Audit and Risk Committee Charter | Administrative Appeals Tribunal

Role and general purpose

Established in compliance with section 45 of the Public Governance, Performance and Accountability Act 2013 (PGPA Act) and PGPA Rule section 17 – Audit committee for Commonwealth entities, the general purpose and role of the Audit and Risk Committee (ARC) is to provide independent advice to the Registrar of the Administrative Appeals Tribunal with the effective discharge of the Registrar’s responsibilities in the areas of financial and performance reporting, internal control systems and risk oversight and management systems. The ARC plays an advisory role and is authorised to exercise those powers expressly delegated to it in this charter. Other than to the Registrar, the ARC has no direct obligation to or from any management group, team or Division.

Members of the ARC are expected to understand and observe the requirements of the PGPA Act and rules. Members are also expected to:

act in the best interests of the AAT as a whole;
be proactive in identifying issues and risks that require further management attention;
ask relevant questions, evaluate the answers and continue to probe for information until completely satisfied with the answers provided;
encourage openness and transparency;
work constructively with AAT management to achieve continuous improvement within the entity;
express opinions, frankly, ask questions that draw out the key issues and pursue independent lines of enquiry;
display a professional approach to duties, including an appropriate commitment of time and effort; and
convey technical matters to other members of the ARC, where members have been chosen for particular technical skills.

Unless otherwise required by law or expressly agreed by the Registrar, members of the ARC are required to keep Committee discussions, committee papers and deliberations confidential.

The ARC will be supported by the Registrar and his or her nominees, principally the Chief Operating Officer, Chief Risk Officer, Chief Corporate and Financial Officer, Director, Finance and Internal Auditors.

Authority and powers

The Registrar authorises the ARC, in accordance with its role and responsibilities, to:

obtain any information it requires from any employee or external party (subject to any legal obligation to protect information);
discuss any matters with the Australian National Audit Office (ANAO), external auditor, or other external parties (subject to confidentiality considerations);
request the attendance of any employee or other person at a committee meeting; and
obtain legal or other professional advice, as considered necessary to fulfill its role at the AAT’s expense, up to a limit of $5,000 or as otherwise authorised by the Registrar.

Sub-committees

The ARC may establish one or more sub-committee/s to assist the full ARC in meeting its responsibilities, in consultation with the Registrar.

Composition and skills

Membership - The ARC shall comprise a total of three members. This includes an Independent Chair and two independent members appointed by the Registrar. All ARC members are to be independent and external to the AAT, with a majority of members being persons who are not officials of any Commonwealth entity.

The Registrar may wish to appoint internal members as Special Advisors to the committee.

The ARC is authorised to appoint a Deputy Chair who will act as chair in the absence of the Chair.

Observers - The Registrar, Chief Operating Officer, Chief Risk Officer, Chief Corporate and Financial Officer, Director, Finance or other management representatives may attend meetings as advisers or observers, as determined by the ARC. A representative(s) of the ANAO will be invited to attend meetings of the ARC, as an observer.

ARC members and any Special Advisors will be appointed for an initial period determined by the Registrar. Members may be re-appointed after a formal review of their performance, for further periods as specified by the Registrar.

The ARC, taken collectively, will have a broad range of skills and experience appropriate to carry out its responsibilities in an efficient, effective and ethical manner. Collectively, the ARC will have the following knowledge or expertise:

the operations and framework of the AAT;
risk identification, evaluation, and management;
project and program management;
information management and security;
the operations of government and the public sector including information technology systems and controls;
the roles of internal and external audit;
the application of accounting, auditing and assurance standards;
relevant legislative and other policy requirements of the entity;
public sector reporting requirements, including financial and performance reporting; and
internal control, compliance activities and fraud control

The ARC is authorised to appoint a Deputy Chair who will act as chair in the absence of the Chair.

Functions and responsibilities

The ARC’s functions and responsibilities are set out below.

Financial reporting

The ARC through the Chair will provide a letter of advice to the Registrar:

whether the annual financial statements, in the committee’s view, comply with the PGPA Act, the PGPA Rules, the Accounting Standards and supporting guidance;
whether additional entity information (other than financial statements) required by Finance for the purpose of preparing the Australian Government consolidated financial statements (including the supplementary reporting package) comply with the PGPA Act, the PGPA Rules, the Accounting Standards and supporting guidance;
in respect of the appropriateness of the entity’s financial reporting, with reference to any specific areas of concern or suggestions for improvement.
Review the annual financial statements and provide advice and recommendations to the Registrar, including recommending their signing by the Registrar. In particular, the ARC will review:

the AAT’s compliance with the PGPA Act, the PGPA Rules, the Accounting standards and supporting guidance;
information (other than annual financial statements) requested by Finance in preparing the Australian Government’s consolidated financial statements, including the supplementary reporting package;
processes and systems for preparing financial reporting information, including financial record keeping;
the auditor’s judgments about the adequacy and appropriateness of the AAT’s accounting policies and the quality of the AAT’s processes for the preparation of the AAT’s financial statements, through discussions with the ANAO, and
whether appropriate management action has been taken in response to any issues raised by the ANAO, including financial statement adjustments or revised disclosures.

Review the processes in place designed to ensure that financial information included in the AAT’s annual report is consistent with the signed financial statements.
Assess whether external reporting is consistent with information and knowledge held by ARC members and is adequate for the needs of the AAT.
Review and make recommendations to the Registrar for approval of changes to accounting policies and treatments having an impact on external reporting.

Performance reporting

The ARC through the Chair will provide a letter of advice to the Registrar whether, in their view, the entity’s annual performance statements and performance reporting as a whole is appropriate, with reference to any specific areas of concern or suggestions for improvement.

Review and provide advice on the appropriateness of the AAT’s systems and procedures for assessing, monitoring and reporting the achievement of the AAT’s performance. In particular, the committee will satisfy itself that:

The AAT’s Portfolio Budget Statements and corporate plan include details of how the AAT’s performance will be measured and assessed.
The AAT’s approach to measuring its performance throughout the financial year against the performance measures included in its Portfolio Budget Statements and corporate plan is sound, and has taken into account the Commonwealth performance framework. This may include reviewing, over time, particular elements of the performance measures.
The AAT has sound processes in place for the preparation of its annual Performance Statement and the inclusion of the Statement in its annual report, and
The AAT’s proposed Performance Statement is not inconsistent with the AAT’s financial information, including its financial statements that it proposes to include in its annual report.

Risk oversight and management

The ARC through the Chair will provide a letter of advice to the Registrar whether in their view, the entity’s system of risk oversight and management as a whole is appropriate (with reference to the Commonwealth Risk Management Policy for NCEs) and any specific areas of concern or suggestions for improvement.

Review whether management has in place a current and sound enterprise risk management policy framework and associated internal controls for effective identification and management of the AAT’s business and financial risks. This would entail gaining a sufficient understanding of the AAT’s risk appetite and the entity’s operating environment, and reviewing the mandatory requirements of the PGPA Act, the PGPA Rule, the Commonwealth Risk Management Policy.
Review the approach to managing the AAT’s key risks, including those associated with individual projects and program implementation and activities.
Review the process of developing and implementing the AAT’s fraud control arrangements and whether the AAT has appropriate processes and systems in place to detect, capture and effectively respond to fraud risks.
Review reports on fraud from management that outline any significant or systematic allegations of fraud, the status of any ongoing investigations and any changes to identify fraud risk in the AAT.

Internal control

The ARC through the Chair will provide a letter of advice to the Registrar whether the entity’s system of internal control is appropriate for the entity, with reference to any specific areas of concern or suggestions for improvement.

Review and provide advice on the appropriateness of the AAT’s:

Internal control framework

Review management’s approach to implementing and reviewing an effective internal control framework; this framework should include controls in relation to functions performed by external parties such as contractors and advisers.
Review whether management has in place relevant policies and procedures, including Accountable Authority Instructions or their equivalent and delegations and authorisations, a business continuity management plan and that these are periodically reviewed and updated.

Legislative and policy compliance

Review the effectiveness of systems for monitoring AAT’s compliance with laws, regulations and government policies with which the AAT must comply.
Determining whether management has adequately considered legal and compliance risks as part of the entity’s enterprise risk management framework, fraud control framework and planning.

Security compliance

Reviewing management’s approach to maintaining an effective internal security system (including complying with the Protective Security Policy Framework — and ICT security policy).

Internal audit coverage

Review the proposed internal audit coverage, ensure the coverage takes into account the AAT’s key risks, and recommend approval of the Internal Audit Plan by the Registrar or nominated delegate.
Review all audit reports and provide advice to the Registrar on significant issues identified in audit reports and recommend action on significant issues raised, including identification and dissemination of good practice.
Obtain regular reports from the outsourced internal audit service provider/s, on the overall status of the AAT’s internal audit activities and monitor management’s implementation of internal audit recommendations.
Periodically review the performance of internal audit and report the results to the Registrar.
Provide advice to the Registrar on the appointment of the internal audit service provider where the internal audit function is outsourced or co-sourced.
Periodically meet privately with the internal audit service provider/s.

External Audit - engagement with the ANAO

Provide input on planned ANAO financial statement and performance audit coverage.
Monitor management’s responses to all ANAO financial statement management letters and performance audit reports, including the implementation of audit recommendations.
Act as a forum for communication between AAT management and the ANAO.
Provide advice to the Registrar on action to be taken on significant issues raised in relevant ANAO reports or better practice guides.
Meet privately with the ANAO at least once per year.

Additional functions

Governance arrangements

Periodically review the AAT’s governance arrangements or elements of the arrangements as determined by the Registrar and suggest improvements, where appropriate, to the Registrar.

Parliamentary committee reports, external reviews and evaluations

Satisfy the committee that the AAT has appropriate mechanisms in place to review relevant parliamentary committee reports, external reviews and evaluations of the AAT and implement where appropriate any recommendation arising.

Business continuity management

Assess whether the AAT has a sound approach to business continuity planning arrangements, including whether business continuity and disaster recovery plans have been periodically updated and tested.

Ethical and lawful conduct

Assess whether management has taken steps to embed a culture that promotes the proper use and management of public resources and is committed to ethical and lawful conduct.

Other

Undertake other activities related to its responsibilities as requested by the Registrar.

Administrative arrangements

Annual Work Plan

The ARC will develop an annual work plan that outlines the activities to be undertaken to achieve the ARC’s functions as outlined in this charter. A forward meeting schedule will be implemented, which includes dates and proposed agenda items for each meeting for the forthcoming year.

Meetings

The ARC will meet at least four times per year. One or more special meetings may be held to review the AAT’s annual financial statements and performance statements or to meet other specific responsibilities of the ARC.
The Chair is required to call a meeting if asked to do so by the Registrar and decide if a meeting is required if requested by another member, internal auditor or the ANAO.

Quorum

A quorum will consist of a majority of ARC members. The quorum must be always in place during the meeting.

Secretariat and meeting papers/minutes

The Governance and Projects Officer together with the Assistant Director Governance and Projects will provide secretariat support to the ARC. The secretariat will ensure the agenda for each meeting is approved by the Chair; the agenda and supporting papers are circulated at least one week before the meeting; and ensure the minutes of the meetings are prepared and maintained. Minutes must be reviewed by the Chair and circulated in a timely manner to each member and committee advisor and observer as appropriate.

Induction

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

Review of this charter

The ARC will review this charter and performance of the ARC periodically. This review will include consultation with the Registrar. Any substantive changes to the charter will be recommended by the ARC to the Registrar.

Conflicts of Interest

Once each year, members of the ARC will provide written declarations, through the Chair, to the Registrar, declaring any material personal interest they may have in relation to their responsibilities. Members should consider past employment, consultancy arrangements and related party issues in making these declarations and the Registrar, in consultation with the Chair, should be satisfied that there are sufficient processes in place to manager any real or perceived conflict.
At the beginning of each ARC meeting, members are also required to declare any material personal interests that may apply to specific matters on the meeting agenda. Where required by the Chair, the member will be excused from the meeting or from the ARC’s consideration of the relevant agenda items(s). The Chair is also responsible for deciding, in consultation with the Registrar where appropriate, if he/she should excuse themselves from the meeting or from the ARC’s consideration of the relevant agenda item(s).

Reviewing and assessing committee performance

The Chair of the ARC, in conjunction with the Registrar, will undertake a review of the performance of the ARC at least once every two years. The review will be conducted on a self-assessment basis (unless otherwise determined by the Registrar) with appropriate input sought from the Registrar, ARC members, senior management, internal audit, the ANAO and any other relevant stakeholders as determined by the Registrar.
The Chair will provide advice to the Registrar on an external member’s performance where an extension of the member’s tenure is being considered.