2004-05 Annual Report - Australia Post

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In undertaking this role the
committee has adopted a set
of principles approved by the
Remuneration Tribunal which
are designed to link the level of
remuneration with the financial
and operational performance of
the corporation.
Remuneration arrangements
for other senior executives are
reviewed and determined by the
managing director.
Advice is periodically sought
from independent specialised
remuneration consultants on:
° the structure of remuneration
packages
° the quantum of increases that
apply in other comparable
Australian corporations.
On the basis of this advice,
the managing director ensures
that payments to other senior
executives are in line with market
practice and are competitively
placed to attract and retain the
necessary talent for the work
required by these roles.
Incentive rewards for the
managing director and other
senior executives for meeting
or exceeding specific key annual
business objectives are linked
to the annual business plan
at a corporate and individual
level. Measures and targeted
achievement levels are reviewed
each year to reflect changes
in the business priorities for
the forthcoming year. The
measures include financial,
customer satisfaction, employee
engagement and other individual
measures that support the key
business objectives. Before a
reward is payable, a threshold
must be reached, according
to predefined measures.
Both the managing director
and other senior executives
are employed under individual
contracts of employment that are
not limited to a specific duration.
Continuation of employment is
subject to ongoing satisfactory
performance. Where Australia
Post terminates the managing
director’s or other senior
executive’s employment for
reasons other than performance or
misconduct, they are entitled to:
° in the case of the managing
director, 60 days’ payment
in lieu of notice and a
termination payment of 1.5
times annual base salary; and
° for other senior executives,
90 days’ payment in lieu of
notice and a termination
payment calculated on four
weeks for each of the first
five years of employment
and three weeks for every
year thereafter to a maximum
of 84 weeks, including the
payment in lieu of notice.
All of the above payments are
based on annual base salary.
Details of the managing director’s
remuneration for 2004–05 are
provided in Note 25 to the
financial statements on page
81 of this report. Remuneration
details for the other key
executives with the greatest
authority for the management of
Australia Post are provided in Note
26 to the financial statements on
pages 82–83 of this report.
External audit
Under section 8 of the CAC Act,
the Auditor-General inspects and
audits the accounts and records
of the corporation’s financial
transactions and assets, reporting
to parliament, the minister and
the board. The Auditor-General
also audits and reports on
compliance with the performance
standards prescribed for Australia
Post under section 28C of the
APC Act. Ernst & Young has been
retained by the Australian National
Audit Office to assist in both of
these assignments.
The board has adopted a
comprehensive set of audit
independence principles
in relation to the external
auditors. Among other things,
these principles exclude the
engagement of the external
auditors for the provision of
certain non-statutory audit-related
services such as internal auditing,
taxation planning, treasury policy
and operations, and business and
strategic planning. In addition,
the senior audit partner on the
corporation’s account is to be
rotated at least every five years.
Internal audit
Australia Post maintains an
independent internal audit
service to assist the corporation
meet its objectives by bringing a
systematic, disciplined approach
to evaluating and improving the
effectiveness of risk management,
control and governance processes.
The internal audit service is
authorised by the board to direct a
comprehensive program of internal
auditing within the corporation
with full and unrestricted access to
all functions, property, personnel
records, accounts, files and other
documentation.
The internal audit work program
is subject to annual endorsement
by the Audit Committee, with
the results, progress and
performance regularly reviewed
by both the committee and the
external auditors. The internal
auditor also meets privately
with the Audit Committee at
each meeting, without other
management present.
Risk management
The board oversees a
comprehensive risk management
policy framework covering all
significant business risks and
strategic considerations. The
underpinning processes, which
seek to identify, analyse, assess
and treat these risks, are consistent
with the principles of the relevant
Standard (AS/NZS 4360).
As part of the corporation’s risk
management framework all
business units report annually
to an internal Risk Management
Committee on their existing
and emerging risks, associated
mitigation strategies and progress
against their implementation.
Outcomes are reported to the
Audit Committee.
Risk identification, measurement
and mitigation strategies are
included in business-related
proposals considered by the
board. There are also a number
of programs in place to manage