is to obtain external specialists to review areas of concern. This year an actuary was employed to assist with new accounting requirements. The Committee and the Board is actively involved in reviewing the challenges that face Afdawn, in particular the going concern and the new accounting standards as well as the debtors impairment provision. The Committee assures shareholders that it continues to take all the steps necessary to ensure the appropriate process is being followed to prevent any further problems from arising. As noted above key areas of focus included the going concern and cash flows, IFRS9 and IFRS15 implementation as well as the sale and settlement of a subsidiary, initiation fees, controls and compliance with laws and governance. The Committee had discussions with management, review of documentation, results and cash flows were studied as well as discussion of the issues with the auditors. Where necessary expert assistance was consulted. The Committee was also committed to ensuring that the JSE pro-active monitoring reports were taken into account when complying with the reporting requirements in the financial statements. 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 challenges for the Group to become profitable, however the increased funding will assist this process. The Committee is confident that the business is sustainable at least for the next twelve months. The Committee has reviewed the Key Audit Matters (KAMS) in the Auditors report and confirms that it agrees with the issues that have been raised. The audit opinion includes an emphasis of matter in relation to the uncertainties included in note 1.18. The Committee actions in relation to the going concern are noted above. There are two KAMS that have been reviewed by the Committee. They are: • The impairment of trade receivables. As noted an expert was employed to value the trade receivables and the additional impairment has been taken into account in the financial statements. The reporting has also been reviewed for compliance with IFRS. • The impairment of investments. There was no impairment of subsidiaries required and reporting was in terms of IFRS. 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; • approving the expertise of the financial director; and • review of the key audit matters and confirm that they concur with the issues the Committee believes are important. 1. Composition of the Audit and Risk Committee The members of the Audit and Risk Committee are all independent non-executive directors of the Group and include: Name Qualification Ms. HH Hickey CA(SA)
AFDAWN AR FINAL 2019
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