The Bidvest Group Limited
Annual report 2009

ADDITIONAL CORPORATE GOVERNANCE INFORMATION

A closer look at internal audit

The Group’s system of internal financial control includes policies, procedures and clearly defined lines of accountability and delegation of authority. The system provides for comprehensive reporting and analysis against approved standards and budgets. Compliance is tested by management review, internal audit check and external audit.

The Group’s divisional audit committees consider the results of these reviews and confirm the appropriateness and satisfactory nature of these systems while ensuring that breakdowns involving material loss, if any, and remedial actions are reported to the appropriate boards.

Internal audit function

Internal audit departments evaluate the effectiveness of operational activities and attendant business risks. They examine systems of internal financial control, bringing material deficiencies, instances of non-compliance and development needs to the attention of the audit committee, external auditors and operational management.

Internal audit is an independent and objective assurance and consulting activity designed to add value to Group operations. Internal audit continually measures, evaluates and reports on the effectiveness of risk, control and governance processes. It considers their economy of application and efficiency in meeting organisational objectives, using a systematic, disciplined approach. Internal audit provides:
  • assurance that management processes are sufficient to identify and monitor significant risks
  • confirmation of the adequacy and effective operation of internal control systems
  • feedback on risk management and assurance
  • objective confirmation that the board receives the appropriate quality of assurance and reliable information from management

The purpose, authority and responsibility of the internal audit function are defined in a board-approved internal audit charter that is consistent with the Institute of Internal Auditors’ definition of internal auditing. Divisions ensure effective risk management and monitoring via their own internal audit function.

The activities of divisional internal auditors are coordinated by the Group internal audit manager who has unrestricted access to the audit committee and its chairman. The Group internal audit manager reports at all audit committee meetings and attends divisional audit committee meetings.

The internal audit function communicates with other internal and external auditors to ensure proper coverage and to minimise duplication of effort. External auditors also review reports issued by internal audit.

Internal audit reports on internal audit assurance standards and procedures at business units within the Group. The adequacy and capability of the Group’s internal audit structures are reviewed every year.

Audit plans for each business segment are tabled annually and follow-up audits are conducted in areas where major weaknesses are identified.

Businesses’ internal audit plans consider existing, residual and emerging risks and issues highlighted by their audit committees and senior management. Self-assessment questionnaires are regularly completed by the divisions. Internal audits are conducted formally at each business unit at least once in a two-year cycle in Africa and once in a three-year cycle in Bidvest Europe and Bidvest Asia Pacific. This risk assessment is coordinated with the board’s own assessment of risk.

Where the internal audit service is outsourced, the work is placed with a firm other than the external auditors of that division. This ensures independence is not impaired.