Parliament Portfolio Committee on EnergyPresentation by the Audit and Risk Committee

• The Audit and Risk Management Committee (Committee) operates in terms of its charter approved by the board.

• It is a board committee and consists five non-executive directors.

• The Chairperson of the Committee, is a Chartered Accountant and Certified Internal Auditor and he is an independent non-executive director.

• The Committee members consist of members of the Board and one independent member.

• The committee was constituted to include experts in IT Assurance, Risk Management, Finance, Audit and Nuclear Science.

BACKGROUND

• The committee undertakes its work in accordance with the annual plan derived from its charter.

• The CEO, CFO, Internal Audit & Risk Manager and Auditor General of South Africa (AGSA) have a standing invitation to the Committee meetings.

• The committee reports to the board atleast quarterly.• The Committee meets least quarterly.

BACKGROUND

Audit Committee Activities Map

RESPONSIBILITIES• The Committee meets to address the roles and responsibilities

as detailed in the Committee Terms of Reference (TOR), including:

• financial and sustainability reporting; • internal financial controls; • external audit process; • internal audit process; • risk management; • information technology ; and • Performance management.• The Committee recommends to the Board for approval

matters that were considered in terms of its TOR.

NNR INTERNAL CONTROL……

Assurance

Performance

Legislation

Policies

Charters

Procedures

Governance Arrangements

Organisational Objectives

Enterprise wide Risk Assessment

Processes Systems People

Financial EnvironmentalComplianceOperational

Management Internal audit External Audit

AUDIT COMMITTEE ANNUAL PLAN

• The committee annually prepares its annual plan to ensure coordination, extensive assurance and risk mitigation.

Activities 1st

Meeting

2nd

Meeting

3rd

Meeting

4th

Meeting

Responsibility

Internal Audit Activity (IAA)Approve the Internal Audit Charter X Int AuditApproved the Internal Audit Plan X Int AuditConsidered reports of the IAA X X X Int AuditReviewed quarterly reports of the internal audit activity X X X Int AuditExternal AuditReview significant findings, recommendations, by Auditor-General Ext AuditReview the AG’s report on transversal reviews. X Ext AuditApproved the audit plan of the external auditors X Ext AuditReviewed and approved the audited financial statements. X CFOReviewed the interim AG management letter. X Ext AuditCompliance and Risk ManagementReview the risk management plan. X CROReview the gap analysis of policies and procedures. X X Legal CounselRecommendation of the risk committee’s terms of reference. CROFinance, IT and performanceReview the quarterly financial reports and regulator’s performance against budget X CFO

Review the annual financial statements and the performance information X CFO

Review and approve the IT strategy. X IT ManagerReview the accounting policies adopted by management X X XAudit Committee Admin AC ChairApproved the Audit Committee Charter X ACSOther MattersReview of management action in findings from the IAEA review. X

AUDIT COMMITTEE ANNUAL PLAN (CONTINUES)

MAJOR AUDIT COMMITTEE ACTIVITIES (CONTROL MEASURES)

• Reviewed and recommended for approval IT, performance, risk management, finance and SCM policies.

• Reviewed and approved for approval the performance scorecard and the related budget.

• Review and approved the risk management plan and the three year strategy and internal audit annual plan.

• Reviewed and approved the AGSA audit plan and proposed fees.

• Reviewed quarterly the status of implementation of action plans to address identified external audit findings is presented and monitored quarterly.

MAJOR AUDIT COMMITTEE ACTIVITIES (CONTROL MEASURES)

• Reviewed the compliance program of the regulator and the IT Strategy and recommended the for approval.

• Reviewed the quarterly financial, performance and compliance reports presented by management.

• Reviewed the assignments reports and quarterly reports from internal audit in the implementation of the plan, and the implementation of the risk management plan.

• Reviewed the funding plan of the NNR in accordance with its operation requirements for the next three years.

YEAR-END ACTIVITIES

• Initial draft of the financial statements for 2011/2012 had material errors.

• The errors were subsequently corrected.• The AFS were submitted in accordance with the legislated

time.• The AGSA revealed issues in assets, potential irregular

expenditure, leases, IT and performance information.• The lease issue was taken for consultation with the AGSA

Technical Department and the National Treasury, ultimately

Initial Develop Establish Proficient Advanced

Internal Audit X

Performance Reporting X

Risk Management X X

Financial Reporting X

Information Technology

External Audit X

Compliance Model X

Focus will be placed on enhancing the activities in Information Technology and Compliance in this period.

The Performance Management unit has been greatly improved.

ACTIVITIES MATURITY

COMBINED ASSURANCE VIEW

Organisational Strategy Organisational Strategy

External Audit Internal AuditCompliance Audit

Audit of PI

FinancialFinancial Social Social EnvironmentEnvironment

Sustainability

Assurance

CHALLENGES

• The absence of a CFO for the major part of he year, reducing reports review capability.

• Material errors detected before submission of AFS to the AGSA.

• Changes in the Regulations during the year, resulting in differences in interpretation.

• Moving to the new building, resulting in asset issues.• Limited funding resulting in limited ability to plan and forecast

appropriately.