Corporate Governance in Commonwealth Authorities and Companies

More documents

Recommendations

Info

Figure 2: General obligations of the participants. Parliament Parliament passes legislation which underpins the operations of CAC bodies, including their functions and powers. Parliament also has an important accountability role in reviewing the performance of government entities. Minister(s) Under the CAC Act, it is the responsible Minister(s), who within the government, is/are given portfolio responsibility for a CAC body and its legislation. The responsible Minister(s) is/are accountable to Cabinet and Parliament for the performance of the particular organisation. The CAC Act also prescribes certain roles and responsibilities for the Finance Minister in relation to bodies covered. In addition, there are also other Ministers that may have responsibilities for broader Commonwealth policy that impacts on the operation of a CAC body (for example, privacy and employment). The responsible Minister(s) should exercise strategic control consistent with their accountability to Parliament and the public. CORPORATE GOVERNANCE IN COMMONWEALTH AUTHORITIES AND COMPANIES 8
However, there is no common set of principles to guide responsible Minister(s) in their relationships with CAC Boards. There is also little guidance in the CAC Act as to the nature of the relationship between the responsible Minister(s) and a CAC body. A responsible Minister may, however, notify the directors of Commonwealth authorities and wholly-owned Commonwealth companies of ‘general government policies which are to apply to the Authority or Company’ 16 . Directors who receive such notification must comply with that policy. Directors of Commonwealth Authorities and wholly-owned Commonwealth companies, must also notify the responsible Minister(s) of significant events 17 . They must also keep the responsible Minister(s) informed of the operations of the organisation and its subsidiaries and are required to produce reports, documents and information in relation to those operations as required by the responsible Minister(s) or the Finance Minister 18 . Notwithstanding, there is nothing in the CAC Act which gives either the responsible Minister(s) for the particular CAC – or the Finance Minister, central agencies or the portfolio Department – a power of direction in relation to the actual operations of the particular CAC. While such a power of direction does not exist in the CAC Act, it may exist in some other source such as the organisation’s enabling legislation, the memorandum and articles of association of a wholly-owned Commonwealth company or simply by virtue of the fact that the Commonwealth owns all, or the majority, of the shares. Each of these sources will, therefore, be relevant, in addition to the provisions of the CAC Act, in determining the extent of the responsible Minister’s, or other government representative’s, power to intervene in the affairs of the particular CAC body. Board of Directors The Board is responsible for ensuring good corporate governance, determining and approving corporate strategy and providing guidance and oversight to senior management. It is responsible for approving and reviewing the overall business strategies, significant policies and structure of the organisation; has the absolute responsibility for the performance of a CAC body in meeting its stated objectives and obligations as a public body; and is fully accountable for this outcome to the responsible Minister (s). The Board must also ensure that an effective system of controls is in place to manage, among other things, the major risks faced by the organisation; reporting performance to stakeholders; and complying with applicable laws and regulations. Other functions of the Board include appointing, or recommending for appointment, the CEO and management team and setting remuneration appropriate for appointments; monitoring managerial performance such as ensuring that management is monitoring the effectiveness of the internal control system; evaluation of the CEO; evaluating its own effectiveness; preventing conflicts of interest; and balancing competing demands on the organisation. 16 Sections 28 and 43. 17 Sections 15 and 40. 18 Sections 16 and 41. These sections also require the CAC body to keep the Finance Minister informed. CORPORATE GOVERNANCE IN COMMONWEALTH AUTHORITIES AND COMPANIES 9 A Corporate Governance Framework
Page 1: PRINCIPLES AND BETTER PRACTICES Cor
Page 6 and 7: Corporate governance is also now be
Page 8 and 9: In this paper, the concept of the B
Page 10 and 11: 2. A Corporate Governance Framework
Page 14 and 15: In addition, the Board is expected
Page 16 and 17: The development and implementation
Page 18 and 19: ◗ international interests - treat
Page 20 and 21: Each of these elements is discussed
Page 22 and 23: 3. Better Practice Governance Proce
Page 24 and 25: Board Skills In order to undertake
Page 26 and 27: Better Practice The majority of the
Page 28 and 29: Strategy Setting For the Board and
Page 30 and 31: Monitoring the Performance of the B
Page 32 and 33: Statutory Accountability It is crit
Page 34 and 35: For wholly-owned Commonwealth compa
Page 36 and 37: The CAC Act, therefore, imposes gre
Page 38 and 39: Table 1: Summary of Legal Requireme
Page 40 and 41: References ANAO (1997a), Applying P
Page 42 and 43: Appendix A - Public Sector Corporat
Page 44 and 45: Financial and Operational Reporting
Page 46 and 47: Appendix B - Existing CAC Governanc

Corporate Governance in Commonwealth Authorities and Companies

Create successful ePaper yourself

Delete template?

Save as template?