Portfolio Audit &
Committee Charter
2014-2016
Risk
Table of Contents
1
INTRODUCTION ________________________________________________________ 3
2
PURPOSE _____________________________________________________________ 3
3
OBJECTIVES __________________________________________________________ 3
4
AUTHORITY ___________________________________________________________ 3
5
MEMBERSHIP __________________________________________________________ 4
6
ADMINISTRATION AND EXECUTIVE SUPPORT ___________________________ 4
7
MEETINGS _____________________________________________________________ 4
8
9
7.1
Meeting structure ________________________________________________________ 4
7.2
Quorum _________________________________________________________________ 5
7.3
Conflict of Interest _______________________________________________________ 5
RESPONSIBILITIES _____________________________________________________ 5
8.1
Forward Plan ____________________________________________________________ 5
8.2
Internal Audit ____________________________________________________________ 5
8.3
Victorian Auditor-General’s Office _________________________________________ 6
8.4
Financial Statements / External Accountability _____________________________ 6
8.5
School Council Financial Audits___________________________________________ 7
8.6
Risk Management and Internal Controls ___________________________________ 7
8.7
Compliance ______________________________________________________________ 7
8.8
Annual Review of Performance and Reporting ______________________________ 7
RELATIONSHIP WITH THE SECRETARY AND STATUTORY AUTHORITY
AUDIT COMMITTEES ___________________________________________________ 8
10 SUMMARY OF PROTOCOLS FOR COMMUNICATION – PORTFOLIO AUDIT
AND RISK COMMITTEE _________________________________________________ 8
Portfolio Audit & Risk Committee Charter – Department of Education & Early Childhood Development
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1
INTRODUCTION
This Charter sets out the authority, membership, objectives and responsibilities of the
Portfolio Audit and Risk Committee of the Department of Education and Early Childhood
Development (DEECD).
2
PURPOSE
The Portfolio Audit and Risk Committee (‘the Committee’) assists the Secretary to the
Department (‘the Secretary’) in fulfilling his oversight and governance responsibilities and
obligations under the Financial Management Act 1994 (‘the Act’). The Committee will monitor
and oversee the following, in accordance with the Act and the associated Standing Directions:
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application of accounting policies
financial management
the internal control system
the risk management system
the performance management system
business assurance policies and practices
protection of the assets of the Department
compliance with the Standing Directions of the Minister for Finance under the Act.
The portfolio focus includes the state-wide statutory authorities primarily funded through the
Department, namely:
Victorian Registration and Qualifications Authority (VRQA)
 Victorian Curriculum and Assessment Authority (VCAA)
 Adult Community and Further Education Board (ACFE)
Statutory authorities not primarily funded by the Department are not included in the
portfolio.
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OBJECTIVES
The primary objectives of the Committee are to:
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Provide advice to the Secretary as to whether there are adequate, appropriate and
effective controls in place to manage and control key risks and to meet external
regulatory, compliance and public accountability requirements.
Facilitate the provision of information between the Department, the Committee and
statutory authority audit committees on significant risks to the Department.
Facilitate the use of internal audit as an effective means for the Department and
statutory authorities to achieve appropriate levels of control and risk tolerance.
AUTHORITY
The Secretary and chairs of the statutory authorities authorise the Committee, within the
scope of its responsibilities, to:
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Seek any information it requires from any employee (and all employees are directed to
cooperate with any request made by the Committee) and any relevant external party.
Provide unrestricted access for internal audit and external auditors to fulfil its
objectives and undertake its duties.
Portfolio Audit & Risk Committee Charter – Department of Education & Early Childhood Development
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Conduct or authorise investigations into any matters considered necessary to meet its
duties and obligations.
Have unlimited access to all records and documents, unless otherwise prohibited by
legislation, with the exception of Cabinet-in-Confidence documents.
Require the attendance of executive officers within the portfolio at meetings as
appropriate.
This authority is provided by the Secretary and the chairs of the statutory authorities under
the relevant Standing Directions of the Minister for Finance under the Financial Management
Act 1994.
5
MEMBERSHIP
The Committee shall comprise six members: a maximum of four independent members and
two internal members who shall be executive officers of the Department.
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All members are to be appointed by the Secretary.
Members shall be appointed for an initial period not exceeding three years, with
renewal based on a review of individual performance.
The Committee shall have an independent Chairperson.
Members will be appropriately skilled, with qualifications and experience to ensure
compliance with the Standing Directions, for example, the requirement for basic
financial literacy.
At least one member of the Committee must have accounting or related financial
management expertise.
To maintain independence, membership of the Committee will not include the
Secretary, Chief Finance Officer or Chief Audit Executive.
An executive person acting in an internal member’s substantive position may not be a
member of the Committee or act as a proxy for the substantive member, although
they may be invited to attend Committee meetings as determined by the Chair.
Membership of the Committee is by personal appointment of the Secretary and
positions are not ex officio.
ADMINISTRATION AND EXECUTIVE SUPPORT
An officer of the Department will be appointed to provide executive support to the
Committee.
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MEETINGS
The Committee will meet at least six times per year. Special meetings may be called if
requested by the Secretary, Chief Audit Executive or the Committee.
7.1
Meeting structure
Meetings will be scheduled in line with an annual work-plan to be provided by the Committee.
At least one of the meetings will include consideration of the Department’s annual financial
statements.
Portfolio Audit & Risk Committee Charter – Department of Education & Early Childhood Development
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The agenda and relevant supporting documentation will be distributed to all members of the
Committee at least one week (5 working days) prior to each meeting.
When appropriate, the Secretary, senior departmental executives and/or representatives of
each statutory authority shall be invited to attend Committee meetings.
The independent members of the Committee shall be able to meet in the absence of the
internal members of the Committee, as required, including in relation to meetings with the
Chief Audit Executive and the external auditor.
The Auditor-General (or representative) and the Department’s internal auditors may be
invited to attend Committee meetings or parts thereof as required.
7.2
Quorum
A quorum for any meeting will be three members, providing there is a minimum of two
independent members in attendance.
Should the Chairperson be unable to attend a meeting, the Committee may appoint an
independent member to Chair the meeting, or may choose to defer the meeting.
7.3
Conflict of Interest
Members must declare any conflicts of interest annually and at the start of each meeting. The
Committee will maintain a register of conflicts of interest. This register will record all
declarations of conflicts of interest.
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RESPONSIBILITIES
The Committee shall undertake the responsibilities set out below. The Committee will advise
the Secretary if these responsibilities are not able to be delivered within the level of resources
provided to the Committee by the Audit and Risk Branch of the Governance and Executive
Services Division.
8.1
Forward Plan
The Committee shall develop and monitor a forward work plan identifying when the
responsibilities of the Committee would normally be completed.
8.2
Internal Audit
The Committee shall:
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Review and endorse the internal audit plan, incorporating internal audit projects for
key statutory authorities, based on business priorities and risks across the portfolio.
Provide advice to the Secretary on the adequacy of the Internal Audit Unit’s resources,
skills, knowledge and experience to carry out its responsibilities and complete the
approved internal audit plan.
Review the internal audit charter to ensure that appropriate organisational structures,
authority, access and reporting arrangements are in place.
Review the conduct and outcomes of internal audit, provide advice on significant
issues identified, and monitor action taken by management in response to internal
audit findings.
Portfolio Audit & Risk Committee Charter – Department of Education & Early Childhood Development
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Annually, or more regularly as decided by the Committee, meet in the absence of
management with the internal auditors.
Review the performance of the internal auditors.
Victorian Auditor-General’s Office
8.3
The Committee has the following responsibilities to assist the Department to maintain an
effective, open working relationship with the Auditor-General and his duly appointed agents
and representatives:
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8.4
Consider all audit reports, including performance audit reports completed by the
Auditor-General’s Office.
Invite the Auditor-General or his or her duly appointed representative to attend
meetings (or parts of meetings) of the Committee as an observer.
Meet with the Auditor-General, or his or her duly appointed representative, at
appropriate times during the year to:
o discuss the proposed audit plan with a view to eliminating duplication of audit
activities with the internal audit function
o discuss the outcomes of the external audit.
Meet privately with the Auditor-General, or his or her duly appointed representative,
at least once a year to ensure free, frank and open communication.
Oversee the external audit (financial and performance) by:
o making recommendations to the Secretary on how the Department should act
on advice from the external audit and to oversee the external audit by ensuring
that management takes appropriate action,
o monitoring whether the accepted recommendations of external audit are
adopted and addressed by management on a timely basis,
o investigating the reasons for any material adjustments to the accounts,
o reviewing the impact of actions taken by management to resolve issues.
Financial Statements / External Accountability
The Committee shall:
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Review the Department’s financial reports and annual financial statements.
Review and recommend for signing by the Secretary, the annual financial statements
that are provided to parties external to the Department, prior to finalisation and
submission.
Ensure that procedures are in place for the timely and accurate reporting on financial
matters and reports required in accordance with the Financial Management Act 1994
(FMA) and the Strategic Management Framework (SMF).
Facilitate a common understanding of accounting policy positions is established with
the Auditor-General in a timeframe appropriate for the completion of the
Department’s financial statements.
Provide advice to the Secretary on whether the statements should be signed.
Portfolio Audit & Risk Committee Charter – Department of Education & Early Childhood Development
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8.5
Review the operation of the gifts, benefits and hospitality policies and procedures at
least once a year to ensure transparent reporting of accepted gifts, benefits and
hospitality.
School Council Financial Audits
The Committee shall:
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8.6
Review and endorse the school council financial audit strategy
Review and endorse the scope/objectives of topic audit(s) to be included in the school
council financial audit program.
Review and endorse the school council financial audit program state-wide report for
presentation to the Secretary and the Executive Board.
Review and endorse the topic audit report(s).
Risk Management and Internal Controls
The Committee shall:
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8.7
Develop a ‘whole-of-enterprise’ understanding of risks to the portfolio and the control
mechanisms in place to control those risks.
Review the portfolio’s risk management framework, and adequacy of strategic and
business risk management.
Review risk transfer and treatment strategies relating to insurance.
Review the adequacy and effectiveness of portfolio business continuity management
arrangements, including disaster recovery and emergency management planning and
testing.
Review whether appropriate policies and processes are in place for fraud control
prevention, detection, reporting, response and investigations.
Review whether management’s approach to maintaining an effective internal control
framework is sound and effective.
Recommend to the Secretary whether the risk attestation may be signed.
Compliance
The Committee shall:
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8.8
Determine whether legal, regulatory and compliance risks have been considered as
part of the portfolio's risk management framework.
Review the effectiveness of accountability mechanisms that monitor compliance.
Review the process for monitoring compliance with ethical conduct standards
established in the Victorian Public Sector Code of Conduct.
Annual Review of Performance and Reporting
The Committee shall review its performance against the Charter, as well as that of individual
members and audit and risk management, on an annual basis and provide an assessment and
suggestions for continuous improvement to the Secretary.
Portfolio Audit & Risk Committee Charter – Department of Education & Early Childhood Development
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The review will include consideration of:
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The Audit Plan: Review of the delivery, adequacy and focus of the audit plan for the
portfolio and its fit with the portfolio’s risk profile and framework and the work of the
external auditors.
The work the Committee performed to discharge its responsibilities during the
preceding year.
Adherence to communication protocols: Performance against performance targets
contained in the protocols for communication with the Department’s Secretary and
statutory authority audit committees.
Committee efficiency and effectiveness.
Any other matter the Committee decides is of sufficient importance.
The results of the performance review will be provided to the Secretary.
The Committee will review this Charter at least every three years.
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RELATIONSHIP WITH THE SECRETARY AND STATUTORY AUTHORITY AUDIT
COMMITTEES
The Committee will regularly update the Secretary and the statutory authority audit
committees about the Committee’s plans and activities through:
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Consideration of high risk areas for the portfolio and follow up action plans on these
areas
Assisting agency audit committees to achieve compliance with requirements of the
Financial Management Act 1994
Communication with and receiving of reports from the statutory authority audit
committees on issues of governance, risk management, audit and assurance.
The Committee may, at any time, report to the Secretary any other matter it deems of
sufficient importance to do so. In addition, at any time, the Chair may request a meeting with
the Secretary.
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SUMMARY OF PROTOCOLS FOR COMMUNICATION – PORTFOLIO AUDIT AND
RISK COMMITTEE
The protocols below identify the arrangements between the Portfolio Audit and Risk
Committee (PARC), the Secretary and the statutory authority audit committees.
This table and scheduled communications do not preclude the provision of other
communication and information sharing.
Type of information
Who to be provided to
Target
Portfolio Audit and Risk Committee
1. Annual audit plan
(draft)
Secretary
Prior to finalisation by PARC
to enable comments to be
considered by PARC.
Portfolio Audit & Risk Committee Charter – Department of Education & Early Childhood Development
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Type of information
2. Annual audit plan
(final)
Who to be provided to
Secretary
Target
Within two weeks
endorsement by PARC.
of
Victorian Auditor-General’s Office (VAGO)
Statutory authority audit committees
NB: Portfolio Audit Plan incorporates statutory
authorities
3. Meeting agenda and
papers
PARC Committee and regular invitees
Non-regular invitees (generally an Executive Director
with line responsibility) only receive, present, and/or
talk to a specific audit paper or subject matter as
determined by the Committee.
Statutory authority audit
committees receive the final
annual plan.
At least one week prior to
the PARC meeting (5
working days).
4. Meeting minutes
Secretary
Endorsed minutes from the
Chair, to the Secretary
within 10 days of the PARC
meeting.
5. Meeting minutes
Statutory authority audit committees
Endorsed
minutes
are
provided
to
statutory
authority audit committees,
as requested and in line
with their scheduled audit
committee meetings.
6. PARC meeting action
items
Executive Directors responsible for actions or with
line responsibility for audit/subject matter and
statutory authority audit committee/s where
relevant
Following endorsement of
the
minutes
by
the
Secretary
and
as
determined by the priority
of
the
action
due
date/timing.
PARC
Prior to the following PARC
meeting.
Secretary
7. Responses to PARC
recommended
actions
Statutory Authority Audit Committees
8. Meeting minutes
PARC
Endorsed
minutes
are
requested from statutory
authority audit committees,
in line with scheduled audit
committee meetings.
Portfolio Audit & Risk Committee Charter – Department of Education & Early Childhood Development
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