Auditors, Company Secretaries and Audit Committee under the new Companies Act 71 of 2008
Accountability requirements regarding the appointment of an auditor, company secretary and audit committee applies to every public-, state-owned- (unless exempted), private-, personal- and non-profit company if its Memorandum of Incorporation (MOI) requires it to comply.
Rights and restricted functions of auditors (Sect 93)
The auditor of a company has the right of access to the accounting records and all books and documents of the company, and is also entitled to require from the directors of the company any information necessary for the performance of the auditor’s duties.
An auditor has the right of access to all current and former financial statements of a company and is therefore also entitled to:
- Attend any general shareholders meeting
- Receive all notices of and other communication relating to any general shareholders meeting
- Be heard by any general shareholders meeting on any part of the meeting which concerns the auditor’s functions and duties.
Audit Committees (Sect 94)
At each Annual General Meeting of a public and state-owned company, the shareholders must appoint at least three directors of the company to the audit committee.
The Minister may prescribe minimum qualification requirements for members of an audit committee as necessary to ensure that any such committee comprises of persons with adequate knowledge and experience to equip the committee to perform its functions.
Duties of the Audit Committee (not exhaustive)
- To nominate an independent auditor and determine the auditors fees and terms of engagement
- To determine the extent of any non-audit services the auditor may provide to the company and to pre-approve any agreement for the provision of such services
- To prepare a report, which is to be included in the annual financial statements for that financial year
- To make submissions to the board relating to any matter concerning the company’s accounting policies, financial control, records and reporting
- To perform other functions determined by the board, including the development and implementation of a policy and plan to evaluate and improve the effectiveness of risk management, control and governance processes.