By Katie Perkins,2014-05-18 00:15
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    1. STATUS

    The Commercial and Audit Board is an advisory sub-committee of Council.

    2. ROLE

    The purpose of the Commercial and Audit Board is to assist Council to fulfil it’s

    governance obligations to the community, by providing independent advice to Council

    in matters relating to financial reporting, internal control structures, risk management

    systems, and internal and external audit functions.

    In particular the Board will have the objectives of assisting and advising Council in

    regard to systems, processes and control structures that will ensure:

    ? Compliance with legal obligations.

    ? Maintenance of an effective system of internal control that will promote the

    credibility and objectivity of internal and external financial reporting. ? The efficiency and effectiveness of operations.

    ? The effective management of risk, through the monitoring and controlling of

    community and commercial exposures that will protect Council’s assets and

    resources, particularly the commercial undertakings of Council. ? The efficient operation of Council through receiving delegated tasks, providing

    advice and being a forum where issues can be discussed and explored in depth. ? The objectivity of the internal auditor by providing an independent reporting line in

    addition to having direct access to the Chief Executive Officer. ? Provision of an effective means of communication between the external auditor,

    internal auditor, management and Council.

    ? Ensure that Council maintains ethical standards and exercises due care and

    diligence in the process.


    The Commercial and Audit Board will consist of:

    ? Two Councillors;

    ? Three suitably qualified, independent members, two of whom will live outside the

    municipality and one inside the municipality;

    ? Chief Executive (non voting).

    The Chairperson will be appointed by Council and will be one of the independent


The Council will review:

    ? Representation of Council on an annual basis; and

    ? The three independent representatives at the expiration of their appointed terms. The appointment of independent members will be made by Council by way of public advertising and will be for an initial term of one year. At the expiration of their term, independent members may be reappointed. Independent members will have knowledge and experience consistent with the requirements of the Victorian Local Government Act 1989 and/or Financial Management Act 1994 as amended.

    The terms of the independent representatives and the internal auditor should overlap to ensure a continuity of knowledge where appointments change.

    The Director Business & Finance, the Manager Finance (Council’s Principal Accounting

    Officer), the Director Community Services and the Internal Auditor’s are not members

    of the Audit Committee but should attend meetings in an advisory capacity. Other senior Council officers should also attend meetings in an advisory capacity as and when required or requested by the Board.


    The Commercial and Audit Board meetings will be formally structured with an agenda and discussion papers circulated before the meeting. Minutes will be taken of all proceedings.

    Meetings will be held at least 4 times each year with the timing of the meetings to be agreed by the Board. A separate meeting will be conducted at the end of each financial year to review the performance of Council’s commercial undertakings and

    major exposures and establishing strategic objectives with management for the following financial year. More frequent meetings can be held as the need arises. A quorum for the Board will be three members with at least one Councillor and two independent members. Should the Chairperson be absent from a meeting, the Board shall appoint a temporary Chairperson.

    5. VALUES

    The primary values of the Commercial and Audit Board are its independence and objectivity in relation to management.

    The Board must not assume any management functions, nor should management exert undue influence over the work of the Board.

    Overseeing the statutory financial reporting and general governance process is one of the Board’s most important tasks. The Commercial and Audit Board must understand

    the fundamental accounting issues, policies and procedures that are applicable to the Victorian Local Government sector, and be able to advise the Audit and Accountability Committee on the impact of these issues on information reported and policies adopted by Council.

    The Commercial and Audit Board will have unrestricted access to both the internal and external auditors and to senior management of Council. The Board can also request consultation with independent experts where necessary to carry out their duties.


    The duties and responsibilities of the Commercial and Audit Board are as follows:

    a) Financial, Audit, Risk Management and Control General.

    ? To review the scope of the internal audit plan and program and the effectiveness

    of the function. This review should consider whether, over a period of years the

    internal audit plan systematically addresses:

    ? Internal controls over significant areas of risk, including non-financial

    management control systems;

    ? Internal control over revenue, expenditure, assets and liability processes;

    ? The efficiency, effectiveness and economy of significant Council programs;


    ? Compliance with regulations, policies, best practice guidelines, instructions

    and contractual arrangements. ? Review the appropriateness of special internal audit assignments undertaken by

    internal audit at the request of the Council or Chief Executive Officer. ? Review the level of resources allocated to internal audit and the scope of its


    ? Review reports of internal audit and the extent to which Council and management

    react to matters raised by internal audit, by monitoring the implementation of


    ? Facilitate liaison between the internal and external auditor to promote

    compatibility, to the extent appropriate, between their audit programmes. ? Monitor the risk exposure of Council by determining if management has

    appropriate risk management processes and adequate management information


    ? Review Council’s draft annual financial report, standard statements and

    performance statement focusing on:

    ? accounting policies and practices;

    ? changes to accounting policies and practices;

    ? the process used in making significant accounting estimates;

    ? significant adjustments to the financial report (if any) arising from the audit


    ? compliance with accounting standards and other reporting requirements;

    ? significant variance from prior years.

    ? Recommend adoption of the annual financial report, standard statements and

    performance statement to Council. Review any significant changes that may

    arise subsequent to any such recommendation but before the financial report is


? Discuss with the external auditor the scope of the audit and the planning of the


    ? Discuss with the external auditor issues arising from the audit, including any

    management letter issued by the auditor and the resolution of such matters. ? Review tendering arrangements and advise Council.

    ? Review issues relating to national competition policy, financial reporting by

    Council business units and comparative performance indicators. ? Identify and refer specific projects or investigations deemed necessary through

    the Chief Executive Officer, the internal auditor and the Council if appropriate.

    Oversee any subsequent investigation, including overseeing of the investigation

    of any suspected cases of fraud within the organisation. ? Address issues brought to the attention of the Board, including responding to

    requests from theCouncil for advice that are within the parameters of the Board’s

    terms of reference.

    ? The Board in conjunction with the Council and the Chief Executive Officer should

    develop the Board’s performance indicators.

    The Board, through the Chief Executive Officer and following authorisation from the

    Council, and within the scope of its responsibilities, may seek information or obtain

    expert advice on matters of concern.

    b) Best Value Matters

    ? Monitor compliance of council’s Best Value Program in the context of Council’s

    framework, systems and processes to ensure compliance with the Local

    Government (Best Value Principles) Act 1999.

    ? Review quarterly summary reports of proposed and completed reviews as

    supplied by the Corporate Planner.

    ? Receive summary reports on individual service reviews conducted under the

    “best value” legislation as specifically required by Council.

    c) Commercial Activities

    ? Consider reports on the commercial performance of external contracts and

    provide advice on areas where business performance improvements can be


    ? Review annual business plans and annual operating budgets for external contract


    ? Review all tender submissions made on in-house Council tenders as referred to

    the Board.

    ? Review and advise on business proposals and tender submissions on all external

    tenders in accordance with Council’s External Tendering Policy.

    ? Provide advice aimed at ensuring that services provided under formal in house

    agreements and external contracts are conducted in full compliance with the

    Trade Practices Act, Competitive Neutrality Policy and any other relevant Acts.

    ? Make recommendations to Council on competitive business policies and

    commercial activities. The duties and responsibilities of the Commercial and Audit Board are subject to ongoing review. The Board may identify specific responsibilities that must be discharged on an ongoing basis and may address other responsibilities as determined from time to time.


    The Chairperson of the Commercial and Audit Board will provide, at a minimum, quarterly reports on the Board’s activities to the Council.

    The Board may report more frequently to the Council where it considers it appropriate or where required by the Council.

    The Commercial and Audit Board will establish a framework with the internal auditor for the management of internal audit projects and reporting of internal audit projects. This framework will be documented.


    Members of the Commercial and AuditBoard will be covered by Council’s insurance

    policies while engaged in the business of the Board.


    Members of the Commercial and Audit Board must comply with Council’s confidentiality policy.

    Members of the Commercial and Audit Board will not directly or indirectly release or make available to any person information relating to the work or discussions of the Board except in accordance with any direction of the Council.

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