Corporate Governance

The Implications for Internal Audit

David Blunden M.Eng (Civil), M.B.L., C.P.Eng

Assoc. Director Internal Audit Group
RMIT University

Internal
Audit
Group
 Corporate Governance

Outline of Presentation:

Focus on issues related to Internal Audit

• Background - Corporate Failures

• Corporate Governance Reviews

Internal • University Governance – The Council

Audit
Group • Internal Audit Groups, Audit Committees
& management
 Corporate Governance

Background - Corporate Failures:

International

• Enron, Worldcorp

Australian

• National Safety Council, HIH, One Tel,

Ansett, Harris Scarfe
Internal
Audit
Group
 Corporate Governance

Recent Reviews of Corporate Governance:

• “Principles of Good Corporate Governance and Best

Practice Recommendations”, Aust. Stock Exchange
Corp. Gov. Council, March 2003

• “The Failure of HIH Insurance”, HIH Royal

Commission, April 2003

Internal
Audit
Group
 Corporate Governance

Recent Reviews of University Governance:

• “Meeting the Challenge – The Governance and

Management of Universities”, DEST, Aug. 2002

• “Review of University Governance”,

Vic. Dept Ed.&T., May 2002

• “Review of New Zealand Tertiary Education Institution

Governance”, M. of Ed., NZ Gov., May, 2003
Internal
Audit • “Report of the Auditor-General on RMIT’s finances”,
Group Vic. A-G, June 2003
 Corporate Governance

Federal Budget – Additional Funding tied to Governance:

• Council numbers restricted to 18

• Councilors as ‘trustees’, not representatives of

particular constituencies

• Formal program of professional development of

Councilors

Internal
• Restrictions on Council delegations
Audit
Group
• Industrial relations and student unionism
requirements
 Corporate Governance

Council Issues Identified:

• Independence of Councilors

• Remuneration of Councilors

• Non-delegation of primary responsibilities

• Councilor Code of Conduct

Internal
Audit • Management information
Group

• Risk management
 Corporate Governance

Internal Audit Issues Identified:

• Internal Audit function

• Independence of Audit Committee

• Effectiveness of Audit Committee

• Audit Committee Charter

Internal
Audit
Group
 Corporate Governance

Internal Audit Groups & Audit Committee

Effectiveness directly related to effectiveness of

the Audit Committee:

• Independence
• Skill set
• Process management
• Relationship with management

Annual Audit Program focus:

Internal • Strategic
• Risk based
Audit • Management input
Group • Flexibility
 Corporate Governance

In Summary:

• A background of Corporate Failures

• Corporate Governance Reviews

• The makeup of University Councils

Internal • Implications for Internal Audit Groups

Audit
Group
Where to now? … …
 Corporate Governance

A way forward:

• Government focus on University Councils

• Independence of Councilors

• Effective Audit Committees

Internal • Internal Audit relationships – management & Council

Audit
Group
• “Effectiveness” of Internal Audit