Governance Reporting Award

Sponsored and adjudicated by Chartered Secretaries Australia (CSA)

This Award seeks 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.

A number of guidelines published on disclosure of governance practices have been published and statements of suggested 'best practice' have been put forward by professional advisers, market operators and industry bodies. CSA has chosen the 8 Principles of Corporate Governance and 27 Recommendations of the ASX Corporate Governance Council as the guiding criteria for the private sector Awards. CSA believes this is the most appropriate benchmark for entities in the Australian context. The adjudication panel will follow the "if not why not" philosophy of the guidelines and look for reports that provide quality disclosure and clear explanations of how and why certain paths were followed.

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 public sector Awards. It is acknowledged that many organisations in the public sector will review overall accountability using the five corporate governance principles as outlined in the public sector criteria. It is not expected that adjudicators will check for complete compliance with all relevant legislation. It is important for entries to identify clearly which sector they wish to be judged in.

It is CSA's view that the reporting of governance practices should not just reflect a checklist approach. Entries 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 Council guidelines specify that a company should:

1. Lay solid foundations for management and oversight:

  • Clearly enunciate matters reserved for the board and include iniformation setting out expectations of directors, feedback on letters of appointment and the process of evaluating the performance of key staff.

2. Structure the board to add value:

  • Disclose the composition of the board including qualifications/experience, statement on materiality, and roles of chairperson and CEO.
  • Identify nomination committee, appointment process, terms of office and re-election procedures.
  • Disclose the process for evaluating the performance of the board and its committees.

3. Promote ethical and responsible decision-making:

  • Identify the code of conduct for the board and key executives. Has it been broadly communicated to all stakeholders?

4. Safeguard integrity in financial reporting:

  • Communicate the establishment and process of the audit committee and charter including selection and appointment information.
  • Disclose the CEO/CFO certificate to board on financial statements and their compliance.

5. Make timely and balanced disclosure:

  • Include communication policy and continuous disclosure policy and procedures.

6. Respect the rights of shareholders:

  • Communicate the strategy with shareholders to encourage participation.

7. Recognise and manage risk:

  • Have policies on risk been established including identifying material business risks and their treatment?
  • Is there a sound system of risk management and internal compliance and control?
  • Is management expected to provide assurance that the risk management system is operating effectively in all material aspects?

8. Remunerate fairly and responsibly:

  • Disclose the remuneration policy for the board and senior executives indicating the difference between executive and non-executive directors.
  • Is the remuneration and equity based executive remuneration in accordance with shareholder approved plans?

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.