Companies Act, 1973 (Act No. 61 of 1973)

Chapter X: Auditors

Appointment

270A. Functions and funding of audit committees

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1)An audit committee of a widely held company must with respect to the financial year for which it is appointed-

a)nominate for appointment as auditor of the company under section 270 a registered auditor who, in the opinion of the audit committee, is independent of the company;

b)determine the fees to be paid to the auditor and the auditor's terms of engagement;

c)ensure that the appointment of the auditor complies with this Act and any other legislation relating to the appointment of auditors;

d)determine, subject to this Chapter, the nature and extent of any non-audit services which the auditor may provide to the company;

e)pre-approve any proposed contract with the auditor for the provision of non-audit services to the company;

f)insert in the financial statements to be issued in respect of that financial year a report-

i)describing how the audit committee carried out its functions; and

ii)stating whether the audit committee is satisfied that the auditor was independent of the company;

g)receive and deal appropriately with any complaints (whether from within or outside the company) relating either to the accounting practices and internal audit of the company or to the content or auditing of its financial statements, or to any related matter; and

h)perform other functions determined by the board.

 

2)Nothing in this section precludes the appointment by a widely held company at its annual general meeting of an auditor other than one nominated by the audit committee, and where such an auditor is to be appointed paragraph (a) of subsection (1) shall not apply, but the appointment shall not be valid unless the audit committee is satisfied that the proposed auditor is independent of the company.

 

3)The appointment of an audit committee shall not reduce the functions of the board of directors of the company except with respect to the appointment, fees and terms of engagement of the auditor.

 

4)A widely held company shall meet all expenses reasonably incurred by its audit committee, including the fees of any consultant or specialist engaged by the audit committee to assist if in the performance of its duties,

 

5)In considering whether, for the purposes of subsection (1)( a), (1)(f)(ii) or (2), a registered auditor is independent of a company, the audit committee shall in relation to the company and any subsidiary or parent of the company or, if the company is a member of a group, any other member of the group-

a)ascertain that the auditor does not, except as auditor or in rendering services permitted under subsection (1)(e), receive any remuneration or other benefit;

b)consider the extent of any consultancy, advisory or other work undertaken by the auditor;

c)consider whether the auditor's independence may have been prejudiced as a result of any previous appointment as auditor; and

d)consider compliance with other criteria specified for independence by the Independent Regulatory Board for Auditors.