Audit committee disclosure requirements for annual reporting

From the 2019-20 reporting period the PGPA Rule (s.17AG(2A), s.17BE(taa) and s.28E(ob)) requires that Commonwealth entities and companies include in their annual report the following information related to their audit committee: 

  • a direct electronic address (hyperlink) to the charter determining the functions of the audit committee;
  • the name of each member of the audit committee during the reporting period;
  • the qualifications, knowledge, skills or experience of each member of the audit committee;
  • information about each member’s attendance at meetings of the audit committee during the reporting period; and
  • the remuneration of each member of the audit committee. 

The questions and answers below were compiled based on entities’ queries relating to the new requirements. If you can’t find an answer to your query below please contact us at pgpa@finance.gov.au.

Audit Committee Disclosure Reporting

 
Do I need to report the audit committee information together?

Yes, entities are encouraged to report all the information required by the PGPA Rule together in one section in the annual report. This includes how much audit committee members are remunerated for being on the audit committee. While entities can include the remuneration figures elsewhere in the annual report (e.g. under remuneration for key management personnel), entities should ensure the figure is also reported with the audit committee information. This makes it easier for the information to be found and to confirm that all requirements have been met.

 
Do I need to disclose my audit committee charter on my entity’s website?

The PGPA Rule does not specify that the direct electronic address must be to the entity’s website, however it seems to be the easiest and most suitable place to upload the audit committee charter. Whichever platform an entity chooses for their audit committee charter, a direct electronic address needs to allow the entity’s charter to be publicly available.

 
How do I report information of my audit committee members who served only part of the reporting cycle?

Reporting the number of meetings attended by audit committee members should be done consistent with the requirements in the annual report i.e. number of meetings attended/total number of meetings conducted during the reporting period. Where audit committee members attended a reduced number of meetings because they served for part of the reporting cycle, this should be explained the ‘notes’ section of the table, with corresponding markers linking the note to the specific information in the table. When reporting the number of meetings attended by audit committee members, this should only be in reference to the meetings attended in their capacity as an audit committee member (i.e. not the governing board or other committee meetings the audit committee member may also be attending in the reporting period).

 
Do I report audit committee members’ remuneration GST included?

Yes. The figure provided for the remuneration of audit committee members should be GST inclusive.

 
How much of the qualification, knowledge, skills or experience of my audit committee members do I need to report?

Entities should provide biographical information relevant to the audit committee member’s position/area of expertise that they have accumulated and bring to their role as an audit committee member. Although a specific level of detail is not prescribed, it is expected that samples of the qualifications, knowledge, skills or experience would be included to demonstrate how each audit committee member contributes to the four legislative functions of the audit committee (and any additional functions prescribed by the accountable authority in the audit committee charter). The intention of this requirement is to allow each entity to present that their audit committee, as a whole, has the appropriate qualifications, knowledge, skills or experience to deliver the audit committee functions.

 
How do I report the remuneration for the audit committee member if they also serve in another position in the entity?

Audit committee members are typically engaged under a contract arrangement. The remuneration in each contract will be unique to the qualifications, skills, knowledge, experience and the role performed by the audit committee member. For the purposes of audit committee remuneration disclosure in s17AG(2A), only the remuneration that members receive for being on the audit committee during the reporting period should be reported. 

Total remuneration for this purpose excludes any amounts received for other roles performed. For example, where members are also remunerated for being on the board, only the amount received for being on the audit committee should be reported in this section. Entities should not report the total amount received by the member for all duties performed. Where members are not remunerated, a $0 figure should be reported.

Elsewhere in the Annual Report where the total remuneration of key management personnel is disclosed, this figure includes remuneration for other roles and being on the audit committee.

Entities are encouraged to use cross-referencing to explain the components of total remuneration, including where individuals are also remunerated for audit committee membership. Entities can also explain that the audit committee component is separately disclosed in the audit committee remuneration section.

 
Are there different reporting requirements for internal and external audit members?

No. The Rule does not differentiate between internal and external members, and all audit committee members information needs to be reported. 

 
Do I still need to report if my audit committee has a different name?

Yes. The name your accountable authority chose for its audit committee does not change its statutory functions, membership requirements or the entity’s reporting obligations in relation to its audit committee. This means the recent changes to the PGPA Rule including s17(4), s.17AG(2A) and s17BE(taa) will apply. You may need to review this information with your corporate/legal area, and review your audit and risk committee charter to verify it has the statutory functions required by the PGPA Act and Rule, and if so, treat it as the audit committee for the membership requirements in s17(4) and the reporting purposes of PGPA Rule s17AG and s17BE(taa).

 
How do I report if my entity was subject to a Machinery of Government change?

Audit committee disclosures need to cover the full reporting period, consistent with other disclosures in the annual report. The gaining entity has an obligation to report the audit committee disclosure requirements for the full reporting period, and is responsible for obtaining information from the merged or abolished entity related to their audit committee conduct. Where necessary, notes should be used to explain details in relation to a Machinery of Government change.


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