BOARD COMMITTEES
The committees assist the Board in the performance of its duties and also in enabling effective decision-making. In terms of the Water Services Act, the Board is authorised to delegate powers to the committees established by the Board. The functions and powers delegated to committees are set out in the Committees’ Terms of Reference. Terms of Reference for all committees have been reviewed and approved by the Board. The Board of Umgeni Water had three formally constituted Committees.
Audit Committee
This committee comprises seven non-executive directors and the chief executive. It is chaired by Professor Imtiaz Vally. Most of the members of this committee have financial backgrounds and the necessary skills and experience that ensure the effective functioning of the committee. The committee has been established in terms of the requirements of sound corporate governance practices (King II), the PFMA and its regulations and operates within that framework. The objective of the Committee is to assist the Board in fulfilling its oversight responsibilities for:
- The integrity of Umgeni Water’s financial statements
- Compliance with legal and regulatory requirements
- The external auditor’s independence and qualifications
- The performance of Umgeni Water’s internal audit function and that of the external auditors
- Internal controls over financial reporting and compliance with ethical standards adopted by Umgeni Water
- The adequacy and effectiveness of Umgeni Water’s financial, operating, compliance and risk management controls
- Reviewing the management of risk and monitoring control effectiveness.
The committee is responsible for meeting with the internal and external audit teams of Umgeni Water, where reviews of auditing concerns identified by internal and external audits are discussed.
This committee is supported by two management committees, namely the Corporate Risk Management Committee and the Fraud Prevention Committee. The Fraud Prevention Committee is chaired by an independent professional. The chairpersons of both management committees attend all meetings of the Audit Committee and report on matters relating to risk and fraud prevention.
Remuneration and Human Resources Committee
This committee comprises seven non-executive directors and the Chief Executive. It is chaired by Ms Nompumelelo Chamane. The committee reviews and recommends to the Board all matters relating to:
- Human Resources policies, organizational structure and compliance with the Employment Equity Act, 55 of 1998
- Conditions of employment of executive management
- Appointment of the Chief Executive and members of executive management
- Remuneration packages for the Chief Executive, members of executive management and staff
- Succession planning for executive management
- Policies and practices for Performance Management
- Special rewards recommended by the Chief Executive.
Capital Projects, Fixed Assets and Procurement Committee
This committee comprises nine non-executive directors and the Chief Executive. It was chaired by Ms Nombuso Afolayan. The committee was established to assist the Board in its duties relating to the management of capital expenditure for expansion and diversification programmes, compliance to supply chain management and safeguarding of Umgeni Water’s assets. The committee reviews and recommends to the Board all matters relating to:
- The five-year capital expenditure programme
- Proposed investments having a value greater than authorized limits
- Transfer and/or disposal of assets within specified limits.
- The committee also assists The Board with procurement decisions and approves procerement policies, tenders and contracts within its delegated authority.
Code of Ethics
The Board of Umgeni Water has approved an Ethics Policy which provides guidelines for executive management and employees at all levels to conduct every business activity with integrity, honesty, morality and in an appropriate manner.
Risk Profile and management
The Board of Umgeni Water, assisted by the Audit Committee, is ultimately accountable for risk management. The aim of Integrated Risk Management is to ensure that in all Umgeni Water activities, opportunities are maximised and adversity minimised through adequate management of multidisciplinary risks. In recognising risk as all sources of uncertainty that could affect, positively or negatively, the organisation’s ability to achieve its strategic and business objectives, Umgeni Water has developed and maintains policies and procedures to provide a systematic view of the risks faced in the course of its operations, business and administration activities, and institutes effective control mechanisms to mitigate the impacts of risk, to ensure organisational sustainability. Through iterative risk assessment Umgeni Water has identified and rated strategic risks. A Priority Scale guides both the risk accountability and the risk appetite of Umgeni Water.
Divisional and operational risk assessments are undertaken, identifying risks which limit divisions in achieving strategic objectives, and subsequently mitigations are implemented to manage these risks. Results of risk assessments and mitigations implemented are monitored by the Corporate Risk Management Committee and reported to the Board via the Audit & Risk Committee.
Fraud Prevention
A Fraud Prevention Plan has been developed by the Fraud Prevention Committee in accordance with the Public Finance Management Act. An external professional chairs the Fraud Prevention Committee. The key focus of the Fraud Prevention Committee is to proactively fight fraud and action the Fraud Prevention Plan. The committee has unlimited access to the Chairperson of the Audit Committee and the Chief Executive. Umgeni Water continues to operate the fraud prevention hotline, which is administered by KPMG. The whistle-blowing facility has assisted in ensuring that the risk of fraud is minimised and monitored.
In order to direct Umgeni Water’s Disaster Risk Management efforts in alignment with the provisions of the South African Disaster Management Act, No 57 of 2002, Umgeni Water has formulated a multidisciplinary framework. The organisation currently has implementation guidelines and plans for High River Levels and Dam Break disaster scenarios, as well as engagement protocols for water quality emergencies.
Audit and controls
The Board is responsible for the maintenance of effective and efficient systems of internal control. The internal control systems are designed to provide reasonable assurance that assets are safeguarded and that liabilities and working capital are efficiently managed. Principal features of the organisation’s internal finance controls are:
- A system of financial planning, budgeting and reporting which allows continuous monitoring of performance
- A materiality and significance framework
- Clearly-defined delegations of authority
- The establishment of a short, medium and long-term funding strategy
- The tariff model which determines the financial impact of capital expenditure and the bulk water tariff on Umgeni’s debt curve
- Established policies and procedures.
To assist the Board in the discharge of its responsibilities, internal audit undertakes an independent assessment of the internal control systems and business risks and reports to the Board through the Audit Committee.
The audit plan covers major financial and commercial risks and responds to any changes emanating from Umgeni Water’s integrated risk management process.
The external auditors are responsible for independently auditing and reporting on the financial statements in accordance with the International Financial Reporting Standards.
Compliance to Water Services Act 108 of 1997 & PFMA
As a good corporate citizen, Umgeni Water complies with the laws of the country. The organisation’s policies are continually reviewed to ensure it responds to relevant legislation.
The Water Services Act 108 of 1997, as amended, and the Public Finance Management Act set out the exact operational and fiduciary duties of the Board. In order to increase the Board’s understanding of the legislation, Board members are kept abreast of developments in legislation through presentations and memoranda.