LIGHTHOUSE PRINCIPLE: STRUCTURE
(based on ASX Principle 2)
The Audit Office has a well-defined governance structure consisting of the Office Executive, independent Audit and Risk Committee and Remuneration Committee, as well as an external audit function and an internal audit function (see independent assurance and corporate reporting).
The Office Executive, with the Auditor-General as Chair, directs the affairs of the Audit Office and is responsible for:
- setting the strategic direction and monitoring performance against the Audit Office’s Corporate Plan and Future State Roadmap
- setting direction on the impact to the Audit Office of key changes to standards, legislation and machinery of government change that have a whole-of-office consequence
- ensuring the Audit Office is compliant with relevant laws, directions, codes and practices, ensuring key policies are regularly reviewed, up-to-date and relevant, as well as embedding a culture of compliance
- operating in accordance with the Audit Office’s values and embedding a culture of ethical and lawful behaviour
- overseeing the Audit Office’s financial performance and sustainability.
The Office Executive consists of the Auditor-General as Chair, the Deputy Auditor-General, Assistant Auditors-General from Financial Audit and Performance Audit, and the Executive Director Corporate Services. Meetings are also attended by the Executive Director Quality and Innovation, the Director of the Office of the Auditor-General as the Chief Risk Officer and Chief Audit Executive, and from time to time by management representatives. The CFO attends all monthly meetings.
The Office Executive has a broad level of experience, skills, and diversity to fulfil its oversight role. This includes disciplines in economics, accounting, law and business administration, experience in local and state government and the private sector, and diversity in gender and age consisting of four women and three men (at 30 June 2018) within a diverse age range. For further details on the skills and experience of members see the Office Executive.
Key focus areas for the Office Executive during 2017–18 included:
- carrying out our new mandate to audit local government
- reassessing and tracking progress against the Audit Office’s Corporate Plan
- overseeing the Audit Office’s strategic initiatives including Local Government, Influencing for Impact, Reporting Process, Working Better, Working Together, Data Analytics, and Technology and Process Innovation
- reviewing the Audit Office’s strategic risks and monitoring actions to mitigate each strategic risk to an acceptable level
- working with NSW Treasury on their Financial Management Transformation program and associated legislation.
Audit and Risk Committee
The Audit and Risk Committee assists the Auditor-General by providing oversight and review of governance, risk management and internal control frameworks. In 2017–18, the committee reviewed:
- the strategic risk register, project risk management, fraud framework, and business continuity and disaster recovery plans
- the internal and external audit plan, internal and external audit reports and follow up of recommendations from these reviews
- the process for appointing the contracted internal audit service provider
- financial results and annual financial statements
- compliance with relevant applicable laws, regulations, government policies and directions, and Audit Office policies
- the internal control framework.
Management provided the committee with regular updates on progress against the Corporate Plan – important information for them to fulfil their responsibilities.
Our Governance Unit assessed the committee’s activities in 2017–18 to confirm compliance with Treasury Policy Paper Internal Audit and Risk Management Policy for the NSW Public Sector (TPP 15-03). For a copy of the attestation statement see page 121. The committee’s charter is also in line with the requirements of TPP 15-03 and can be found on our website.
The committee prepared an annual report to the Auditor-General for the first time outlining its activities and achievements in the previous year and will continue to do this each year.
The Audit and Risk Committee consists of three independent members – Dianne Hill (Chair), Bruce Turner AM and new member John Gordon who joined on 1 November 2017. The independence, integrity, and experience of the Audit and Risk Committee members are key strengths, providing insight and enhancing our operations.
Greg Fletcher completed his term as member on 3 December 2017. Greg made a strong contribution to the ARC and we are thankful for all his excellent work on this committee.
Dianne Hill was appointed on 12 December 2016 as Chair for a final term until 28 August 2021. Dianne brings considerable experience having been an independent non-executive director for over 25 years at several organisations. Dianne has 30 years experience in chartered accounting, project and business consulting, financial services and risk.
Bruce Turner AM was appointed on 17 February 2017 for a four-year term. Bruce brings extensive experience sitting on audit and risk committees within the state government and not-for-profit sectors, as well as governance committees in the local government sector. Bruce has also been involved through Chief Audit Executive roles in large and diverse state and federal government agencies.
John Gordon was appointed on 1 November 2017 for a three-year term. John has over 40 years experience providing assurance, advisory and corporate governance assistance to a broad range of clients in the private and public sectors. This includes 22 years as an audit and assurance partner with PwC Australia. He was a founding member of the NSW Department of Local Government Accounting Advisory Committee with 35 years of continuing involvement in the local government sector. John currently serves on several audit and risk committees and boards.
The Auditor-General, Deputy Auditor-General, Director Office of the Auditor-General (as Chief Audit Executive and Chief Risk Officer), internal and external auditors, and management representatives attend committee meetings. The committee also met independently, without management, with the internal and external auditors, Chief Audit Executive and Auditor-General.
Committee members also provided annual written conflict of interest declarations to the Auditor-General which were verbally confirmed at the start of each meeting. There were no conflicts of interest declared that prohibited the continuing engagement of the members of the Audit and Risk Committee.
Please see our ‘Disclosure’ section for information on the Remuneration Committee.
Formal Office Executive meetings attended*
- A total of 10 formal meetings were held.
Audit and Risk Committee meetings attended*
- A total of five meetings held, including one special meeting to review the annual financial statements.
*Individual committee members sit on various boards and audit and risk committees for councils, state government agencies and public companies. These memberships are captured and appropriately managed on a conflict of interest register. This register is publicly available on our website.