Annual Financial Statements for the year ended 30 June 2021 0 - Book - Page 8
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SASOL LIMITED GROUP
Report of the Audit Committee continued
Key Issues
Judgments in Financial
Reporting
Accounting for
provisions
• Post-retirement benefit
obligations
Accounting
for financial
instruments
(in conjunction
with the board’s
Capital Investment
Committee)
• Derivative financial
instruments
Audit Committee Review
Conclusions
• The Committee received an update
• The Committee reviewed the net poston the status of funding, investment
retirement benefit assets in South
and governance of pensions and
Africa and Europe and the related
Valuation of the
other
retirement
benefits
provided
surpluses. The Committee reconfirmed
post-retirement benefit
to current and former employees of
that Sasol is entitled to these surpluses
obligation requires the use
Sasol. In addition, the Committee
in terms of the pension fund rules and
of assumptions in relation
examined the assumptions used by
supported the recognition thereof. The
to uncertain future factors
management as part of its annual
valuations are performed by qualifying
i.e. inflation rates, discount
reporting process.
independent third parties.
rates, salary increases and
• The Committee reviewed the
mortality rates. Judgement • The Committee received briefings on
the Group’s rehabilitation provisions
rehabilitation provisions for compliance
is also required in the
and asset retirement obligations,
with legislation and consistent
measurement of the fair
environmental remediation strategies,
application of the accounting policy.
value of certain pension
including the key assumptions
assets.
used, the governance framework
• Rehabilitation provisions
applied (covering accountabilities
Provisions are
and controls), discount rates and the
recognised for the
movement in provisions over time.
full future restoration
• Considered the external auditors’
and rehabilitation of
assurance process which included the
production facilities to the
use of their Specialists in pension and
end of its economic lives.
environmental matters.
Most of these activities
will occur in the long-term
and the requirements
that will have to be met in
future might be uncertain.
Judgement is required in
estimating future cost and
cash outflows, discount
rates, settlement dates,
technology and legal
requirements.
Valuation of derivatives
requires the use of
assumptions in relation to
uncertain future factors
i.e. forward curves,
volatility assumptions and
discount curves.
• Hedge accounting
Designated hedge
relationships are evaluated
for effectiveness at
each reporting period.
Judgement is required
in the measurement of
effectiveness, and the
methodologies utilised to
calculate the effectiveness.
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• The Committee reviewed the
assumptions in the calculations, and
critically assessed the competence,
independence and objectivity of the
financial instrument’s specialists
engaged to perform the valuations.
• The Committee obtains updates
at each reporting date as to the
effectiveness of designated hedges,
as well as risk factors for potential
future ineffectiveness.
Sasol Annual Financial Statements 2021
• The Committee reviewed the valuations
undertaken by the external financial
instrument’s specialists, which
supported the accounting entries.
• The Committee reviewed the adequacy
of the disclosures relating to derivative
financial instruments.