Corporate governance Committees and oversight
Corporate
|
|
(a) |
oversight of financial reporting principles and policies, controls and procedures; |
|
(b) |
ensuring the integrity of Goodman’s financial statements, independent external audit and its compliance with legal and regulatory requirements relating to financial statements; |
|
(c) |
audit functions and committees of any entity within Goodman; |
|
(d) |
due diligence and prudential supervision procedures required by regulatory bodies; and |
|
(e) |
establishing procedures for selecting, appointing, and if necessary, removing Goodman’s external auditor, including undertaking any required due diligence. |
The Committee may consider any matter which falls within the roles and responsibilities delegated to it by the Board, notwithstanding that the particular matter(s) may have been previously referred to and considered by another Board Committee. For example, the Audit Committee also has, as part of its charter, a formal role in the oversight of risk management practices within Goodman, with an emphasis on financial risk management. Subject to any resolution of the Board, the Committee has the power delegated by the Board to undertake all things necessary to perform its duties and fulfil its purpose including:
(a) approving principles, policies, strategies, processes and control frameworks for the management of audit matters; and
(b) sub-delegating its powers and discretions to senior executives with or without the power to delegate further.
The Audit Committee has unlimited access to the senior executives, external auditor and internal auditor. In particular:
|
(a) |
senior members of management are invited to attend Committee meetings and to present to the Committee on key issues; and |
|
(b) |
Committee members regularly meet with management, independently of Committee meetings, to further discuss issues relevant to the work of the committee. |
The Committee reports to the Board on the outcome of its reviews, discussions with the external auditor and its findings on matters which have, or are likely to have, a material impact on the operating results or financial position of Goodman.
Goodman has engaged KPMG to act as its external auditor. As part of the terms of engagement, KPMG is required to review the half yearly and annual financial report prior to approval by the Board, discuss their findings with the Committee including the adequacy of financial and accounting controls, and to attend the AGM and be available to answer questions from Securityholders about the conduct of the audit and the preparation and content of the independent audit report.
Each reporting period, the external auditor provides an independence declaration in relation to the audit or review. The Committee is also responsible for assessing whether non-audit services provided by the external auditor are consistent with the external auditor’s independence and compatible with the general standard of independence of auditors imposed by the Corporations Act 2001.
The internal audit function involves a rolling programme of reviews and control testing of Goodman’s business processes. The internal audit programme is closely aligned to the risk management framework. The internal audit function is wholly independent of the external audit function. Internal audit findings are reported to both the Audit and Risk and Compliance Committees and management responds to the recommendations.
The Audit Committee reviews the scope of the engagement arrangements for the internal auditor and recommends the programme to be adopted to the Board. As at 30 June 2009, the Audit Committee is chaired by Mr John Harkness. John is a Chartered Accountant and was a former partner of KPMG, before retiring in June 2000. He was a partner of KPMG while it was engaged to conduct the audit of Goodman’s entities, however, he was not involved in those audits. The other members of the Committee are Mr Ian Ferrier and Mr James Hodgkinson. Ian is also a Chartered Accountant with significant financial expertise and was previously the Chairman of the Audit Committee (until he became Acting Chairman of the Board). James is a senior executive at Macquarie Group Limited and has significant experience in the listed property sector. All three members of the Committee are non-executive and the majority of the members are Independent Directors. Please refer to page 31 in the Directors’ report for details of the Committee members’ attendance at meetings during the year. Goodman’s Audit Committee Charter is available on its website.
Executive confirmations
In addition to the work of the Audit Committee, the Group Chief Executive Officer and the Group Chief Financial Officer are required to confirm to the Board in writing that Goodman’s financial reports present a true and fair view, in all material respects, of its financial condition and operational results and are in accordance with relevant accounting standards.
The Group Chief Executive Officer and the Group Chief Financial Officer also provide written confirmation that, to the best of their knowledge and belief, the statement given to the Board on the integrity of Goodman’s financial statements is founded on a sound system of risk management and internal control and that the system is operating in all material respects in relation to the financial reporting risks.
These statements are based on a Group‑wide and broad ranging series of full and half year confirmations from senior executives and department heads in relation to the financial integrity, risk management and internal compliance and control system within each department.
Risk and Compliance Committee
The Board has required that management design and implement a risk management and internal control system to manage Goodman’s material business risks. The Board has established a Risk and Compliance Committee to provide oversight and direction to Goodman’s system of risk oversight, management and internal controls. The Committee, which meets at least four times a year, is chaired by Mr John Harkness, and is comprised of a majority of Independent Directors.
The Committee operates under a formal charter (available on Goodman’s website) and reports to the Board regarding the effectiveness of its risk management framework in relation to:
(a) internal risk management systems;
(b) incident management;
(c) business continuity planning and support processes;
(d) external compliance audit functions;
(e) internal compliance systems;
(f) sustainability framework; and
(g) insurance requirements.
Both management and the Board have formed the view that the Committee manages Goodman’s risks effectively.
Goodman’s risk management system has been developed in accordance with international and Australian/New Zealand standards on Risk Management and has been underpinned by a Risk Management Policy that sets out the oversight and management of risk for Goodman. Goodman’s Risk Management Policy is available on its website.
The Committee also oversees the work of several internal management committees which have risk responsibilities. These committees facilitate the sharing of information and seek to ensure that a consistent approach to risk management is applied across Goodman.
Consistent with Goodman’s approach of transparent reporting to the Board, members of the Committee have unfettered access to management to discuss risk matters. Senior members of management are invited to attend Committee meetings and present on key issues. External experts and third party service providers are also invited to attend the Committee meetings to provide the Committee with further information and understanding of the way in which Goodman manages its risk and compliance obligations.
The Group Risk Manager is responsible for the implementation of the Risk Management Policy globally. He reviews critical business units and profiles their key risks on an annual basis. Action plans for mitigating key risks are reported to the Committee at each meeting.
The Compliance Manager is responsible for reviewing and monitoring the efficiency of the compliance systems on an ongoing basis and for reporting on the results of these activities to the Risk and Compliance Committee.
Investment Committee
The Investment Committee has authority to:
(a) review, consider and, if appropriate, approve any transactions falling within its mandate;
(b) make recommendations to the Board regarding transactions;
(c) perform other functions as may be delegated from the Board from time to time; and
(d) sub-delegate its powers and discretions to executives of Goodman, with or without the power to delegate further.
The Investment Committee consists of Mr Jim Sloman (Chairman), Mr Ian Ferrier and Mr Gregory Goodman.
A list of attendees at the meetings of the Board, Audit Committee, Remuneration and Nomination Committee, Risk and Compliance Committee and Investment Committee can be found on page 31 in the Directors’ report.