Our performance in 2009 - Sappi

Audit committee report
The legal responsibilities of the Sappi Limited group audit
committee (the committee) are set out in the Companies Act,
61 of 1973 (as amended). These responsibilities, together with
the requirements of compliance with appropriate governance
and international best practice, are incorporated in the committee’s
charter, which is reviewed annually and approved by the board.
Composition of the committee
All independent non-executive directors, with the exception of
the chairman of the board, are eligible to serve on the committee.
The nomination and governance committee recommends to
the board any appointments to or removals from the board,
which in turn is responsible for the composition of the committee.
The committee has three or more members, all of whom are
financially literate, with three members forming a quorum. Access
to training is provided on an ongoing basis to assist members in
discharging their duties.
The committee comprised the following members during the
year and to the date of this report, except where noted otherwise:
• Dr D Konar (Chairman)
• Mr J E Healey
• Mr D C Brink
• Mr H C Mamsch
• Mrs K R Osar
Biographical details of the current members of the committee
are set out on pages 26 to 28.
The chief executive officer, chief financial officer, group risk
manager, group head internal audit and representatives of the
external auditors are invited to attend the committee meetings.
The external auditors attend all committee meetings and separate
meetings are held to afford them the opportunity of discussion
without the presence of management or internal auditors. The
internal auditors attend all committee meetings and are similarly
afforded separate meetings with the committee.
Internal audit
Internal audit is an independent assurance function, forming part
of the Enterprise-wide Risk Management Framework (ERMF).
The group head internal audit has a direct reporting line to the
committee chairman and also meets regularly with the chief
executive officer and the chief financial officer. Further details
on the internal audit function are contained in the corporate
governance report.
External audit
The group’s external auditors are Deloitte & Touche. Fees paid
to the auditors are disclosed in note 4 to the annual financial
statements. Further details are contained in the corporate
governance report.
Key functions and responsibilities of the committee
The key functions and responsibilities of the committee as
outlined in the charter are to:
2009 annual report
• assist the board of directors in its evaluation of the adequacy
and efficiency of the internal control systems, accounting
practices, information systems and auditing processes applied
within the group in the day-to-day management of its business;
• facilitate and promote communication between the board,
management, the external auditors and the group head internal
audit;
• introduce such measures as in the committee’s opinion may
serve to enhance the credibility and objectivity of financial
statements and reports prepared with reference to the affairs
of the group;
• nominate for appointment as auditors the company registered
auditors who, in the opinion of the committee, are independent
of the group;
• determine the fees to be paid to the auditors and the
auditors’ terms of engagement;
• ensure that the appointment of the auditors complies with
the Companies Act and any other legislation relating to the
appointment of auditors;
• determine the nature and extent of any non-audit services
that the auditors may provide to the group;
• approve any contract with the auditors for the provision of
non-audit services to the group;
• receive and deal appropriately with any complaints (whether
from within or outside the group) relating either to the accounting
practices and internal audit of the group or to the contents or
auditing of its financial statements, or any other related matter
thereto; and
• perform such further functions as may be prescribed.
The committee reports that it has adopted appropriate formal
terms of reference to discharge its responsibilities, has regulated
its affairs in compliance with its charter and has discharged all
its responsibilities as contained therein.
Effectiveness of internal control
The committee monitors the group’s internal controls for
effectiveness and adherence to the ERMF.
The emphasis on risk governance is based on the group’s ERMF.
The ERMF places weight on accountability, responsibility, independence,
reporting, communications and transparency, both
internally and with all our key external stakeholders.
Specific responsibilities of the committee include the following:
Internal control
• Monitoring management’s success at creating and maintaining
an effective internal control environment throughout the group
and at demonstrating and stimulating the necessary respect
for this control environment
• Monitoring the identification and correction of weaknesses
and breakdowns of systems and internal controls.
Financial control, accounting and reporting
• Monitoring the adequacy and reliability of management
information and the efficiency of management information
systems
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financials