Endeavour Energy Annual Performance Report - Parliament of New ...
Endeavour Energy Annual Performance Report - Parliament of New ...
Endeavour Energy Annual Performance Report - Parliament of New ...
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07<br />
GOVERNANCE<br />
Fraud risk register<br />
An initiative in <strong>Endeavour</strong> <strong>Energy</strong>’s<br />
Fraud and Corruption Control Plan<br />
2010–2012 requires a company<br />
wide fraud risk assessment (FRA)<br />
to be conducted every two years.<br />
In August 2010, before the FRA<br />
began, we conducted a review <strong>of</strong><br />
the risks in our Fraud Risk Register.<br />
A definition <strong>of</strong> a ‘fraud and corrupt<br />
conduct risk’ was also developed<br />
and applied during the register<br />
review and subsequent FRA.<br />
The risks were then segmented<br />
into business process categories<br />
to help ensure better practice<br />
in the management <strong>of</strong> fraud risk.<br />
Likewise, treatment action plans<br />
were developed for each <strong>of</strong> the fraud<br />
risks. These are being implemented<br />
and monitored by the various<br />
divisions, in line with the 2011–12 risk<br />
management plan.<br />
In early 2011, a new company<br />
procedure was developed to define<br />
the process for maintaining and<br />
updating the register. This included<br />
a requirement for employees to<br />
establish a way to identify new fraud<br />
risks in their areas <strong>of</strong> responsibility,<br />
on an ongoing basis.<br />
Conflicts <strong>of</strong> interest<br />
To ensure their independent status,<br />
all directors <strong>of</strong> <strong>Endeavour</strong> <strong>Energy</strong><br />
are subject to the statutory duties<br />
and prohibitions regarding conflicts<br />
<strong>of</strong> interest.<br />
We rely on the integrity <strong>of</strong> the Board<br />
<strong>of</strong> Directors to identify and disclose<br />
issues which may give rise to a<br />
conflict <strong>of</strong> interest. The Company<br />
Secretary maintains the Register<br />
<strong>of</strong> Disclosures which is reviewed,<br />
as a minimum, every six months to<br />
ensure the information held by the<br />
organisation is up to date.<br />
Further to the declarations contained<br />
in the Register <strong>of</strong> Disclosures,<br />
Directors are required to declare any<br />
real or perceived conflicts <strong>of</strong> interest<br />
in relation to the matters before<br />
the Board or Board committee that<br />
would interfere with their exercise<br />
<strong>of</strong> independent judgment as a<br />
Director. Any such declarations will<br />
be added to the register.<br />
Non-executive directors are entitled<br />
to accept positions with other<br />
companies. However, directors must<br />
observe their duties as set out in<br />
the <strong>Energy</strong> Services Corporations<br />
Act 1995, the State Owned<br />
Corporations Act 1989, the Board<br />
Code <strong>of</strong> Conduct, the Code <strong>of</strong> Ethics<br />
and general law, in accepting any<br />
position with another company and,<br />
in particular, those duties relating to<br />
conflicts <strong>of</strong> interest.<br />
Compliance<br />
<strong>Endeavour</strong> <strong>Energy</strong>’s Strategic<br />
Compliance Plan supports<br />
the continual improvement,<br />
implementation and measurement<br />
<strong>of</strong> a compliance management<br />
framework aligned to the Australian<br />
Standard AS 3806–2006: Compliance<br />
Programs. The plan’s primary<br />
aim is to assist us in focusing on<br />
people, processes and systems to<br />
support compliance.<br />
The Executive Leadership Team<br />
and Audit and Business Risk Board<br />
Committee monitor the progress<br />
<strong>of</strong> initiatives in the Strategic<br />
Compliance Plan. Regular monitoring<br />
and reporting is in place for key<br />
legal and regulatory obligations<br />
such as Workplace Safety, Retail<br />
and Network Licence Compliance<br />
and Management Representations.<br />
This includes financial compliance<br />
and compliance with Statement <strong>of</strong><br />
Corporate Intent obligations.<br />
Compliance control frameworks<br />
are reviewed on an ongoing basis.<br />
Subjects for review include the<br />
accountabilities <strong>of</strong> people who<br />
have the authority to commit<br />
the organisation to expenditure.<br />
Non-compliances are reported to<br />
the Board.<br />
Internal audit<br />
The Board and Executive Leadership<br />
Team are committed to the<br />
operation <strong>of</strong> an objective and<br />
independent internal audit function.<br />
They support this through allocating<br />
resources, by approving the annual<br />
audit program and monitoring its<br />
completion, reviewing executive<br />
summaries <strong>of</strong> individual audits and<br />
monitoring the implementation <strong>of</strong><br />
audit recommendations.<br />
Internal Audit assists management<br />
to achieve <strong>Endeavour</strong> <strong>Energy</strong>’s<br />
statutory and business objectives<br />
by adopting a disciplined approach<br />
to evaluating and improving<br />
risk management, controls and<br />
governance processes.<br />
To support a strong internal audit<br />
function, an independent external<br />
quality assurance review <strong>of</strong> internal<br />
audit is required at least once in<br />
three years. The May 2009 review<br />
concluded that the internal audit<br />
methodology and practices used<br />
are in line with the standards <strong>of</strong> the<br />
Institute <strong>of</strong> Internal Auditors and<br />
good practice. We expect the next<br />
review will take place within the<br />
next 12 months.<br />
As at 30 June 2011, Internal Audit<br />
had delivered the targets in the<br />
approved audit program in the<br />
year under review. In addition, each<br />
division met the key performance<br />
indicator <strong>of</strong> nil overdue audit<br />
recommendations aged greater<br />
than 90 days.<br />
During the year, Internal Audit<br />
also provided assurance and<br />
recommendations for control<br />
improvements in key operations and<br />
activities in the network and retail<br />
businesses and support functions,<br />
as well as a pre-implementation<br />
review <strong>of</strong> the governance and<br />
controls relating to the transition<br />
<strong>of</strong> the retail business.<br />
External audit<br />
The Auditor-General <strong>of</strong> <strong>New</strong> South<br />
Wales provides independent external<br />
audit services through the Audit Office<br />
<strong>of</strong> <strong>New</strong> South Wales. It provides no<br />
other services to <strong>Endeavour</strong> <strong>Energy</strong>.<br />
Insurance<br />
<strong>Endeavour</strong> <strong>Energy</strong> reviews the<br />
adequacy <strong>of</strong> insurance policy<br />
coverage and limits during each<br />
annual insurance renewal process<br />
and ensures all participating<br />
markets meet acceptable insurer<br />
security requirements.<br />
42