27 September 2023

Auditor on board with board lessons

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The Australian National Audit Office (ANAO) has published the key messages it found in a series of audits examining the effectiveness of governance boards in four corporate Commonwealth entities.

In its latest edition of Audit Insights, the ANAO said its observations related primarily to the attributes of effective governance such as relationships, behaviour and culture, as well board composition, appointment processes and independence.

“The key messages may be relevant for the operations of other Commonwealth boards as well as broader governance arrangements in Commonwealth entities,” the ANAO said.

It recommended the establishment of a board charter, providing a single reference point that clearly set out the functions, powers and membership of the respective board, as well as roles, responsibilities and accountabilities, consistent with relevant legislative requirements.

“Periodically evaluating board performance can enable a board to reflect on its operations and assess whether it has effectively met its purpose, objectives and obligations,” the ANAO said.

“Lessons learned from this process can assist the board in setting priorities and goals and contribute to enhancing overall board and organisational effectiveness.”

It urged boards to engage with the relevant Department and Minister in relation to the skills requirements for future board appointments, as well as recognising and managing conflicts of interest.

“Keeping sufficient evidence of decision-making processes and outcomes is fundamental to effective governance, accountability and transparency,” the ANAO said.

“It also contributes to efficient practice, the utilisation of evidence and enabling a learning organisation.”

The Audit Office also recommended that board members hold management to account.

“Setting expectations for management reporting to the board can assist in ensuring that the board and management have a shared understanding of the board’s requirements and can assist the board in meeting its obligations as the accountable authority,” the ANAO said.

Full details of the ANAO’s insights can be accessed at this PS News link.

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