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AUDIT COMMITTEE REPORTThe Audit Committee has adopted appropriate formal terms of reference, which havereference.In undertaking its responsibilities, the Audit Committee has reviewed the following:• The effectiveness of the internal control systems;• The effectiveness of the internal audit function;• The risk areas of the entity to be covered in the scope of the internal and external audits; users of such information; • Compliance with legal and regulatory provisions;• The activities of the internal audit function;• The independence and objectivity of the external auditors; and,• The scope and results of the external audit function.The Audit Committee is also responsible for:• Reporting to the Mintek Board and the Auditor-General where the report implicates any members ofthe accounting authority in fraud, corruption or gross negligence;• Communicating any concerns it deems necessary to the Mintek Board;• Encouraging communication between members of the Mintek Board, senior executivemanagement, the internal auditors and the external auditors;• Conducting investigations within the terms of reference;• Concurring with the appointment of the in-house internal audit function;• Approving the internal audit work plan; and,• Setting the principles for recommending the use of the external auditor for non-auditservices.during the year under review and that these controls have functioned effectively duringthe period. The Audit Committee considers Mintek’s internal controls and systems to beappropriate in all material respects to:• Reduce the entity’s risks to an acceptable level;• Meet the business objectives of the entity;• Ensure the entity’s assets are adequately safeguarded; and,• Ensure that the transactions undertaken are recorded in the entity’s records.statements for the year ended 31 March 2006 due to non-compliance of generally acceptedaccounting practice in the determination of residual lives/values of assets, asset impairmentand revenue recognition. The audit opinion expressed stated that, except for the effect ofbalance sheet date.55annual report 2007