Sasol Form 20-F for the year ended 30 June 2021 - Book - Page 106
previously disclosed in our Annual Report on Form 20F for the year ended 30 June 2019 and described in (i)
below has been remediated and closed out. The
management review arising from the remediation
actions in relation to the material weakness described in
(ii) below identified as of 30 June 2020 with respect to
the level of precision applied to the impairment
assessments performed on the South African integrated
value chain cash generating units within one segment of
the company, has now been expanded to all the cash
generating units within the South African integrated
value chain.
the reliability of the company’s financial reporting and
the preparation of financial statements for external
purposes in accordance with generally accepted
accounting principles.
Internal control over financial reporting
includes those policies and procedures that (i) pertain to
the maintenance of records that in reasonable detail
accurately and fairly reflect the transactions and
dispositions of our assets; (ii) provide reasonable
assurance that transactions are recorded as necessary to
permit the preparation of financial statements in
accordance with generally accepted accounting
principles, and that receipts and expenditures are being
made only in accordance with authorisations of our
management and directors; and (iii) provide reasonable
assurance regarding prevention or timely detection of
unauthorised acquisition, use or disposition of assets
that could have a material effect on the financial
statements.
(i)
Material Weakness with respect to the capital
cost estimation process implemented in
connection with the LCCP, which resulted
from the aggregation of a series of individual
control and project-related control
environment deficiencies
As previously disclosed, our
management concluded that the material
weakness identified above was the result of a
number of deficiencies:
Because of its inherent limitations, internal
control over financial reporting may not prevent or
detect misstatements. Therefore, even those processes
of internal control over financial reporting determined
to be effective can provide only reasonable assurance
with respect to the reliability of financial reporting and
preparation of financial statements for external
purposes in accordance with IFRS.
Management assessed the effectiveness of the
company’s internal control over financial reporting as
of 30 June 2021. In making these assessments,
management used the criteria set forth by the
Committee of Sponsoring Organisations of the
Treadway Commission (COSO) in “Internal Control—
Integrated Framework (2013)”.
Material Weaknesses
Competence - Insufficient experience
within the LCCP leadership team in
executing mega projects;
Conduct - Inappropriate conduct and an
improper tone at the top of the LCCP,
including an excessive focus on
maintaining cost and schedule estimates at
the expense of providing accurate cost and
schedule estimation to oversight bodies
(including the Joint Chief Executive
Officers) within the company;
Segregation of Duties - Insufficient
segregation of duties of the LCCP project
controls environment from the LCCP
project execution environment, which
prevented the identification of certain
potential errors in cost and schedule
estimation;
Control Procedures - Inadequate control
procedures within the LCCP control
environment that allowed erroneous
and/or unsupported reporting by the
LCCP leadership to go unchallenged
without proper escalation of potential red
flags;
A material weakness is a deficiency, or
combination of deficiencies, in internal control over
financial reporting, such that there is a reasonable
possibility that a material misstatement of financial
statements will not be prevented or detected on timely
basis.
Based on its assessment, management has
determined that the company’s internal control over
financial reporting still remains ineffective as of 30
June 2021 due to the existence of the material weakness
described in (ii) below. The material weakness with
respect to the capital cost estimation process
implemented in connection with the LCCP, as
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