Sasol Form 20-F for the year ended 30 June 2021 - Book - Page 107
Ethics Process - Inadequate procedures to
ensure that internal complaints as to the
LCCP were escalated appropriately; and
Project-related Control Environment - A
culture of excess deference within the
control environment that oversaw LCCP
that caused certain individuals with
control responsibilities and in oversight
committees, including but not limited to
the Steering Committee created to oversee
LCCP, to exhibit insufficient scepticism
toward reporting by the LCCP leadership
team.
assets under construction, remeasurement
items affecting operating profit (impairment of
property, plant and equipment and assets under
construction) account balances and
disclosures.
One of the remediation actions
pertaining to the material weakness that
existed at 30 June 2020 required additional
review procedures of the South African
integrated value chain impairment assessments
within one segment of the company to ensure
that the controls are functioning effectively
within that segment. As a result of this review
conducted by management of the calculations
during 2021, management detected that a
portion of gas feedstock costs was erroneously
omitted from the South African integrated
value chain impairment assessment since
2015. This led to an overstated valuation of the
company’s gas dependent value chains and
therefore an incorrect impairment was
recognised. Furthrmore, during the current
year it was also determined that the Ammonia
cash generating unit’s carrying value used in
the 2020 impairment assessment was
understated as a result of an error in the
carrying value calculation resulting in an
understatement in the impairment recognised
for 2020. In accordance with SAB No 99
'Materiality', the company evaluated the effect
of the prior period errors, both quantitatively
and qualitatively, and concluded that the
corrections did not have a material impact on,
nor require amendment of, any of the
company’s previously issued or filed financial
statements taken as a whole. However, if the
adjustments to correct the cumulative errors
had been recorded in 2021, the company
believes the impact would have been
significant to the 2021 annual results and
would have impacted comparisons to prior
periods. Accordingly, the company revised the
2021 consolidated financial statements
comparative results for 2018, 2019 and 2020.
Our management has determined that
this now remediated material weakness led to
a misstatement in the disclosure of the
Company’s capital commitments for the year
ended 30 June 2018, which was revised in the
Company’s consolidated financial statements
for the year ended 30 June 2019.
(ii)
Material Weakness with respect to the level of
precision applied to the impairment
assessments performed on certain cash
generating units related to the South African
integrated value chain within one segment of
the company, which has now been expanded to
all the cash generating units within the South
African integrated value chain.
Management concluded that the
controls designed and implemented to review
the results of impairment assessments
performed on the South African integrated
value chain cash generating units in one
segment of the company did not operate at the
required level of precision to prevent or detect
a material misstatement. Specifically, these
controls did not effectively function at the
level of precision required to ensure that the
assumptions applied in determining cash flow
projections are reasonable in response to
changes in the business environment and that
the discounting principles applied aligns to
group policy. These deficiencies impacted the
determination of the recoverable value of these
cash generating units for the purpose of
impairment assessments. This material
weakness resulted in an audit adjustment that
was recorded to the company’s consolidated
financial statements for the year ended 30 June
2020 related to property, plant and equipment,
The deficiencies previously identified
within one segment of the company has
accordingly been expanded to the wider South
African integrated value chain impairment
assessment process.
Management concluded that the
material weakness identified above (although
106