The board, supported by the audit committee, is ultimately responsible for Exxaro’s system of internal control, which has been designed to evaluate, manage and provide reasonable assurance against material misstatement and loss.
We apply a combined assurance model to optimise assurance by management, as well as internal and external providers, while fostering a strong ethical climate and mechanisms to ensure compliance.
Using our board-approved enterprise risk management approach, management identifies key risks facing Exxaro and implements the necessary internal controls. The process is monitored and evaluated by internal audit while independent external auditors cover key controls and accounting matters. Every year, key sustainability indicators are selected for reasonable or limited external assurance ( ESG report) with comparable information for trend analysis where possible.
The board and audit committee assessed the effectiveness of controls for the year to 31 December 2019 as satisfactory, principally through a process of management self-assessment (including formal confirmation by executive management), reports from internal audit, independent external audit and other assurance providers.
Exxaro defines assurance broadly to cover all sources, including external assurance, internal audit, management oversight and regulatory inspections.
Our combined assurance model includes and optimises all assurance services and functions to collectively provide an effective control environment and support the integrity of information used for internal decision making by management, the board and its committees, and in our external reports including:
Our combined assurance forum is a working group, which coordinates assurance activities within Exxaro. Regular invitees include members of the audit committee as well as the sustainability, risk and compliance committee. The forum’s activities and outcomes of assurance reports are presented quarterly to the audit committee.
When commissioning specific assurance prior to publishing external reports, the forum considers:
The well-defined and embedded process enables Exxaro to publish specific disclosure on the approach to assurance of external reports including:
For the year under review, the sources, level, and focus area of assurance commissioned and performed, are summarised below.
|Selective non-audit services||PwC||3||Yes||Yes|
|Environmental liability provisioning||PwC||3||Yes|
|Mining rights and environmental legal compliance||Inlexso||3||Yes|
|B-BBEE DTI code compliance||Empowerdex||3||Yes||Yes|
|Mining charter compliance||Ngubane||3||Yes||Yes|
|Insurance risk surveys||IMIU||3||Yes|
|Major and mega capital projects||EY||3||Yes|
|Mineral Resource and Mineral Reserve statement||EY||3||Yes|
|Governance, risk and internal controls||EY||3||Yes||Yes|
|Social and labour plan projects||Ngubane||3||Yes|
|ISO and OHSAS certifications||Various||3||Yes|
The outcome of assurance reports issued, is illustrated below.
2012 to 2019
The total number of findings raised since 2012 is 2 086. The split by status of the findings is depicted in the chart below. As of 31 December 2019, there was a total of 1 691 findings that had been successfully resolved from the total of 2 086, leaving a total of 395 open findings that require the attention of management and assurance providers.
|Status of findings||Internal audit||Other assurance
|Follow-up in progress||11||0||11|
|Ready for audit||95||206||301|
Overdue findings have been classified by ratings assigned in the final audit report and split into audit source below.
|Audit source||Level 1 (high)||Level 2
|Level 3 (low)||Not rated||Total|
|Other assurance providers||3||9||3||0||15|