EXPLANATORY STATEMENT
Issued by the authority of the Minister for Finance and Deregulation
Commonwealth Authorities and Companies Act 1997
Commonwealth Authorities and Companies (Report of Operations) Orders 2008
The Commonwealth Authorities and Companies (Report of Operations) Orders 2008 (the Orders) are Finance Minister's Orders under subsection 48(1) of the Commonwealth Authorities and Companies Act 1997 (the Act). Subsection 48(1) provides that Orders may be made on any matter on which the Act requires or permits Orders to be made.
Section 9 of the Act requires the directors of a Commonwealth authority to prepare an annual report in accordance with Schedule 1 of the Act. Paragraph 1(a) of Schedule 1 of the Act provides that the annual report must include a report of operations prepared by the directors in accordance with the Finance Minister's Orders.
The Orders replace the Commonwealth Authorities and Companies (Report of Operations) Orders 2005 (the previous Orders) and apply to the preparation of annual reports for financial years ending on or after 30 June 2008.
The Orders update and clarify the previous Orders. In particular, they take account of an amendment to section 28 of the CAC Act through the Commonwealth Authorities and Companies Amendment Bill 2008 and update references to Departments and other aspects of the Government that have changed since the previous Orders were made.
Further details of the Orders are in the Attachment to this Explanatory Statement.
The Orders are a disallowable legislative instrument for the purposes of the Legislative Instruments Act 2003 (Legislative Instruments Act).
In relation to section 17 of the Legislative Instruments Act, all Departments of State, Commonwealth authorities and the Australian National Audit Office were consulted on the Orders. The Australian Government Solicitor provided legal advice that confirmed that the proposed Orders will achieve the legal effect intended.
A preliminary assessment of the regulatory impact of the Orders was undertaken in accordance with guidance from the Office of Best Practice Regulation. As a result, it was determined that a regulation impact statement was not required as the changes to the previous Orders are of a minor or machinery nature and do not substantially alter those arrangements.
ATTACHMENT TO THE EXPLANATORY STATEMENT
Details of Commonwealth Authorities and Companies (Report of Operations) Orders 2008
Order 1 names the Orders as the Commonwealth Authorities and Companies (Report of Operations) Orders 2008.
Order 2 provides that the Orders commence on 30 June 2008.
Order 3 revokes the Commonwealth Authorities and Companies (Report of Operations) Orders 2005.
Order 4 provides that the Orders apply to Commonwealth authorities in relation to each financial year ending on or after 30 June 2008.
Order 5 defines the term "CAC Act" appearing in the Orders to mean the Commonwealth Authorities and Companies Act 1997 and allows for defined terms in the CAC Act to apply in equivalent terms in the Orders.
Order 6 provides that the requirements for the report of operations that are to be prepared by the directors of a Commonwealth authority, and included in its annual report under Clause 1 of Schedule 1 of the CAC Act, are specified in Schedule 1 to the Orders, the Report of Operations Schedule. Details of Schedule 1 are outlined below.
Notes to the Orders (following Order 6) briefly explain the annual reporting framework established by the CAC Act and the context in which the Orders operate.
Details of Schedule 1 - The Report of Operations Schedule
Part 1: Preliminary
Clause 1 specifies the purpose of Schedule 1.
Clause 2 defines certain terms used in more than one clause in Schedule 1.
Clause 3 provides for the process for granting exemptions from the requirements of Schedule 1.
Clause 4 specifies the mode and general requirements for the certification of the report of operations by the directors of the Commonwealth authority.
Part 2: Form and content of the Report of Operations
Division 1 - Overview
Clause 5 outlines the content of the report of operations.
Clause 6 provides an overview of the general approach and standards of presentation to be adopted in the preparation of the report of operations. For example, reports should be concise, readily understandable and free of jargon, and should include appropriate diagrams and charts.
Clause 7 deals with the situation where the directors are unable to obtain information that is required from a subsidiary for the purpose of preparing the report of operations.
Division 2 - General information about operations and activities
Clause 8 requires the report of operations to identify the Commonwealth authority's enabling legislation, its statutory objectives and functions, and its responsible Minister.
Clause 9 requires an outline of the organisational structure of the Commonwealth authority.
Clause 10 requires that the report of operations include a review of the performance of the Commonwealth authority in relation to its statutory objects and functions, its corporate plan (where applicable), its financial results and position, and future prospects. Terms that relate solely to Clause 10 are defined in subclause 10(3).
Clause 11 requires that the report of operations include particulars of any decisions of the courts or administrative tribunals that may have a significant impact on the operations of the authority. Similarly, particulars are required of any report on the operations of the authority by the Auditor-General, a Parliamentary committee or the Commonwealth Ombudsman.
Clause 12 requires that the report of operations include particulars of any directions given by the responsible Minister, or another Minister, under the authority's enabling legislation, or any other legislation, and any general policies of the Government that apply to the Commonwealth authority under the CAC Act. Particulars of any non-compliance with such directions or general policies of the Government applied under the CAC Act should also be provided.
Clause 13 provides for certain disclosure requirements for Government Business Enterprises (GBEs). The report of operations of a Commonwealth Authority that is a GBE must include an assessment of any significant changes in the financial structure and condition of the authority that may have occurred during the financial year. It must also include an assessment of any material events and uncertainties that would cause reported financial information not to be necessarily indicative of future operating results or financial condition. . Other disclosure requirements for GBEs include the amount of dividends paid or recommended during the financial year and an outline of the nature and effect of any community service obligations. Clause 13 also has regard to the treatment of information that is commercially sensitive.
Division 3 - Specific information
Clause 14 requires particulars of each director and their attendance at board meetings.
Clause 15 requires a statement of the main corporate governance practices of the authority, which must include particulars of all board committees (including the audit committee).
Clause 16 requires particulars of indemnities and insurance provided to officers of the authority.
Clause 17 requires that the report of operations must include any matters required to be included in the annual report by the authority's enabling legislation, or any other legislation.
Clause 18 requires that (except for GBEs) the report of operations must include an assessment of the authority's performance in implementing the Commonwealth's disability strategy.