The Australian Securities Exchange (ASX) corporate Governance Council's revised Corporate Governance Principles and Recommendations provide recommendations relating to eight key principles relevant to ASX-listed companies. However, as a Corporate Commonwealth entity, Efic, is not required to disclose the extent to which its corporate governance complies with the recommendations. The following details demonstrate our commitment to good corporate governance.
Lay solid foundations for management and oversight
1.1 The Board has formally determined its own responsibilities and set them out in its Board Charter. The powers of the Managing Director, as delegated by the Board, are set out in an instrument entitled ‘Statement of the Powers of the Managing Director’.
1.2 The Board assesses the performance of the Managing Director each year, including eligibility for any performance-related remuneration.
1.3 The Managing Director assesses biannually the performance of senior executives under Efic’s performance management program.
Structure the Board to add value
2.1 A majority of the Board consists of independent members.
• The Chairperson is an independent member.
• Different individuals exercise the roles of Chairperson and Managing Director.
• In addition to their ongoing statutory obligation to disclose material personal interests when they arise, Board members’ independence is regularly assessed through annual disclosure of external interests, updated at each Board meeting.
• With the approval of the Chairperson, a Board member in the furtherance of his or her duties may seek independent professional advice at Efic’s expense.
2.2 The Board’s performance is reviewed, at a minimum, every two years. The most recent evaluation was completed in December 2013 and addressed issues such as Board composition and skills, quality of information received, roles and responsibilities, exercise of powers and effectiveness, operation of meetings, induction and education, stakeholder obligations and risk management. The review found that the Board operates professionally and effectively.
2.3 The Board holds ‘in camera’ discussions at the end of each meeting to assess the effectiveness of the meeting and identify areas for improvement.
2.4 Management provides the Board with comprehensive and timely information on relevant matters to enable the Board to discharge its duties effectively, including provision of Board papers one week before each Board meeting. Directors are able to obtain additional information if they wish, and have access to all members of the Efic Executive team.
2.5 Efic publishes its key performance indicators in its Annual Report.
Act ethically and responsibly
3.1 Efic has a Code of Conduct.
3.2 Efic has a policy on diversity that recognises the strategic advantages of a diverse workforce. An assessment of Efic’s Diversity Management Policy is undertaken biennially by the Board.
3.3 In addition, Efic's Corporate Responsibility Policy (CRP) sets out many of the principles that enable Efic to attain an appropriate balance between the responsibilities Efic owes to its varied stakeholders. It assists Efic to balance the need to achieve its purpose of overcoming financial barriers for exporters, while fulfilling its responsibilities to its broader, non customer stakeholders.
Safeguard integrity in financial reporting
4.1 Efic has had an Audit Committee of the Board since inception. The Board has set out the accountabilities of the Committee in an Audit Committee Charter. The Board Audit Committee has broad responsibilities to the Board regarding risk oversight and management, including:
• overseeing the work of both the external and internal auditors
• reviewing the annual and half-yearly financial statements
• overseeing compliance with statutory obligations
• the effective management and control of financial and operational risks.
All three Board Audit Committee members, including the Committee Chair, are independent, non-executive Board members. The Committee Chair is not Chairperson of the Board. Efic's risk management system operates under the review of the Board Audit Committee.
4.2 The Managing Director and Chief Financial Officer state in writing to the Board Audit Committee that Efic’s financial reports present a true and fair view, in all material respects, of its financial condition and that the operational results are in accordance with relevant accounting standards.
4.3 In accordance with the PGPA Act, the Auditor-General conducts the annual external audit of Efic. The Auditor-General has contracted Ernst & Young to assist with the audit work.
Make timely and balanced disclosure
5.1 Efic's Annual Report (incorporating the financial statements) is made available on its website. Efic also reports on its website the types of transactions it enters into, in accordance with its Policy and Procedure for environmental and social review of transactions.
5.2 Efic keeps the Minister for Trade and the Minister for Finance informed regarding Efic’s operations, in accordance with its obligations under the PGPA Act.
5.3 Efic also keeps the Minister for Trade informed of developments in the financial markets that have an impact on exporters, and provides information to assist the Government with policy development.
Respect the rights of Security holders
6.1 Efic has a close working relationship with the Australian Government, its sole owner, at various levels.
6.2 Efic’s CRP sets out guiding principles to enable it to establish an appropriate balance between the responsibilities Efic owes to the Australian Government as its sole owner and other stakeholders.
6.3. Efic respects the international agreements to which Australia is a party that relate to its business. Among the key agreements for Efic are the:
• World Trade Organization Agreement on Subsidies and Countervailing Measures
• OECD Arrangement on Officially Supported Export Credits
• OECD Recommendation on the Council on Common Approaches on Environment and Officially Supported Export Credits and Environmental and Social Due Diligence
• OECD Council Recommendation on Bribery and Officially Supported Export Credits
• OECD Principles and Guidelines to Promote Sustainable Lending Practices in the Provision of Official Export Credits to Low-Income Countries
• OECD Guidelines for Multinational Enterprises
• Berne Union Guiding Principles.
Recognise and manage risk
7.1 Efic’s risk management systems and procedures are structured around key requirements of the PGPA Act, the Efic Act, other relevant legislation, regulatory guidance and prudential standards, as well as prudent commercial practice.
7.2 Efic has identified, prioritised and documented all significant risks, and has documented associated risk management systems. Efic’s Risk Management Framework describes the manner in which Efic’s risk appetite and tolerance are established and subsequently controlled. The Framework sets out core principles, outlines responsibilities, categorises the risks that Efic faces and identifies the strategies it has adopted to manage those risks. Efic recognises that risk identification and management is ongoing. Efic’s risks are reviewed with a focus on potential new risks on the horizon.
7.3 Efic’s senior executives, after consultation with relevant staff regarding any control deficiencies or lapses, or any compliance breaches or incidents, provide six-monthly written assurances to the Board regarding the currency of Efic’s risk profile and the effectiveness of compliance and control measures.
7.4 Efic has contracted Deloittes to carry out the internal audit function within Efic.
7.5 The internal auditor reports to management and is accountable to the Board Audit Committee. The Board Audit Committee is responsible for overseeing the scope of the internal audit and recommending to the Board the appointment or dismissal of the internal auditor. The Board Audit Committee has access to the internal auditor without the presence of management.
Remunerate fairly and responsibly
8.1 In accordance with legislative requirements, the Australian Government’s Remuneration Tribunal determines the fees and other amounts payable to Board members. The Tribunal also determines the parameters within which the Managing Director’s remuneration package is set by the Board. Therefore, key remuneration decisions are made outside Efic.
8.2 Board members (other than the Managing Director) do not receive any performance-related remuneration. Board members are not entitled to any retirement benefits beyond statutory superannuation entitlements. An explanation of the Remuneration Tribunal’s operations and practices is available on its website (www.remtribunal.gov.au).
8.3 Under the Efic Act, the Board determines the terms and conditions of Efic’s employees. The remuneration of Efic’s employees is established with reference to market data from the Financial Institutions Remuneration Group. This data is provided twice yearly by the 100-plus financial institutions which are the group's members. Efic benchmarks each position, comparing relevant experience and skills as well as key accountabilities.