Audit Committee Charter



The Federal Court of Australia (Federal Court) was created by section 5 of the Federal Court of Australia Act 1976 as a superior federal court. The Chief Justice of the Federal Court is responsible for the management of the administrative affairs of the Court with the assistance of the Federal Court’s Chief Executive Officer and Principal Registrar (CEO). The Federal Court’s CEO is also responsible for providing corporate services to each of the Federal Court (including the National Native Title Tribunal [NNTT], a federal tribunal established by section 107 of the Native Title Act 1993), the Family Court of Australia (Family Court), a superior federal court created by section 21 of the Family Law Act 1975, and the Federal Circuit Court of Australia (Federal Circuit Court), a federal court created by section 8 of the Federal Circuit Court of Australia 1999.

For the purposes of the Public Governance, Performance and Accountability Act 2013 (PGPA Act), the listed entity also known as the Federal Court of Australia (the Entity) manages the appropriations under an Appropriation Act for the ordinary annual services of the Government provided from time to time to the Federal Court (including the NNTT), Family Court, Federal Circuit Court and for the corporate services of the three federal courts and the NNTT. The Federal Court’s CEO is the accountable authority for the Entity. The officers and staff who support the three federal courts and the NNTT constitute a statutory agency for the purposes of the Public Service Act 1999 and the Federal Court’s CEO is the head of that statutory agency.

The Entity has established an Audit Committee (the Committee) in compliance with section 45 of the PGPA Act and PGPA Rule section 17 (PGPA Rule) Audit Committees for Commonwealth Entities.

The Audit and Risk Committee Charter (the Charter) sets out the Committee’s role, authority, membership and tenure, functions, engagement, reporting and administrative arrangements.

Audit Committee membership

The Committee will comprise of not less than three (3) members, appointed by the Accountable Authority.[1] The Accountable Authority of the Entity is the Chief Executive Officer and Principal Registrar of the Federal Court of Australia.

  • The Accountable Authority will appoint the Chair of the Committee.
  • The Committee is authorised to appoint a Deputy Chair who will act as chair in the absence of the Chair.
  • The Accountable Authority, Executive Director of Corporate Services and Chief Financial Officer, and other management representatives may attend meetings as advisers or observers, as determined by the Chair, but will not be members of the Committee.
  • A representative(s) of the ANAO will be invited to attend meetings of the Committee, as an observer.
  • Committee members, taken collectively, will have a broad range of skills and experience relevant to the operations of the Entity.
  • At least one member of the Committee will have accounting or related financial management experience, with an understanding of accounting and auditing standards in a public sector environment.
  • Committee members will be appointed for an initial period of three (3) years. Members may be re-appointed after a review of their performance, for further periods as specified by the Accountable Authority.

Collectively, the Committee needs sufficient expertise to provide independent advice and assurance on the appropriateness of the Accountable Authority’s financial and performance reporting and the systems of risk management and oversight and internal controls for the Entity. At a minimum, it is expected that members of the Committee would understand and observe the legal requirements of the PGPA Act, the PGPA Rule and Public Governance, Performance and Accountability (Financial Reporting) Rule 2014 (FRR), and any official guidance relevant to the performance of their functions.

Members are also expected to do the following:

  • Gain a good understanding of the Entity’s functions, objectives and operational context
  • Act in the best interests of the Entity and the Commonwealth
  • Apply good analytical skills, objectivity and sound judgement
  • Continuously build, apply and maintain experience and awareness of the challenges and opportunities associated with the Entity’s and the public sector’s operating context
  • Express opinions constructively and openly, raise matters that relate to the Committee’s responsibilities and pursue independent lines of inquiry
  • Contribute the time required to meet their responsibilities

Committee members must not use or disclose information obtained by the Committee except in meeting the Committee’s responsibilities, or unless expressly agreed by the Accountable Authority.

The Committee will be assisted by the Entity’s internal audit function that will be responsible for delivering an internal audit program in line with the Committee’s guidance and subject to approval by the Accountable Authority. The Committee will exercise a governance role in relation to the Entity’s internal audit function.

Authority

The Accountable Authority authorises the Committee, in accordance with its roles and responsibilities, to:

  • obtain any information it requires from any official or external party (subject to any legal obligation to protect information);
  • discuss any matters with the ANAO, or other external parties (subject to confidentiality considerations);
  • request the attendance of any official, including the Accountable Authority, at Committee meetings;
  • obtain legal or other professional advice, as considered necessary to fulfil its role, at the Entity’s expense, subject to approval by the Accountable Authority, or delegate.

Functions [2]

The functions of the Committee include reviewing the appropriateness of the Accountable Authority’s:

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

Financial reporting

The Committee will review the appropriateness of the Accountable Authority’s financial reporting for the Entity (subsection 17(2)(a) of the PGPA Rule). This includes reviewing the financial information systems and framework and the completeness and appropriateness of the Entity’s financial reporting – including compliance with the mandatory requirements of the PGPA Act, the PGPA Rule, the FFR and supporting guidance.

The Committee will review and provide independent advice and assurance – including a written statement – to the Accountable Authority at the end of each financial year, prior to the Accountable Authority signing the financial statements, as to whether:

  • The annual financial statements, in the Committee’s view, comply with the PGPA Act, the PGPA Rule, the Accounting Standards and supporting guidance.
  • Additional information (other than the financial statements) required by the Department of Finance for the purpose of preparing Australian Government consolidated financial statements (including the supplementary reporting package) comply with the PGPA Act, the PGPA Rule, the Accounting Standards and supporting guidance.
  • The Entity’s financial reporting as a whole is appropriate, with reference to any specific areas of concern or suggestions for improvement.

Performance reporting

The Committee will review the appropriateness of the Accountable Authority’s performance reporting for the Entity (subsection 17(2)(b) of the PGPA Rule).This requires the Committee to review the performance information systems and framework and the completeness and appropriateness of the Entity’s performance reporting – including compliance with the mandatory requirements of the PGPA Act, the PGPA Rule and the Commonwealth performance framework and supporting guidance.

The Committee will review and provide independent advice and assurance – including a written statement – to the Accountable Authority, at the end of each year, as to whether:

  • The Entity’s Portfolio Budget Statements and corporate plan contain appropriate details of how the entity’s performance will be measured and assessed.
  • The Entity’s approach to measuring its 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.
  • The Entity has appropriate systems and processes for the preparation of its annual performance statements and inclusion of the statements in its annual report.
  • The Entity’s annual performance statements and the performance reporting as a whole, comply with the PGPA Act and the PGPA Rule, with reference to any specific areas of concern or suggestions for improvement.

System of risk oversight and management

The Committee will review the appropriateness of the accountable authority’s system of risk oversight and management for the Entity (subsection 17 (2)(c ) of the PGPA Rule). This requires the Committee to gain a sufficient understanding of the Accountable Authority’s risk appetite and the Entity’s operating environment and reviewing the risk system framework accordingly – for its maturity, completeness, and application of the mandatory requirements of the PGPA Act, the PGPA Rule, the Commonwealth Risk Management Policy and supporting guidance.

The Committee will review and provide independent advice and assurance – including a written statement – to the Accountable Authority, as to whether:

  • The Entity’s risk management framework and associated internal controls for effective identification and management of the Entity’s business and financial risks, in keeping with the Commonwealth Risk Management Policy, are appropriate and whether an appropriate approach has been taken in managing the Entity’s risks.
  • The Entity’s process of developing and implementing the Entity’s fraud control arrangements is appropriate and whether the Entity has appropriate mechanisms for detecting, capturing and effectively responding to fraud risks.
  • The Entity’s reports on fraud from management that outline any significant or systemic allegations of fraud, the status of any ongoing investigations and any changes to identified fraud risks in the Entity are appropriate.
  • The Entity’s systems for risk oversight and management as a whole, with reference to the Commonwealth Risk Management Policy are appropriate with reference to any specific areas of concern or suggestions for improvement.

System of internal control

The Committee will review the appropriateness of the Accountable Authority’s system of internal control for the Entity (subsection 17 (2)(d) of the PGPA Rule). This requires the Committee to gain a sufficient understanding of the Entity’s operating context, governance requirements, the Accountable Authority’s risk appetite, and reviewing the internal control framework accordingly – for its maturity and completeness and application of the mandatory requirements of the PGPA Act, the PGPA Rule and supporting guidance.

The Committee will review and provide independent advice and assurance – including a written statement – to the Accountable Authority, as to whether:

  • The Entity has an appropriate 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.
  • The Entity has relevant policies and procedures in place, such as accountable authority instructions, delegations, procedures for an effective internal security system, including ICT security, and a business continuity plan.
  • The Entity has adequately considered legal and compliance risks as part of the Entity’s enterprise risk management framework, fraud control framework and planning.
  • The Entity has adequate internal audit coverage, taking into account the Entity’s primary risks, and recommending approval of the internal audit annual work plan by the Accountable Authority.
  • The Entity’s system of internal control is appropriate, with reference to any specific areas of concern or suggestions for improvement.

In addition to the above, the Committee should review all internal audit reports and provide advice to the 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.

Additional functions of Audit Committees

Business continuity management

  • The Committee should satisfy itself that a sound approach has been followed in establishing the Entity’s business continuity planning arrangements, including whether business continuity and disaster recovery plans have been periodically updated and tested.

Ethical and lawful behaviour

  • The Committee should assess whether management has taken steps to embed a culture that promotes the proper use of Commonwealth resources and is committed to ethical and lawful behavior.

 

Conduct of the Audit Committee

Administrative arrangements

The Committee will develop an annual work plan detailing the actions to be taken in order to perform the Committee’s functions and the provision and advice to the Accountable Authority.

The Committee will generally meet at least four times per year, and more often if required. Special meetings may be held to review the Entity’s annual financial statements and performance statements or to meet other specific responsibilities of the Committee.

The Chair will call a meeting if requested to do so by the Accountable Authority and may call a meeting if requested by another Committee member.

The Committee will develop a forward meeting schedule that includes the dates, location and proposed agenda items for each meeting for the forthcoming year, and that covers all the responsibilities outlined in this Charter.

A quorum for any Audit Committee meeting will consist of a majority of Committee members, one of whom must be the Chair (or a Deputy Chair in the Chair’s absence) and one of whom must be an independent member.

Meetings can be held in person, by telephone or by video conference.

Where appropriate, decisions of the Committee can be determined by written notation circulated to all members of the Committee and signed by at least a quorum of members without opposition from any Committee member.

Internal and external audit representatives will be invited to attend each meeting as appropriate.

In undertaking its role, the Committee may meet separately with both the internal and external auditors as required by the Committee.

Secretariat services will be provided to the Committee and ensure the agenda for each meeting and supporting papers are circulated, after approval from the Chair, prior to the meeting and ensure the minutes of the meeting are prepared and maintained. Minutes must be approved by the Chair and circulated to each member and Committee observers, as appropriate.

Conflicts of interest

Once each year, members of the Committee will provide written declarations, through the Chair, to the Accountable Authority declaring any material personal interests they or their close family members may have in relation to their responsibilities. External members should consider past employment, consultancy arrangements and related party issues in making these declarations and the Accountable Authority, in consultation with the Chair, should be satisfied that there are sufficient processes in place to manage any real or perceived conflict.

At the beginning of each Committee meeting, members are 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 Committee’s consideration of the relevant agenda item(s). The Chair is also responsible for deciding, in consultation with the Accountable Authority where appropriate, if the member should excuse themselves from the meeting or from the Committee’s consideration of the relevant agenda item(s). Details of material personal interests declared by the Chair and other members, and actions taken, will be appropriately recorded in the minutes.

Assessment arrangements

The Chair of the Committee, in consultation with the Accountable Authority, will undertake a review of the performance of the Committee at least once every two years. The review will be conducted on a self-assessment basis (unless otherwise determined by the Accountable Authority), with appropriate input sought from the Accountable Authority, Committee members, senior management, internal audit, the ANAO, and any other relevant stakeholders, as determined by the Accountable Authority.

The Chair will provide advice to the Accountable Authority on an external member’s performance where an extension of the member’s tenure is being considered.

Review of charter

As part of the FCA continuous improvement approach and adopting best practices, the Committee will, at least once a year, review this Charter. This review will include consultation with the Accountable Authority.

Any substantive changes to the Charter recommended by the Committee will be considered for formal adoption by the Accountable Authority.

Approved:

Warwick Soden
Chief Executive Officer/Principal Registrar
Federal Court of Australia

Date: 10 August 2018

 


[1] The members of the Committee can consist of officials of the Entity and others (for example judicial officers or independent external appointees). For these purposes, the “officials of the Entity” are the statutory office holders, officers and employees of the Federal Court, Family Court, Federal Circuit Court and NNTT listed in paragraph 18ZB(a) of the Federal Court of Australia Act 1976. The majority of members must not be officials of the Entity. The Committee may have a temporary increase in the number of members as a result of staggering the rotation of members.

[2]PGPA Act Rule section 17 states that the functions of an Audit Committee must include reviewing the appropriateness of the Accountable Authority’s: financial reporting; performance reporting; system of risk oversight and management; and system of internal control. As such these functions are mandatory.[2]