Meeting 1 September 2020 requirements - Draft Audit and Risk Advisory Committee Charter
Audit & Risk Advisory Committee Charter guidance
Key changes incorporated into the Audit and Risk Advisory Committee Charter model include:
- Text to take account of the expanded role of the Committee pursuant to Sections 53 and 54 of the Act;
- Guiding commentary to provide users with guidance in tailoring the Charter to suit the circumstances of their Council;
- An Appendix that provides guidance to Committee members on their regulatory responsibilities with regard to confidentiality, use of information and managing and reporting conflicts of interest;
- A stronger emphasis on the key role that the internal control environment plays and how Committees can monitor this area of Council’s performance more effectively. This change includes references to the impact of the new Governing Principles on Councils’ policies and procedures
The model does not take account of the maturity level of Audit & Risk Committees in the sector, but it is likely that some Councils will be more advanced in dealing with the challenges of the new model Charter. In this context it is understood that some Councils may need time to transition to the more extensive requirements for Audit & Risk Committees under the new Act.
Audit & Risk Advisory Committee Self Assessment guidance
- Any assessment of the Committee’s performance should not be an assessment about the performance of individual members. That is a separate exercise that the ARC Chair/CEO may conduct. Committee and individual performance assessments should not be combined as they do not work and create problems when there are comments about an individual;
- The real value in these surveys is in the comments that respondents provide at the end of each section;
- There needs to be a minimum of 10 responses to provide reliable results with meaningful comments;
- The process that is followed once the surveys have been completed is a key part of the self assessment process – ARC Chairs have a key role to play here.
- There can be a difficulty in interpreting the results, as the answers are averaged out from across Councillor members, Independent members and senior officers who have different levels and occurrences of involvement. The Chair will therefore need to manage the responses carefully.
- This is a Word document, but this template can be developed from an Excel document also and the value there is in summarising and interpreting results, for example, on a question by question basis, or on a subject matter basis, etc.
Audit & Risk Advisory Committee Workplan
What I need to do to be compliant by 1 September 2020
1. To be compliant with the new Act 2020 your council must:
- prepare and approve a committee charter and make appointments to the committee (establish the committee) on or before 1 September 2020 (s 54(7)).
2. The committee charter must specify the functions and responsibilities of the committee, and must include the following functions (s 54):
- monitor the compliance of council policies and procedures with the overarching governance principles and the Act and any regulations and Ministerial directions
- monitor council financial and performance reporting
- monitor and provide advice on risk management and fraud prevention systems and controls
- oversee internal and external audit functions.
Section 54 of the Act also describes the work an Audit and Risk committee must undertake and administrative instructions.Note: While section 139 of the previous Act (1989) has already been repealed, the new Act (2020) specifically allows for the continued operation of an audit committee established under that section (prior to the repeal) may continue to operate until the new committee is established
The council must prepare and approve a committee charter and establish the committee (appoint members) by 1 September 2020.
The committee must report to council twice yearly, the report must include the committee’s findings and recommendations.
A majority of committee member must be independent of council; the chair must not be a councillor and members of council staff must not be committee members. Collectively, the committee must have expertise in financial and risk management and experience in public sector management.
The committee must undertake an annual assessment of its own performance against the charter and report on this to council.
The committee must adopt an annual workplan.
Please continue to contribute your policies:
Risk Management - the International Organisation for Standardisation’s risk management standard AS ISO 31000:2018 Risk Management – Guidelines has been accepted as the Australian risk management standard and widely adopted in the private and public sectors. Many councils have membership to access these standards.