Corporate Governance in Commonwealth Authorities and Companies

1. Introduction
Commonwealth authorities and companies (CAC bodies) play a major part in giving effect
to government policy. They are a diverse range of organisations in terms of functions,
institutional form, size, and not least, in respect of the particular governance processes by
which such bodies are directed, controlled and held to account. The nature of the
relationships between Parliament, Ministers and CAC bodies also makes proper
governance an important matter for these organisations.
The principles and practices discussed in this paper are based on knowledge that has been
gained from experts on corporate governance, results of a survey conducted of various
CAC bodies and previous audit work and research undertaken by the ANAO. Some of
the more recent related ANAO publications include a report on Government Business
Enterprise Monitoring Practices 1 and a review of accountability arrangements in statutory
bodies 2 . Further relevant material is provided in the references section of this publication.
What is Corporate Governance?
Corporate Governance is not a new concept. However, it is an issue which is currently
receiving a great deal of attention in Australia and overseas, both in the private and public
sectors.
The importance of good corporate governance has been highlighted in the private sector
by the corporate excesses of the second half of the 1980s in Australia and overseas and the
need to meet the challenges of global competition, technological progress and increasingly
integrated financial markets. In the public sector, recent reforms to improve efficiency and
effectiveness, such as the commercialisation, corporatisation and privatisation of
government organisations and the role of the Board in governing significant assets, in these
transformed organisations, has focussed attention on the need for various new models of
corporate governance. 3
Definitions of corporate governance are many and varied. Broadly speaking, corporate
governance generally refers to the processes by which organisations are directed,
controlled and held to account. It encompasses authority, accountability, stewardship,
leadership, direction and control exercised in the organisation. For CAC bodies, key
elements of corporate governance include the transparency of corporate structures and
operations; the implementation of effective risk management and internal control systems;
the accountability of the Board to stakeholders through, for example, clear and timely
disclosure; and responsibility to society.
1 ANAO, Audit Report No. 2 1997-98, Government Business Enterprise Monitoring Practices; Selected Agencies, September 1997.
2 ANAO, Audit Report No. 23 1998, Accountability and Oversight Arrangements for Statutory Bodies in the Former Industries and Energy
Portfolio, December 1998.
3 Robertson, T., Corporate Governance, The Public and Private Sector, Unpublished Doctoral Thesis, Macquarie Graduate School of
Management.
CORPORATE GOVERNANCE IN COMMONWEALTH AUTHORITIES AND COMPANIES
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