Although the ultimate accountability for structure, accountability and risk management remains with the board of directors, ARC’s main responsibility is to oversee and ensure proper governance of the auditing function and identification and management of risk of the company. The board increasingly looks to board committees to provide assurance and as chairman of the ARC, I can applaud the level of expertise serving on this committee, as they continue to monitor and review these tasks.

Trustco, a company with an integrated structure, encourages transparency, cooperation and integration between the external and the internal audit function.   This enables ARC to get a clear understanding of the strengths and weaknesses of the group’s internal control management systems.  Any identified weaknesses are dealt with immediately.

ARC has an ongoing responsibility to assess the effectiveness of the control framework, and therefore gathers information from management and also from the external and internal audit as part of our assessment process.  This leads to ARC challenging and testing management as well as the external and internal auditors on any assessment they may have made.  We are constantly briefed on how management is embedding a culture of good governance and ethical behaviour.  Although embedding such a culture does not guarantee that the group will achieve their goals, the lack of such culture provides greater opportunity for error or for improprieties to occur.

I think in future ARC will play an even more integrated part of a company’s reporting structure. It is therefore imperative for every ARC member to have in-depth financial knowledge as well as the
ability to apply business experience
into practical application.

Risk and reward are two sides of the same coin.  Risk in itself is not bad.  What is bad, is risk that is mismanaged, misunderstood or mispriced.  The board of directors determined the risk tolerance for the group and ARC is constantly testing, monitoring and implementing safety measures to ensure that the risk tolerance of the group is not enthused.  The risk tolerance of the group is clearly identified and defined.  To help management to identify risk indicators, ARC is informed of the risks and exposures which the company may face.  ARC is also updated regularly on the company’s strategic objectives, procedures and evaluations.

Risk is not only measured in monetary value, but reputational risk is also of great importance.  How the group’s actions are perceived by others in the market adds another layer of responsibility to be a good corporate citizen.  The environment in which a company operates, the social impact it has and the economic impact and influence are all factors that must be considered when measuring risk.

To be a good corporate citizen might be attainable, or even achievable through regulatory enforcement, but being a good corporate citizen is not good enough. Trustco holds itself to a higher standard, where good is not good enough, but aims for better.

Trustco is not a company that engages in a “box-ticking” exercise to ensure compliance, but rather sees compliance as a means to enhance shareholder return.  As chairman of the ARC I can enthusiastically congratulate the company for actively pursuing good governance, cultivating a culture of excellence, and at all times being transparent. (Refer to corporate
governance report)

I would like to use this opportunity, to thank all members of the committee for their considerable effort and the devotion with which they have executed their duties during the year.  The management of internal audit, risk and compliance does not always have an easy task. They often experience challenging views and opinions from management, but their dedication and resilience is truly commendable.Kudos to their integrity
and steadfastness.

Winton Geyser

Chairman of the audit and risk committee