Audit Committee Charter

Updated: 22 September 2020

Introduction

The Electoral Commissioner has established an Audit Committee in accordance with section 45 of the Public Governance, Performance and Accountability Act 2013 (PGPA Act) and section 17 of the Public Governance, Performance and Accountability Act Rule 2014 (PGPA Rule) referred to in this Charter as the Business Assurance Committee (BAC).

Functions

The functions of the committee are to review the appropriateness of the Australian Electoral Commission’s (AEC):

  • financial reporting
  • performance reporting
  • systems of risk oversight and management, and
  • systems of internal control.

This Charter is principles based with an accompanying annual work plan detailing the activities the Committee will undertake in acquitting its functions. The Charter and annual work plan are approved by the Electoral Commissioner.

Financial reporting

The BAC will provide written advice to the Electoral Commissioner regarding the appropriateness of the AEC’s financial reporting as it relates to annual financial statements. This will include review of the AEC’s annual financial statements, including planning, assurance, risks, key accounting policies, significant accounting judgements and estimates, for preparation of the financial statements and supplementary reporting pack. The BAC will consider any issues which may prevent the signing of the AEC’s financial statements or relate to non-compliance with relevant legislation and guidance.

Performance reporting

The BAC will provide written advice to the Electoral Commissioner regarding the appropriateness of the AEC’s performance reporting including the annual performance statement. This will include review of the AEC’s performance reporting framework, including compliance with relevant legislation and guidance, being fit for purpose and supported by appropriate systems, processes and controls to report results completely and accurately. It will also include consideration of the AEC’s approach for developing appropriate measures against which the AEC assesses its performance.

System of risk oversight and management

The BAC will provide written advice to the Electoral Commissioner on the appropriateness of the AEC’s system of risk oversight and management, including compliance with relevant legislation and guidance. This will include review of the AEC’s Risk Management Framework, Fraud Control Framework and consideration of the effectiveness of management’s processes to identify and manage key risks, including those related to fraud.

System of internal control

The BAC will provide written advice to the Electoral Commissioner on the appropriateness of the AEC’s system of internal control. Based on the results of the AEC’s Internal Audit and Assurance Plan, this will include review of key elements of the AEC’s internal control framework, such as relevant policies and procedures, internal controls, and processes for monitoring the effectiveness of key controls and compliance with relevant policies and legislation. It will also include review of internal audit coverage, reporting and remedial action taken by management.

Internal Audit Function

The BAC will review the effectiveness of the internal audit function as a whole and advise on the:

  • audit strategy adopted by internal audit and their systems and procedures, including independent review of the function from time-to-time
  • proposed internal audit and assurance plan to ensure coverage takes into account the AEC’s key risks, including the adequacy of resources available to complete the plan. The BAC will be consulted on and recommend the approval of the internal audit and assurance plan to the Electoral Commissioner
  • findings of internal audits and management’s response to the findings, including that the identified recommendations are being appropriately actioned, and
  • overall achievements and performance of the internal function against approved plans.

To ensure that internal audit is operating without undue influence, the BAC will have a discussion with internal audit, at least once a year, without management in attendance and the Chair of the BAC shall be consulted on the appointment of the Chief Internal Auditor.

ANAO – External Auditors

The BAC will engage with the Australian National Audit Office (ANAO), the AEC’s external auditor, in relation to the ANAO’s financial statement and performance audit coverage. In particular, the BAC will:

  • provide input on planned ANAO financial statement and performance audit coverage,
  • monitor management’s responses and implementation of recommendations relating to all ANAO financial statement management letters and reports
  • monitor management’s responses and implementation of audit recommendations relating to ANAO performance audits.

Membership

The BAC will consist of a minimum of three [3] members, appointed by the Electoral Commissioner, the majority of which will be external. The Electoral Commissioner will appoint an external Chair to the BAC and a Deputy Chair who will act as a chair in the absence of the Chair.

BAC members are appointed for an initial period not exceeding two years, and can be re-appointed for a further period not exceeding two years. Members may be eligible for an extension beyond these initial terms after a review of their performance.

In appointing Members, consideration will be given to ensuring there is an appropriate balance between continuity of membership, the contribution of fresh perspectives, and a suitable mix of qualifications, knowledge, skills and experience.

Advisors, as agreed by the Electoral Commissioner and the Chair, may be appointed to support the BAC fulfil its functions. These advisors will receive all papers and attend all meetings but are not considered part of the quorum and do not have voting rights.

The members, should collectively, develop, possess and maintain a broad range of skills and experience relevant to the operations and governance of the AEC, the environment in which the AEC operates and the contribution that the BAC makes to the AEC.

Members of the BAC are to:

  • understand and observe the legal requirements of the PGPA Act, PGPA Rule and Public Governance, Performance and Accountability (Financial Reporting) Rule 2015 (FRR), and any official guidance relevant to performing their functions,
  • gain a good understanding of the AEC’s functions, objectives and operational context,
  • act in best interests of the AEC as a whole,
  • apply good analytical skills, objectivity and good judgement,
  • continuously build, apply and maintain appropriate experience and awareness of the AEC’s and the broader public sector operating context,
  • express opinions constructively and openly, raise issues that relate to the BAC’s responsibilities and pursue independent lines of enquiry, and
  • contribute the time required to meet their responsibilities.

The membership arrangements, including such things as remuneration, the qualifications, knowledge, skills or experience of Members, is included in the AEC’s Annual Report.

Conduct of the BAC

The BAC is directly accountable to the Electoral Commissioner for the performance of its functions.

It has no executive powers in relation to the operations of the AEC. The BAC may only review the appropriateness of particular aspects of those operations, consistent with its functions, and advise the Electoral Commissioner accordingly.

From time to time the BAC may seek advice from external specialists to assist discharge its functions. The engagement of external specialists must be authorised by the Electoral Commissioner and comply with the Commonwealth Procurement Rules.

Relationships

In performing its responsibilities, the BAC will provide a forum for communication between the Electoral Commissioner, senior managers and the internal and external auditors of the AEC.

Management

To support the AEC achieve better business outcomes the BAC will engage with management in a timely, constructive and professional manner in discharging its advisory responsibilities and formulating its advice to the Electoral Commissioner.

Management may present and/or provide reports to the BAC within the scope of the BAC functions.  

Governance Committees

The BAC will develop and maintain relationships with the strategic committees to ensure a strategic approach is taken to providing assurance on the appropriateness of the AEC’s accountability and control frameworks. This may include members of the BAC being appointed as advisors or observers to these Committees. Members appointed on governance committees will provide reports (written or verbal) back to the BAC. 

Australian National Audit Office (ANAO)

In undertaking its functions, the BAC will engage with the ANAO, as the AEC’s external auditor, in relation to the ANAO’s financial statements and performance audit coverage.

Authority

The Electoral Commissioner authorises BAC, in performing its functions to:

  • Obtain any information required from any employee or external party (subject to any legal obligation to protect information);
  • Discuss any matters with the external auditor, or other external parties (subject to confidentiality considerations);
  • Request the attendance of any employee, including the Electoral Commissioner, at BAC meetings; and
  • Obtain legal or other professional advice, as considered necessary to meet its responsibilities, at the AEC’s expense, subject to approval by the Electoral Commissioner, or delegate.

Sub-committees

BAC, in consultation with the Electoral Commissioner, may establish sub-committees to assist it fulfil its responsibilities. A member of the BAC may be appointed as the Chair of the sub-committee. The establishment of a BAC sub-committee does not change the functions of BAC under this Charter.

The sub-committee will document its responsibilities, membership and reporting arrangements for approval by the BAC.

The Chair of the Sub-committee will report to the BAC after each meeting. Any matter deemed of sufficient importance will be reported to the Electoral Commissioner through the Chair of the BAC.

Reporting

The Chair will report to the Electoral Commissioner after each meeting. Any matter deemed of sufficient importance will be reported to the Electoral Commissioner immediately.

The Committee will report as often as necessary, and at least once a year in an Annual Report, to the Electoral Commissioner on its operations and activities during the year to communicate its view on the appropriateness of the functions it reviews, including reference to any specific areas of concern or suggestions for improvement.

The Committee may, at any time, report to the Electoral Commissioner on any other matter it deems of sufficient importance to do so. In addition, at any time an individual Committee member may request a meeting with the Electoral Commissioner.

Conflicts of Interest

Members and Advisors with an actual, perceived or potential conflict of interest will notify the Committee as soon as these issues become apparent. Conflicts of interest will be managed by the Chair in consultation with the Deputy Chair.

If the Chair has an actual, perceived or potential conflict it will be managed with the Electoral Commissioner, or in the Electoral Commissioner’s absence the Deputy Chair.

At least once each year, members and advisors of the Committee will provide written declarations, declaring any perceived, potential or actual conflicts of interest they may have in relation to their responsibilities.

Access to and use of Information

Committee members must not use or disclose information obtained by the Committee except in meeting the Committee’s responsibilities, or unless expressly agreed by the Electoral Commissioner.

Assessing Performance

The Chair of the Committee will undertake a review of the performance of the Committee at least once every two years. The review will seek appropriate input from the Electoral Commissioner, Committee members, advisors and observers, senior management and any other relevant stakeholders.

In addition, in consultation with the Electoral Commissioner periodic independent performance reviews may be undertaken.

The Chair will provide advice to the Electoral Commissioner on a member’s performance where an extension of the member’s tenure is being considered.

Induction and Ongoing Awareness

The Committee will maintain a program of induction and awareness-raising for its members, with the objective of enabling the Committee to be aware of contemporary developments and leading practices in relation to its functions.

New members will receive relevant information and briefings on their appointment to assist them to meet their Committee responsibilities.

Review of Charter

The Charter will be updated as required, to reflect any changes in the AEC’s operating environment.

At least once a year the Committee will review this Charter. The Committee will recommend any substantive changes to the Electoral Commissioner for approval.

Publication of the Charter

This Charter will be published in the AEC’s Annual Report.

Administrative Arrangements

Meetings

The Committee will meet at least four times per year. One or more special meetings may be held to review the AEC’s annual financial statements and performance statements or to meet other responsibilities of the Committee.

The Committee may also hold committee only sessions and consider matters out of session.

Information relating to Members’ meeting attendance for the reporting period is included in the AEC’s Annual Report.

The Chair is required to call a meeting if asked to do so by the Electoral Commissioner, and decide if a meeting is required if requested by another member, internal or external audit.

The Chair, may invite other employees to attend meetings as observers, but they will not be members of the Committee.

A representative of the ANAO may be invited to attend meetings of the Committee, as an observer.

Planning

The Committee will develop an annual meeting schedule that includes the dates, location, and proposed agenda items for each meeting for the forthcoming year, and that covers all the responsibilities outlined in this Charter and the Work Plan.

Quorum

A quorum for any Committee meeting will be a majority of members, one of whom must be the Chair or the Deputy Chair, and a majority of which must be external. The quorum must be in attendance at all times during the meeting.

Secretariat

Internal Audit will provide secretariat support to the Committee. The secretariat will:

  • Ensure the agenda and supporting papers are circulated at least one week before each meeting
  • Ensure the minutes of the meetings are prepared and maintained. The Chair will review the minutes for approval by the Committee
  • Assist in keeping the Electoral Commissioner informed of the Committee’s work
  • On behalf of the Committee, maintain induction and on-going awareness packs. 

Maintenance of Records

The Committee Secretariat shall maintain records of all meeting papers and minutes, of the Committee’s key functional and administrative arrangements (remuneration, reappointment, conflict of interest declarations, etc.), reviews of the Committee and its Charter and any other material relevant to the conduct of the Committee or its meetings.

‘Appropriateness’ has its ordinary meaning of ‘suitable for a particular purpose’ (Guide for non-corporate Commonwealth entities on the role of audit committees, 2018)
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