Company Name and page strapline

Albertinah Kekana Read biography

Jabu Moleketi Read biography

During the year, the Audit Committee revised its mandate to include risk management and is now known as the Audit, Risk and Compliance Committee.

 

Mandate and terms of reference

 

The Group’s Audit, Risk and Compliance Committee (‘ARC Committee’) has adopted a mandate and terms of reference that has been approved by the Board. During the 2011 financial year, the ARC Committee revised its mandate to include risk management.

 

The ARC Committee’s responsibilities include the following:

 

•	Reviewing the Group’s consolidated preliminary results, interim results and annual financial statements;
•	Monitoring compliance with statutory and JSE Listings Requirements;
•	Reporting to the Board on the quality and acceptability of the Group’s accounting policies and practices, including, without limitation, critical accounting policies and practices;
•	Considering the appointment and/or termination of the external auditors, including their audit fee, independence and objectivity and determining the nature and extent of any non-audit services;
•	Receiving and dealing appropriately with any complaints (internally and externally) relating either to the accounting practices and internal audit or to the content or auditing of all entities within the Group’s annual financial statements or related matters;
•	Monitoring the risk management framework and assessing the significant risks facing the Group; and
•	Monitoring the effectiveness of the processes to create awareness and develop an understanding of relevant legislation and regulation to ensure compliance by management.

 

Membership

 

Members: PJ Moleketi, A Kekana

 

Members of the ARC Committee during the financial year included the following independent non-executive directors:

 

P Malabie
PJ Moleketi

 

Ms P Malabie resigned from the Board on 4 November 2010 and was replaced on 12 May 2011 by Ms A Kekana.

 

The Chief Executive Officer and Chief Financial Officer attend ARC Committee meetings by invitation, as well as the head of internal audit, the Chief Risk Officer and the external auditors. The primary role of the ARC Committee is to ensure the integrity of the financial reporting, the audit process and that a sound risk management and internal control system is maintained. In pursuing these objectives the ARC Committee oversees relations with the external auditors and reviews the effectiveness of the internal audit function.

 

The internal and external auditors have unlimited access to the Chairman of the ARC Committee. The internal audit department reports directly to the ARC Committee and is also responsible to the Chief Financial Officer on day-to-day administrative matters.

 

Four ARC Committee meetings plus one teleconference are scheduled per financial year. Additional committee meetings may be convened when necessary. During the 2011 financial year, four committee meetings and one teleconference were convened.

 

Attendance was as follows:

 

	Name of member	11.5.2010	27.5.20103	10.9.2010	3.11.2010	4.3.2011
	TA Boardman
	P Malabie1					-
	PJ Moleketi2	-

 

Notes:
1. P Malabie resigned on 4 November 2010.
2. PJ Moleketi appointed on 13 May 2010.
3. Teleconference.

 

Statutory duties

 

In terms of Section 270A(f) of the Companies Act of 1973, as amended (‘the Act’), the ARC Committee discharged all of those functions delegated to it in terms of the ARC Committee mandate, the Act and the JSE Listings Requirements:

 

•	Considered and satisfied itself that the external auditors are independent;
•	Determined the fees paid to the external auditors for the 2011 financial year;
•	Confirmed the non-audit services which the external auditors performed during the year under review;
•	Nominated the external auditors for appointment for the 2011 financial year;
•	Approved the internal audit plan for the year;
•	Held separate meetings with management and the external auditors to discuss any reserved matters;
•	Ensured that the ARC Committee complied with the membership criteria as set out in the Act;
•	Considered the appropriateness and experience of the Chief Financial Officer as required by the JSE Listings Requirements; and
•	Reviewed the consolidated and Company annual financial statements of Vodacom Group Limited.

 

Internal control

 

Internal controls comprise methods and procedures adopted by management to provide reasonable assurance in safeguarding assets, prevention and detection of error, accuracy and completeness of accounting records, and reliability of annual financial statements of all entities within the Group. The internal audit function serves management and the Board by performing independent evaluations of the adequacy and effectiveness of the Group’s controls, financial reporting mechanisms and records, information systems and operations, and provides additional assurance in safeguarding of assets and financial information.

 

Vodafone is required to comply with Section 404 of the Sarbanes-Oxley Act (‘SOx’) due to their listing on the NASDAQ stock exchange. Vodafone has identified specific processes that had to be in scope for Vodacom South Africa. In order to be SOx compliant, the processes or systems and controls identified are reviewed for adequacy and tested to prove the effectiveness and ongoing operation thereof. Management has concluded that the internal control over financial reporting as at 31 March 2011 was effective. The ARC Committee was also responsible for oversight of the Group’s compliance activities in relation to SOx.

 

Risk management

 

Detailed reviews of the Group’s risk management, ERM programmes, business continuity, forensic services and health & safety are performed by the Group’s Risk Management Committee which reports to the ARC Committee through the auspices of the Chief Risk Officer. Critical and high level strategic risks which are ranked in relation to a scale from catastrophic to negligible are presented to the ARC Committee which risks are then reported to and considered by the Board. Further details of the Group’s key risks are reported in the ‘Risk management report’ on page 78 of the integrated report.

 

Integrated reporting

 

During the year under review, management appointed an external service provider to assist the Group with the implementation of integrated reporting. This included the determination of material issues and the way in which the Group would report internally each month. The Chairman of the ARC Committee was nominated by the Board as the Group’s champion for integrated reporting.

 

The ARC Committee recommended the 2011 integrated report and consolidated annual financial report for approval by the Board on 2 June 2011.

 

TA Boardman
Chairman
Audit, Risk and Compliance Committee