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.
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  • The  Committee is authorised to appoint a Deputy Chair who will act as chair in the  absence of the Chair.
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  • 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.
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  • A  representative(s) of the ANAO will be invited to attend meetings of the  Committee, as an observer.
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  • Committee  members, taken collectively, will have a broad range of skills and experience  relevant to the operations of the Entity.
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  • 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.
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  • 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
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  • Act  in the best interests of the Entity and the Commonwealth
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  • Apply  good analytical skills, objectivity and sound judgement
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  • 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
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  • Express  opinions constructively and openly, raise matters that relate to the Committee's  responsibilities and pursue independent lines of inquiry
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  • 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);
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  • discuss  any matters with the ANAO, or other external parties (subject to  confidentiality considerations);
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  • request  the attendance of any official, including the Accountable Authority, at Committee  meetings;
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  • 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: 

  1. financial reporting; 
  2. performance reporting; 
  3. system  of risk oversight and management; and 
  4. 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 FRR 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.
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  • 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.
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  • 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.
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  • 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.
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  • The Entity has appropriate systems and processes for the preparation  of its annual performance statements and inclusion of the statements in its  annual report.
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  • 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.
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  • 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.
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  • 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.
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  • 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.
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  • 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.
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  • The Entity has adequately considered legal and compliance  risks as part of the Entity's enterprise risk management framework, fraud  control framework and planning.
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  • 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.
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  • 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:


Sia Lagos
Chief Executive Officer and Principal Registrar
Federal Court of Australia

Date: 28 October 2020
 

  [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.


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