Merafe Resources Integrated Annual Report 2018

MERAFE RESOURCES INTEGRATED ANNUAL REPORT 2018 62 TRANSPARENCY AND ACCOUNTABILITY Introduction The Audit and Risk Committee ("the Committee") presents its report for the financial year ended 31 December 2018. The Committee reports that it has adopted formal terms of reference as its Audit and Risk Committee Charter (the Charter), and that it has discharged all of its responsibilities for the current financial year, in compliance with the Charter. Objectives and scope The overall objectives of the Committee are: • Assess the adequacy of the internal control system, financial control systems and the accounting systems; • Review the Integrated Annual Report, summarised financial statements, interim financial statements and annual financial statements; • Nominate external auditors for appointment, approve external audit fees and set the Groups policy on non-audit services provided by external auditors; • Monitor compliance with legal requirements; • Assess the performance of financial management; • Recommend budgets and plans; and • Conduct periodic review and assessment of the business risks the Group faces. Composition of the Committee The Committee consists of at least three independent non-executive directors, all of who have the necessary qualifications and experience to execute their repsonsibilities, with three members forming a quorum: • Ms M Vuso (Chairman) Appointed 30 July 2018 • Ms K Nondumo (Chairman) Resigned 8 May 2018 • Ms B Majova • Mr A Mngomezulu • Ms HG Motau Appointed 1 January 2019 In addition, Ms Z Matlala, Mr D Chocho and Deloitte & Touche Inc. are also permanent invitees to the meetings. At the date of this report there has been no additional changes to the composition of the members of the Board were noted. Meetings The Committee held four meetings during the year and the quorum was met at all the meetings. 2018 in overview The Committee is satisfied that adequate system of internal controls is in place to mitigate significant risks faced by Merafe Resources Limited and its subsidiaries to an acceptable level, and that these controls have been effective throughout the period under review. The system is designed to manage, rather than eliminate the risk of failure and to maximise opportunities to achieve business objectives. This can provide only reasonable, but not absolute assurance. In addition, the Committee reviewed the financial control systems, the accounting systems and is satisfied with the design and effectiveness of the systems. As required by the JSE Limited Listings Requirements 3.84(g), the Audit and Risk Committee has satisfied itself that Mr D Chocho, the Financial Director during the current financial year has the appropriate experience and expertise to fulfil the responsibilities of the finance function. The Committee has considered the key audit matters set out in the independent auditor's report and is comfortable that they are correctly presented. The review of the Integrated Annual Report together with the consolidated and separate financial statements are also the responsibility of the Committee. The Committee has evaluated the Integrated Annual Report and consolidated and separate financial statements of Merafe Resources Limited for the year ended 31 December 2018 and based on the information provided to the Committee, considers that it complies, in all material respects, with the requirements of the various acts and regulation governing disclosure and reporting. The Committee considered the nature, risks and internal control environment at the Merafe head office and concluded that it was not necessary to have a dedicated internal audit function. Specific internal audit assignments are considered on a periodic basis and outsourced. The recommendations that resulted from the audit in 2017 have largely been addressed and were continuously monitored in the 2018 financial year. The Committee is satisified that it has discharged its duties as set out in its terms of reference for the year under review. External audit The Committee, having considered all relevant matters, satisfied itself through enquiry that auditor independence, objectivity and effectiveness were maintained in 2018. The Committee is further satisfied that Mr Patrick Ndlovu complies with the relevant provisions of the Companies Act and the JSE Listings Requirements. The Committee considered and where necessary requested from Deloitte and Touche Inc. the information detailed in paragraph 22.15(h) of the JSE Listings Requirements in their assessment of the external auditors and the designated audit partner, prior to recomending their re-appointment. Deloitte and Touche have served as the Company's external auditors since 4 May 2017. The performance of the external auditors is reviewed by the Committee annually. The Committee also considers and is satisfied with the quality of the audit for the year under review. Having taken all of the above assessments into account, the Committee recommended the approval of the consolidated and separate financial statements as well as the Integrated Annual Report for the year ended 31 December 2018 by the Board. Matsotso Vuso CA(SA) Chairperson – Audit and Risk Committee 6 March 2019 Report of the Audit and Risk Committee The auditors report is set out in the annual financial statements which form part of our online Integrated Annual Report for 2018.