Governance Reporting Award

Sponsored and adjudicated by Chartered Secretaries Australia (CSA)

These Awards seek to recognise the quality and completeness of disclosure and reporting of corporate governance practices in the annual reports of business entities in the public and private sectors.

There have been a number of guidelines published on disclosure of corporate governance practices and some statements of suggested “best practice” put forward by professional advisers, market operators and industry bodies including Chartered Secretaries Australia.

CSA has chosen the Principles of Good Corporate Governance and Best Practice Recommendations of the ASX Corporate Governance Council as the guiding criteria for the private sector Awards. The adjudication panel will follow the “if not why not” philosophy of the guidelines and look for reports that provide quality disclosures and clear explanations of how and why certain paths were followed.

In the public sector, three groups of legislation (FMA Act 1997, CAC Act 1997 and the Public Services Act 1999) will be used as the guiding criteria for the Awards. It is acknowledged that many organisations in the public sector also have to comply with the Corporations Act.

This award seeks to recognise the quality and completeness of accountability; transparency and openness; integrity; stewardship; and leadership recorded in the annual reporting of corporate governance practices in the Australian, and New Zealand public sector organisations.

The foundations of corporate governance practices vary within the public sector, and for this reason adjudicators are expected to recognise that there is no single set of legislation that applies to every organisation across public sector jurisdictions. It is not expected that adjudicators for the public sector will be checking the complete compliance with all relevant legislation.

Consequently, adjudicators are encouraged to use an informed and professional discretion when assessing candidates across the individual elements of the five corporate governance principles outlined within this assessment guide.

It is CSA’s view that the reporting of corporate governance practices should not just reflect a checklist approach. Entities should be willing to disclose and discuss, where appropriate, not only those practices which are in place, but also areas where shortcomings have been identified and any plans to address the shortcomings.

The ability of entities to meet published standards will always be subject to their individual resources and circumstances but clear communication of their position is vital. This award encourages and rewards full and open disclosure.

Principles of Good Governance

Private Sector

The ASX Corporate Governance Principles Guidelines apply to reporting periods after 1 January 2008 and specify that a company should:

1. Lay solid foundations for management and oversight

• Companies should establish and disclose the respective roles and responsibilities of board and management

2. Structure the board to add value

• Companies should have a board of an effective composition, size and commitment to adequately discharge its responsibilities and duties

3. Promote ethical and responsible decision-making

• Companies should actively promote ethical and responsible decision making

4. Safeguard integrity in financial reporting

• Companies should have a structure to independently verify and safeguard the integrity of their financial reporting

5. Make timely and balanced disclosure

• Companies should promote timely and balanced disclosure of all material matters concerning the company

6. Respect the rights of shareholders

• Companies should respect the rights of shareholders and facilitate the effective exercise of those rights.

7. Recognise and manage risk

• Companies should establish a sound system of risk oversight and management and internal control

8. Remunerate fairly and responsibly

• Companies should ensure that the level and composition of remuneration is sufficient and reasonable and that its relationship to performance is clear

Public Sector

The five governance principles for the public sector are:

1. Accountability

• Identify reporting lines within the organisation including mandatory reporting requirements, content and frequency. The extent of non-mandatory reporting may also be included.
• Disclose performance to plan and a measure of success.

2. Transparency and openness

• What is the relevant legislation establishing the entity? Is it communicated?
• What are the goals and strategies of the organisation? How are they established, communicated and reported against and how is stakeholder participation and feedback encouraged?
• Clear enunciation of the relevant legislation providing the governance structure of the organisation.
• Disclose remuneration policies and senior executive performance in a meaningful way.

3. Integrity

• Is the quality of reporting appropriate to the target audience in relation to financial and performance reporting, development and process of an audit committee and code of conduct for the organisation?
• Appropriate level of integrity in terms of independence and use of personal information to advantage transactions.

4. Stewardship

• Accurate reporting to indicate awareness of the organisation’s stewardship of community resources.
• Full and complete reporting on large projects where there are clear community expectations.

5. Leadership

• Clear communication of the organisation’s position on the level of governance procedures and their communication, customer satisfaction and the organisation’s reputation.
• Composition of the board of governing authority including qualifications, experience and an executive and non-executive breakdown.