In terms of sections 51(1)(a)(ii) and 76(4)(d) of the Public Finance Management Act and the Treasury Regulations, Accounting Authorities have to comply with the compulsory establishment of an Audit Committee and an efective internal audit function in the public entity.
The purpose of the Audit Committee is to assist the Board in fulfilling its oversight responsibilities and to review the financial reporting processes.
The Audit Committee reviews the system of internal control, management of financial risks, the audit process, and the Board’s process for monitoring compliance with laws and regulations and its own code of business conduct. In performing its duties, the Audit Committee maintains effective working relationships with the Board, management, and the internal and external auditors.
The Audit Committee is authorised to have full, free and unrestricted access to all the MGB’s activities, records, property and staff. It is within the scope of the Audit Committee’s responsibilities to seek any information it requires from any employee and external parties. Legal or other independent professional advice may be obtained.
Other functions and responsibilities of the Audit Committee include:
Internal Controls
The MGB’s internal control systems include clearly defined lines of accountability and delegation of authority, and provide for full reporting and analysis against approved budgets. The Audit Committee are responsible for determining the adequacy, effectiveness and operation of these internal control systems, providing the assurance that assets are protected against material loss or unathorised use and transactions are properly authorised and adequately recorded. The Audit Committee performs the functions required of it by law and evaluates the effectiveness of the internal controls and the management of risks in compliance with these principles.
Financial Reporting
The Audit Committee reviews the significant accounting and reporting issues, including professional and regulatory pronouncements, and their impact on the financial statements. The financial statements are reviewed by the Audit Committee to ensure consistency with the appropriate accounting principles.
Internal Audit
The Audit Committee reviews the effectiveness of the internal audit function that is performed by external practitioners whose major responsibilities include the examination and evaluation of the effectiveness of operational activities and systems, together with the attendant business risks and financial control.
In terms of the PFMA and Treasury Regulations the Board must ensure that a risk assessment is conducted regularly to identify emerging risks. A risk management strategy, that included a fraud prevention plan, was used to direct internal audit efforts and priorities, as well as determined the skills required of management and staff to improve controls and to manage these risks.
External Audit
The Audit Committee reviews the scope, performance, significant findings and recommendations made by the external auditors.
