Endeavour Energy Annual Performance Report - Parliament of New ...

07
GOVERNANCE
Fraud risk register
An initiative in Endeavour Energy’s
Fraud and Corruption Control Plan
2010–2012 requires a company
wide fraud risk assessment (FRA)
to be conducted every two years.
In August 2010, before the FRA
began, we conducted a review of
the risks in our Fraud Risk Register.
A definition of a ‘fraud and corrupt
conduct risk’ was also developed
and applied during the register
review and subsequent FRA.
The risks were then segmented
into business process categories
to help ensure better practice
in the management of fraud risk.
Likewise, treatment action plans
were developed for each of the fraud
risks. These are being implemented
and monitored by the various
divisions, in line with the 2011–12 risk
management plan.
In early 2011, a new company
procedure was developed to define
the process for maintaining and
updating the register. This included
a requirement for employees to
establish a way to identify new fraud
risks in their areas of responsibility,
on an ongoing basis.
Conflicts of interest
To ensure their independent status,
all directors of Endeavour Energy
are subject to the statutory duties
and prohibitions regarding conflicts
of interest.
We rely on the integrity of the Board
of Directors to identify and disclose
issues which may give rise to a
conflict of interest. The Company
Secretary maintains the Register
of Disclosures which is reviewed,
as a minimum, every six months to
ensure the information held by the
organisation is up to date.
Further to the declarations contained
in the Register of Disclosures,
Directors are required to declare any
real or perceived conflicts of interest
in relation to the matters before
the Board or Board committee that
would interfere with their exercise
of independent judgment as a
Director. Any such declarations will
be added to the register.
Non-executive directors are entitled
to accept positions with other
companies. However, directors must
observe their duties as set out in
the Energy Services Corporations
Act 1995, the State Owned
Corporations Act 1989, the Board
Code of Conduct, the Code of Ethics
and general law, in accepting any
position with another company and,
in particular, those duties relating to
conflicts of interest.
Compliance
Endeavour Energy’s Strategic
Compliance Plan supports
the continual improvement,
implementation and measurement
of a compliance management
framework aligned to the Australian
Standard AS 3806–2006: Compliance
Programs. The plan’s primary
aim is to assist us in focusing on
people, processes and systems to
support compliance.
The Executive Leadership Team
and Audit and Business Risk Board
Committee monitor the progress
of initiatives in the Strategic
Compliance Plan. Regular monitoring
and reporting is in place for key
legal and regulatory obligations
such as Workplace Safety, Retail
and Network Licence Compliance
and Management Representations.
This includes financial compliance
and compliance with Statement of
Corporate Intent obligations.
Compliance control frameworks
are reviewed on an ongoing basis.
Subjects for review include the
accountabilities of people who
have the authority to commit
the organisation to expenditure.
Non-compliances are reported to
the Board.
Internal audit
The Board and Executive Leadership
Team are committed to the
operation of an objective and
independent internal audit function.
They support this through allocating
resources, by approving the annual
audit program and monitoring its
completion, reviewing executive
summaries of individual audits and
monitoring the implementation of
audit recommendations.
Internal Audit assists management
to achieve Endeavour Energy’s
statutory and business objectives
by adopting a disciplined approach
to evaluating and improving
risk management, controls and
governance processes.
To support a strong internal audit
function, an independent external
quality assurance review of internal
audit is required at least once in
three years. The May 2009 review
concluded that the internal audit
methodology and practices used
are in line with the standards of the
Institute of Internal Auditors and
good practice. We expect the next
review will take place within the
next 12 months.
As at 30 June 2011, Internal Audit
had delivered the targets in the
approved audit program in the
year under review. In addition, each
division met the key performance
indicator of nil overdue audit
recommendations aged greater
than 90 days.
During the year, Internal Audit
also provided assurance and
recommendations for control
improvements in key operations and
activities in the network and retail
businesses and support functions,
as well as a pre-implementation
review of the governance and
controls relating to the transition
of the retail business.
External audit
The Auditor-General of New South
Wales provides independent external
audit services through the Audit Office
of New South Wales. It provides no
other services to Endeavour Energy.
Insurance
Endeavour Energy reviews the
adequacy of insurance policy
coverage and limits during each
annual insurance renewal process
and ensures all participating
markets meet acceptable insurer
security requirements.
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