Corporate Governance
The Credit Union continues to demonstrate its commitment to a high standard of corporate governance.
Corporate governance describes the system by which the Credit Union and the consolidated entity are directed and managed. It includes how we define and achieve our objectives, as well as how we manage our relationships with members (shareholders), Directors, employees and other stakeholders such as regulators and suppliers.
Good corporate governance encourages the consolidated entity to create value through achieving its objectives, whilst providing accountability and control systems that are appropriate to the risks involved in its business.
This statement outlines the main corporate governance practices in place throughout the financial year.
Board of Directors
Board Governance
The Credit Union is governed by the Board whose principal source and rules of governance include:
- The Constitution;
- Board Charter (formerly Corporate Governance Policy);
- Terms of Reference of various Board committees; and
- Board policy statements.
The Credit Union is diligent in complying with the Prudential Standards and Guidelines produced by the industry’s regulator, the Australian Prudential Regulation Authority (APRA).
Role of the Board
The Board’s primary role is the protection and enhancement of long-term member (shareholder) value.
To fulfil this role, the Board is responsible for the overall corporate governance of the consolidated entity including:
- Establishing a strategic plan based on the Credit Union’s vision statement and values designed to meet members’ needs;
- Approving budgets and key performance indicators and monitoring these on a regular basis;
- Setting remuneration, appointing, removing and creating succession plans for the Chief Executive Officer and, as appropriate, Directors; and
- Ensuring the integrity of internal control and management information systems.
It is also responsible for approving and monitoring financial and other reporting. Details of the Board’s role are set out in the Board Charter.
The Board has delegated responsibility for operation and administration of the consolidated entity to the Chief Executive Officer. Responsibilities are delineated by a formal Instrument of Delegation.
Board Processes
To assist in the execution of its responsibilities, the Board has established a number of Board Committees including a Risk Management Committee, a Corporate Governance and Policy Committee and an Audit Committee. These committees have written Terms of Reference, which are reviewed by the Board on a regular basis. From time to time, the Board may convene a special purpose committee or task force to consider a particular issue.
The Board has also established a framework for the management of the consolidated entity including a system of internal control, a business risk management process and the establishment of appropriate ethical standards.
The full Board currently holds 12 scheduled meetings each year, plus strategy meetings and any extraordinary meetings at such other times as may be necessary to address any specific significant matters that may require consideration.
Director Professional Development
The consolidated entity has a formal process to educate new Directors about the nature of the business, current issues, the corporate strategy and the expectations of the consolidated entity concerning performance of Directors. Directors also have the opportunity to meet with management to gain a better understanding of business operations. All Directors are given access to continuing professional development opportunities to update and enhance their skills and knowledge of the credit union and finance industries, changing regulatory requirements, and ongoing business opportunity and risk management issues.
Composition and Performance of the Board
The names of the Directors of the consolidated entity in office during the period of, and up to the date of, this report are set out in the Directors’ Report. Under the Savings & Loans Credit Union Constitution, the Board is required to have a minimum of five Directors and at least five Directors must be appointed by members. Subject to certain constraints, the Board may also appoint Directors. There were eight Directors during the financial year. Seven Directors were member-appointed with the Board appointing Director Mark Day as permitted under the Constitution. This appointment brings additional skills to the Board.
All Directors of the consolidated entity during the financial year were non-Executive Directors. The Board has in place a process to review its own performance. This process involves the Chairperson conducting individual reviews, and the Board reviewing its collective performance. Further enhancements to this process are currently being implemented.
Director Independence
Each Director is independent of management and free of any business or other relationship that could materially interfere with, or could reasonably be perceived to materially interfere with, the exercise of their unfettered and independent judgment.
Chairperson
The Board elects the Chairperson of the Board annually. The Chairperson of the Board also sits on each Board Committee.
Audit committee
The Committee advises on the establishment and maintenance of a framework of internal control and appropriate ethical standards for the management of the consolidated entity.
The Executive Manager, Audit and Risk, the external auditors, the Chief Executive Officer and other management are invited to Audit Committee meetings at the discretion of the Chairperson of the Committee.
The responsibilities of the Audit Committee include:
- Reviewing the annual financial statements for recommendation to the Board. This includes new or significant changes to accounting policies to ensure compliance with Australian Accounting Standards and reviewing significant accounting estimates and the results of the external audit;
- Reviewing the effectiveness of the risk management framework;
- Assessing and monitoring the performance and objectivity of the internal audit function and approving the annual internal audit plan;
- Reviewing annually the external auditor’s independence in accordance with relevant Corporations Act, professional body and APRA requirements;
- Completing the annual Fit and Proper assessments of the external auditors in accordance with prudential standards;
- Assessing the adequacy of the internal control framework;
- Organising, reviewing and reporting on any special reviews deemed necessary by the Board;
- Ensuring fraud risks are properly identified and effective preventative and detective controls are in place to manage these risks;
- Monitoring processes to ensure compliance with regulatory requirements;
- Receiving the annual report on the conduct and outcomes of the Whistleblowers Protection Program; and
- Overseeing the APRA statutory reporting requirements.
In addition, the Audit Committee monitors and evaluates the performance and effectiveness of the external auditor including:
- Reviewing the external audit plan and agreeing the annual engagement letter;
- Reviewing the external audit reports and monitoring management’s responsiveness to the findings;
- Discussing with the external auditor any problems encountered during the audit; and
- Meeting with the external auditor at least once a year independently of management.
The external auditor is invited to attend every Audit Committee meeting.