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PRINCIPLE 4: SAFEGUARD INTEGRITY IN FINANCIAL REPORTING

Financial reporting
CEO and CFO declaration
Consistent with ASX Principle 4, and in accordance with section 295A of the Corporations Act 2001, the company’s financial report preparation and approval process for the financial year ended
30 June 2007 involved both the Managing Director (Chief Executive Officer) and Finance Director (Chief Financial Officer) providing a written statement to the Board that, in their opinion:

  • the company’s financial report presents a true and fair view of the company’s financial condition and operating results and is in accordance with applicable accounting standards; and
  • the company’s financial records for the financial year have been properly maintained in accordance with section 286 of the Corporations Act 2001.

This statement was also signed by the General Manager, Group Accounting.

Audit Committee
The Audit Committee monitors internal control policies and procedures designed to safeguard company assets and to maintain the integrity of financial reporting, which is consistent with ASX Principle 4.

The Audit Committee has the following specific responsibilities (as set out in its Charter):

  • reviewing all published financial accounts of the company and discussing the accounts with the external auditors and management prior to submission to the Board;
  • reviewing any changes in accounting policies or practices and subsequent effects on the financial accounts;
  • reviewing with management, the terms of the external audit engagement;
  • reviewing and assessing non-audit services to be provided by the external auditor;
  • monitoring and assessing the systems for internal compliance and control, legal compliance and risk management;
  • reviewing and monitoring the company’s continuous disclosure policies and procedures; and
  • advising on the appointment, performance and remuneration of the external auditor.

The members of the Audit Committee at the date of this report are:

  • Mr David White (Chairman)
  • Mr James Graham
  • Mr Anthony Howarth (from 1 September 2007)
  • Mr Richard Lester
  • Mr Charles Macek

Mr Trevor Flügge served as a member of the committee until 3 July 2006 and Dr Robert Every served on the committee until
1 September 2007.

The Finance Director, the General Manager, Group Accounting, the Group Internal Audit Manager, the Company Secretary, the external auditor (Ernst & Young), and any other persons considered appropriate, attend meetings of the Audit Committee by invitation.

The committee also meets from time to time with the external auditor in the absence of management.

The composition, operations and responsibilities of the committee are consistent with ASX Principle 4.

The committee met eight times during the year ended 30 June 2007. Details of meeting attendance for committee members are set out in the Directors’ Report on page 121 of the Financial statements.

The Audit Committee’s Charter is made available from the corporate governance section of the company’s website.

Independence of the External Auditor
Appointment of auditor
The company’s external auditor is Ernst & Young. The effectiveness, performance and independence of the external auditor is reviewed by the Audit Committee. If it becomes necessary to replace the external auditor for performance or independence reasons, the Audit Committee will formalise a procedure and policy for the selection and appointment of a new auditor.

Independence declaration
The Corporations Act 2001 requires the external auditor to make an annual independence declaration, addressed to the Board, declaring that the auditor has maintained its independence in accordance with the Corporations Act 2001 and the rules of the professional accounting bodies.

Ernst & Young has provided an independence declaration to the Board for the financial year ended 30 June 2007. The independence declaration forms part of the Directors’ Report and is provided on page 124 of the Financial statements.

Rotation of lead external audit partner
Mr Sean Van Gorp is the lead audit partner for Ernst & Young in relation to the audit of the company.

Mr Van Gorp’s appointment was effective on 1 July 2006. Mr Greg Meyerowitz was previously the lead audit partner.

Restrictions on the performance of non-audit services by external auditors
As part of the company’s commitment to safeguarding integrity in financial reporting, the company has implemented procedures and policies to monitor the independence and competence of the company’s external auditor.

The Audit Committee has implemented a process that requires the prior approval of the Company Secretary for the provision of any non-audit services to the company or its related companies by the external auditor. In cases of uncertainty, a proposed engagement is referred to the Audit Committee. The Audit Committee has also approved guidelines to assist in identifying the types of services that may compromise the independence of the external auditor. Examples of services that are considered to potentially compromise audit independence include valuation services and internal audit services. Details of fees paid (or payable) to Ernst & Young for non-audit services provided to the Wesfarmers group in the year ended 30 June 2007 are set out in the Directors’ Report on page 123 of the Financial statements.

The Board has considered the nature of the non-audit services provided by the external auditor during the year and has determined that the services provided, and the amount paid for those services, are compatible with the general standard of independence for auditors imposed by the Corporations Act 2001 and that the auditor’s independence has not been compromised.

Attendance of external auditors at annual general meetings
In accordance with ASX Principle 6 and the Corporations Act 2001, Ernst & Young attend and are available to answer questions at the company’s annual general meetings. In addition to their right to ask questions at annual general meetings, shareholders may submit written questions for the external auditors to the Company Secretary no later than five business days before an annual general meeting.