From intergrated annual report for year ended 31 December 2020

The group remains committed to the highest standards of governance, ethics and integrity through an ethical culture, competitive performance, effective control and legitimacy in order to create sustainable value and enhance long term equity performance. The board continues to provide prudent and ethical leadership and continues to exercise appropriate governance oversight in this regard.
The directors are ultimately responsible for ensuring compliance with all relevant laws, regulations and codes throughout the group, which compliance is monitored and reported on at both committee and board level. The board and its committees continue to monitor closely the implementation of Bell Equipment’s legal compliance processes and improve upon them to mitigate the risk of non-compliance with the laws in the various jurisdictions in which it does business. The group has an established and comprehensive group approvals framework that is reviewed annually and is aimed at clarifying the various limits of authority in place within the group. The board recognises that delegating authority does not reduce the responsibility of directors to discharge their statutory and common law fiduciary duties. As a parent company Bell Equipment Limited strives to exercise appropriate governance oversight over its subsidiaries while acknowledging their independence and the legal and governance responsibilities that apply to each subsidiary.

King IV principles

Bell Equipment supports the governance outcomes, principles and practices of King IV. The group views developments and governance trends as opportunities to continuously improve and entrench its own standards. Bell Equipment has considered its application of and adherence to the King IV principles and the group materially complies with the principles of King IV and continues to identify areas where the recommended practices can be applied, enhanced and entrenched in its governance structures, systems, processes and procedures so that they support and give effect to the aspiration as expressed in those principles. Practices are scaled in accordance with proportionality considerations and are interpreted and applied in a way that is appropriate for the group and the sector in which it operates. Bell Equipment’s report on the application of the King IV principles is available here.

Ethics

Through the code of ethics and code of business conduct, the group confirms its commitment to high ethical and legal standards in dealing with its stakeholders. The board accepts responsibility for ensuring that the group’s business is conducted honestly, fairly, legally, reasonably and transparently. Management is driving this leadership culture of ethical conduct by establishing the correct tone at the top in respect of the group’s corporate culture by ensuring it is based on the 1-Bell philosophy and aligning it to evolving best practice.

Corruption is a risk that is managed on an ongoing basis, particularly in the diverse areas in which the group operates. Ongoing awareness training on the prevention of fraud and commercial crimes and the entrenchment of applicable policies set stringent standards relating to fraud and the prosecution of offenders, the acceptance of gifts from third parties and declarations of potential conflicts of interest.

The annual submission by employees of their electronic employee governance declarations confirming their compliance to the group codes and policies; their declaration of any potential conflicts of interest as set out in the conflicts of interest policy as well as their disclosure of any approved outside activities, continue to be undertaken. Any non-compliance with policies or perceived material conflicts of interest is reviewed and addressed by the GEC.

The established fraud working group meets quarterly or more regularly when required and monitors and oversees the investigation of all fraud related and unethical matters and reassesses the adequacy of the internal control environment (particularly those controls directly impacting on the incidents). The fraud working group provides strategic guidance to different departments on fraud and unethical behaviour detection and preventative actions. Fraud awareness training in prevention and detection of fraud in the workplace is ongoing and the staff are encouraged to report suspected fraudulent or unethical behaviour on a confidential basis via the anonymous tip off reporting line. Awareness of this facility is created through presentations, newsletters and encouragement of staff to report such incidents before significant losses are incurred. All matters reported through the anonymous tip off reporting line are also assessed by the fraud working group and meetings are set up with the internal auditors and investigators to ensure matters are effectively investigated in terms of the group prevention of fraud and commercial crime policy.

Financial statements and external review

As a part of Bell Equipment’s corporate governance policy, the implemented standards and systems of internal controls continue to be improved by management to provide reasonable assurance on the integrity and reliability of the financial statements and to adequately safeguard, verify and maintain accountability for shareholder investments and group assets.

The board is of the opinion that the internal financial controls are adequate and that the financial records can reliably be used for preparing the financial statements in accordance with IFRS and to maintain accountability for the group’s assets and liabilities. The recent JSE Listings Requirements’ amendments relate to internal financial controls where the primary responsibility for internal controls over the financial reporting process and the accuracy of financial reporting rest with the board and management (specifically the chief executive and chief financial officer) of the group. The board has identified and defined the critical internal financial controls and understood what the impact on control failure will have on the group, developed a framework to establish an approach of how the identified controls will be evaluated and developed a standard consolidated report of the critical controls identified and evaluated to monitor the level of adequacy and effectiveness frequently. This allows the chief executive and chief financial officer to provide the necessary representation that the essential internal financial controls are adequate and operating as intended.

During the year under review management identified certain concerns relating to the group’s accounting for the standard warranty provision on manufactured equipment sales. An independent firm of accounting specialists and subsequently an external legal advisor were appointed to assist management and this process resulted in the restatements of previously reported financial results as reflected in note 5 of these annual financial statements. The directors are satisfied that the steps taken by management remediated the controls in this area by year end to support the reliability of the group’s 2020 financial results. No other matters came to the attention of the directors to indicate that any other material breakdown in the functioning of controls had occurred during the year and up to the date of this report.

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