Audit Committee Charter 2022-2023

Establishment

The Audit Committee (the Committee) is established by the accountable authority of the Department of Climate Change, Energy, the Environment and Water (the Department) in compliance with subsection 45(1) of the Public Governance, Performance and Accountability Act 2013 (PGPA Act).

Functions

The accountable authority has determined the functions of the Committee as set out in this charter, in compliance with subsection 45(2) of the PGPA Act and subsections 17(1) and 17(2) of the Public Governance, Performance and Accountability Rule 2014 (the Rule).

The Committee reviews the appropriateness of the relevant accountable authority’s:

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

Financial Reporting

The Committee will review and provide advice on the appropriateness of the entity’s:

  • annual financial statements
  • processes and systems for preparing financial reporting information.

The Committee will provide a letter addressing the annual financial statements of the Department to the accountable authority. The statement will include:

  • the Committee’s view on the compliance of the statements with the:
  • PGPA Act
  • PGPA Rule
  • the Accounting Standards
  • supporting guidance.
  • consideration of the appropriateness of the Department’s financial reporting as a whole, with reference to any specific areas of concern or suggestions for improvement.

Performance Reporting

The Committee will review and provide advice on the appropriateness of the Department’s systems and procedures for assessing, monitoring and reporting on achievement of the Department’s performance.

In particular, the Committee should seek evidence to satisfy itself that:

  • the Department’s Portfolio Budget Statements and corporate plan contain appropriate details of how the Department’s performance will be measured and assessed
  • the Department’s approach to measuring performance throughout the financial year against the performance measures included in its Portfolio Budget Statements and corporate plan is appropriate and in accordance with the Commonwealth performance framework. This may include, over time, reviewing particular elements of the performance measures
  • the Department has appropriate systems and processes for preparation of its annual performance statement and inclusion of the statement in its annual report.

The Committee will provide a statement to the Department’s accountable authority whether, in the Committee’s view, the Department’s annual performance statements and performance reporting as a whole is appropriate, with reference to any specific areas of concern or suggestions for improvement.

System of risk oversight and management

The Committee will review and provide advice on the appropriateness of the accountable authority’s:

  • enterprise risk management policy framework and the necessary internal controls for the effective identification and management of the Department’s risks, in keeping with the Commonwealth Risk Management Policy (CRMP) for non-corporate Commonwealth entities (NCEs)
  • approach to managing the Department’s key risks – including those associated with individual projects and program implementation activities
  • process for developing and implementing the Department’s fraud control arrangements consistent with the Commonwealth Fraud Control Framework
  • articulation of key roles and responsibilities relating to risk management and adherence to them by officials of the Department.

The Committee will provide a statement to the accountable authority whether in the Committee’s view, the Department’s system of risk oversight and management as a whole is appropriate (with reference to the CRMP), along with highlighting any specific areas of concern or suggestions for improvement.

System of internal control

The Committee will review and provide advice on the appropriateness of the accountable authority’s:

  • internal control framework, including by:
  • reviewing management’s approach to maintaining an effective internal control framework and whether appropriate processes are in place for assessing whether key policies and procedures are complied with
  • reviewing whether management has in operation relevant policies and procedures.
  • legislative and policy compliance, including by:
  • reviewing the effectiveness of systems for monitoring the Department’s compliance with laws, regulations, and associated government policies with which the Department must comply
  • determining whether management has adequately considered legal and compliance risks as part of the Department’s enterprise risk management framework, fraud control framework and planning.
  • security compliance, including by:
  • reviewing management’s approach to maintaining an effective internal security system (including complying with the Protective Security Policy Framework).
  • business continuity and disaster recovery, including by:
  • satisfying itself that an appropriate approach has been taken in establishing business continuity planning arrangements—including whether business continuity and disaster recovery plans have been periodically updated and tested
  • internal audit coverage, including by:
  • reviewing proposed internal audit coverage, ensuring that the coverage takes into account the Department’s primary risks, and recommending approval of the annual Internal Audit Program (IA Program) by the accountable authority
  • reviewing all IA Program reports, providing advice to the relevant accountable authority on major concerns identified in those reports, and recommending action on significant matters raised—including identification and dissemination of information on good practice.
  • external scrutineers, including by:
  • satisfying itself that the Department has appropriate mechanisms for reviewing relevant parliamentary committee reports, external reviews and evaluations of the Department and implementing, where appropriate, any resultant recommendations
  • reviewing the implementation of agreed recommendations from Australian National Audit Office (ANAO) audits or Joint Committee of Public Accounts and Audit (JCPAA) and other parliamentary committee reports directed to the entity.

The Committee will provide a statement to the accountable authority whether the Department’s system of internal control is appropriate for the Department, with reference to any specific areas of concern or suggestions for improvement.

Additional functions

The accountable authority may determine additional functions to be undertaken by the Committee. The accountable authority has determined the additional functions of the Committee set out below:

Internal audit recommendations

  • reviewing the closure by management of agreed recommendations from IA Program reports to determine whether management has demonstrated sufficient verification of implementation to warrant closure.

ANAO and JCPAA recommendations

  • reviewing the closure by management of agreed recommendations from ANAO financial and performance statements audits, ANAO performance audits, and JCPAA reviews to determine whether management has demonstrated sufficient verification of implementation to warrant closure.

Membership

The Committee will consist of at least three (3) independent members, where independent is defined by the Department of Finance. Collectively, members will have suitable skills and experience relevant to the operations of the Portfolio. At least one member will have accounting or related financial management experience, with an understanding of accounting and auditing standards in a public sector environment.

Members are appointed by the Secretary of Department of Climate Change, Energy, the Environment and Water for a term determined by the Secretary. The Secretary appoints a member as Chair. The chair may appoint a Deputy Chair.

A member may resign at any time by giving written notice to the Secretary (the Chair and Chief Internal Auditor). The resignation will take effect when the notice is received by the Secretary, or later if stated in the notice.

Employees of the department or other APS agencies are not considered to be independent and cannot be appointed as members of the Committee.

Members will declare any conflict of interest (actual or perceived) and will complete a written conflict of interest declaration annually.

Members of the Committee must operate in the best interests of the entity and understand and observe the legal requirements of the PGPA Act and PGPA Rule and any official guidance relevant to performing their functions.

Sub-committees

Sub-committees may be established by the Committee in consultation with the Department to assist the Committee in meeting its responsibilities.

The Chair of any sub-committee must be independent. APS employees with suitable experience and knowledge may be appointed as members of sub-committees.

The responsibilities, membership and reporting arrangements for each sub-committee will be documented and approved by the Committee.

The sub-committees do not assume any management functions. Management must not exert inappropriate influence over the work of sub-committees.

Authority

The Department authorises the Committee, within the scope of its role and responsibility, to:

  • obtain information from any official, employee or external party (subject to legal obligation to protect information)
  • discuss any matters with internal or external auditors (subject to confidentiality considerations)
  • refer Internal Audit reports or other information to management committees or boards of the entity as required
  • request the attendance of any official or employee, including an accountable authority or external party, at meetings
  • obtain independent legal or other professional advice to meet its responsibilities, if necessary, at the department’s expense and approved by the Secretary or delegate.

Conduct of the Committee

The Committee is responsible to the accountable authority for the performance of its functions.

It has no executive powers in relation to the operations of the portfolio. The Committee may only review the appropriateness of particular aspects of Department operations, consistent with its functions and advise the accountable authority accordingly.

To support the entity to achieve better business outcomes, the Committee will engage with management in a timely, constructive and professional manner in discharging its advisory responsibilities and formulating advice to the accountable authority.

The Department’s Internal Audit function will assist the Committee to discharge its responsibilities by providing access to all internal audit reports.

The Committee may request attendance or reporting from management at meetings, within the scope of its functions.

Reporting

The Chair will report to the accountable authority after each meeting.

The Committee may report as often as necessary to the Department’s governance committees on its view on the appropriateness of the functions it reviews. The Committee may report (collectively or individually) to the Department at any time on any matter it deems sufficiently important.

The Committee will report annually to the accountable authority. The annual report will include the Committee’s operation and activities including that all functions outlined in this Charter have been satisfactorily addressed.

Consultation

The Committee will develop and maintain open and constructive relationships with Portfolio Executive committees, Internal Audit functions, and the Committee secretariat. The Committee will collaborate to ensure a strategic approach is taken to provide assurance on the appropriateness of the Department’s accountability and control frameworks.

Administrative arrangements

Meetings

The Committee will meet at least four times a year. One or more special meetings may be held to review annual financial statements and performance statements or to meet other specific responsibilities.

The Chair will call a meeting if asked to do so by the Department and decide if a meeting is required if requested by another member, Internal Audit or the ANAO.

Quorum

A quorum is at least two (2) members. The quorum must be in place at all times during the meeting.

Attendance

Accountable authorities, Chief Operating Officers, Chief Financial Officers, General Counsels, Chief Risk Officers, Chief Internal Auditors, Chief Information Officers and Senior Executive Officers (or their equivalent) may attend meetings as observers or advisers, as determined by the Committee.

Representatives of the ANAO may attend as observers.

Planning

The Committee will contribute to, and approve, an annual work plan and meeting schedule that includes the date, location, and proposed agenda items for each meeting for the forthcoming year and covers all the functions outlined in the Portfolio Audit Committee Charter.

Assessing performance

The Committee’s, sub-committees’ and member performance, will be reviewed at least every two years. The review, conducted on a self-assessment basis, will seek input from Committee members, advisors and observers, senior management and any other relevant stakeholders.

Review of the charter

At least once a year, the Committee will review this Charter. Any substantive changes will be recommended by the Committee and formally approved by the accountable authority.

Secretariat

The Department will provide secretariat services to the Committee as determined by the Secretary. The secretariat will ensure the agenda for each meeting is approved by the Chair, the agenda and supporting papers are circulated, where possible, at least one week before the meeting and ensure that minutes of the meeting are prepared and maintained. Minutes must be forwarded in a timely manner to the Chair and members for review and provided to Committee advisers and observers at the next meeting of the Committee.

Upon conclusion of any given Audit Committee meeting the Internal Audit team will promptly draft a summary of key matters from all topics discussed, covering the functions listed above. The Chair will review and provide advice to the Secretary.

Additional Services – Portfolio entities

The Committee will, in compliance with section 45 of the PGPA Act also provide additional oversight of the following portfolio agencies:

  • the Director of National Parks;
  • the Sydney Harbour Federation Trust; and
  • the North Queensland Water Infrastructure Authority, as required.

The Additional Services and role of the Committee will be determined by a separate agreement with each of the accountable authorities. Consistent with section 45 of the PGPA Act, in broad terms the Committee will review the appropriateness of the relevant accountable authority’s:

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

The manner in which this is best undertaken including specific tasks will be agreed between the Committee and relevant portfolio entity.

SIGNED

Mr David Fredericks PSM, Secretary, Department of Climate Change, Energy, the Environment and Water
8/5/2023

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