Federal Register of Legislation - Australian Government

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Rules/Other as made
This rule amends the Public Governance, Performance and Accountability Rule 2014 to establish the minimum requirements for annual reporting for the content of annual reports for Commonwealth companies to be presented to parliament.
Administered by: Finance
Registered 06 May 2016
Tabling HistoryDate
Tabled HR30-Aug-2016
Tabled Senate30-Aug-2016
Date of repeal 08 May 2016
Repealed by Division 1 of Part 3 of Chapter 3 of the Legislation Act 2003

EXPLANATORY STATEMENT

Issued by the Authority of the Minister for Finance

 

Public Governance, Performance and Accountability Act 2013

 

Public Governance, Performance and Accountability Amendment (Commonwealth Company Annual Reporting) Rule 2016

 

The Public Governance, Performance and Accountability Act 2013 (PGPA Act) sets out a framework for regulating resource management by the Commonwealth and relevant entities. Section 101 of the PGPA Act provides that the Finance Minister may make rules by legislative instrument to prescribe matters giving effect to the Act.

 

The Public Governance, Performance and Accountability Amendment (Commonwealth Company Annual Reporting) Rule 2016 (Company Annual Reporting Rule) is being made to amend the rule made under the PGPA Act. The rule instrument is the Public Governance, Performance and Accountability Rule 2014 (PGPA Rule).

 

The Company Annual Reporting Rule contains provisions that provide minimum requirements for the preparation of annual reports by Commonwealth companies under the PGPA Act.

 

Details of the Company Annual Reporting Rule are set out at Attachment A. A statement of compatibility with human rights is at Attachment B.

 

The Company Annual Reporting Rule is a legislative instrument for the purposes of the Legislation Act 2003.

 

Consultation

 

The Department of Finance (Finance) has worked with the Office of Parliamentary Counsel in developing the Company Annual Reporting Rule.

 

Finance consulted stakeholders from Commonwealth companies in relation to the Commonwealth company annual report requirements. A public consultation paper, requesting comments on the proposed approach for annual report requirements for 2015-16, was also released.

 

An exposure draft of the Company Annual Reporting Rule was posted on the Finance website.

                                             

 

 


Attachment A

 

Details of the Public Governance, Performance and Accountability Amendment (Commonwealth Company Annual Reporting) Rule 2016

Section 1—Name of instrument

This section provides that the title of the instrument is the Public Governance, Performance and Accountability Amendment (Commonwealth Company Annual Reporting) Rule 2016.

Section 2—Commencement

This section provides that the instrument commences on the later of:

·         the day after the instrument is registered on the Federal Register of Legislative Instruments; and

·         the commencement of the Public Governance, Performance and Accountability Amendment (Corporate Commonwealth Entity Annual Reporting) Rule 2016.

Section 3—Authority

This section states that the instrument is made under the PGPA Act.

Section 4—Schedules

This section ensures that if anything in the Schedule of the instrument makes an amendment to another instrument, then those amendments will apply after commencement of this instrument.

Schedule 1—Amendments

Public Governance, Performance and Accountability Rule 2014

Item 1 – Section 4

Item 1 inserts a definition of ‘annual report’ for a Commonwealth company in Section 4 of the PGPA Rule.

Item 2 Before section 27A

Item 2 inserts the heading “Part 3-1Planning and budgeting” before section 27A and ensures the PGPA Rule sequencing aligns with the PGPA Act.

Item 3 – Before section 28

Item 3 inserts the heading “Part 3-2Audit committee for Commonwealth companies” before section 28 and ensures the PGPA Rule sequencing aligns with the PGPA Act.

Item 4 – At the end of Chapter 3

Item 4 adds “Part 3-3—Annual report for Commonwealth companies” at the end of chapter 3.

Section 28A Guide to this Part

Section 28A specifies that the Part is made for paragraph 97(1)(b) of the PGPA Act and sets out the requirements for annual reports for Commonwealth companies.

Section 28B Approval of annual report by directors

Section 28B requires that the annual report must be approved by the directors of the Commonwealth company. The annual report must be signed by the directors and detail how and when approval of the annual report was given.

Section 28C Parliamentary standards of presentation

The annual reports for Commonwealth companies are tabled in Parliament. As such, section 28C requires that the annual report must comply with guidelines for presenting documents to the Parliament (for example, presentation and printing standards).

Section 28D Plain English and clear design

Subsection 28D(1) requires that Commonwealth companies must be conscious of the interests of the Parliament and other persons interested in the annual report, when preparing the annual report.

Subsection 28D(2) states that the information included in the annual report must also be relevant, reliable, concise, understandable and balanced. Where practicable, this should be achieved by:

·         using clear design (for example, through headings and adequate spacing);

·         defining acronyms and technical terms (for example, in a glossary);

·         using tables, graphs, diagrams and charts; and

·         including any additional matters as appropriate.

Section 28E Contents of annual report

Section 28E details the content that is required to be included in Commonwealth companies’ annual reports for a reporting period. These are the minimum requirements that must be included in the annual report. Directors of the Commonwealth company may include other information in the annual report where it is considered appropriate.

Paragraph 28E(a) requires that the annual report must include the purposes of the Commonwealth company as included in the company’s corporate plan for the period.

Paragraph 28E(b) requires that the annual report must specify the current responsible Minister’s name and the name of any other responsible Minister during the reporting period being reported on. The title of the responsible Minister (or Ministers if there are multiple responsible Ministers during the reporting period) must also be included.

Paragraph 28E(c) provides that the annual report must include details of any directions issued by the responsible Minister, or other Minister(s), under the Commonwealth company’s constitution or other legislation. Furthermore, Paragraph 28E(d) provides that any government policy order that applied to the Commonwealth company under section 93 of the PGPA Act must also be included in the Commonwealth company’s annual report. Where a direction or order referred to in paragraph (c) or (d) was not complied with during the reporting period, paragraph 28E(e) requires an explanation of the non-compliance to be included in the annual report.

Paragraph 28E(f) provides that the annual report must include information about the directors of the Commonwealth company. The annual report must include the name, qualifications and experience of each director of the Commonwealth company. The annual report must also include the number of meetings of the board of the Commonwealth company attended by each director during the reporting period and whether each director is an executive or non-executive director. An executive director is an employee of the Commonwealth company, responsible for executive functions in the management and administration of the company. Non-executive directors are independent of corporate management and are not employees of the Commonwealth company.

Paragraph 28E(g) provides that the organisational structure of the Commonwealth company (including any subsidiaries of the Commonwealth company) must be included in the annual report.

Paragraph 28E(h) provides that the annual report must include an outline of the location (whether or not in Australia) of major activities or facilities of the Commonwealth company.

Paragraph 28E(i) provides that the annual report must include information on the main corporate governance practices that the Commonwealth company had in place during the financial year. This requirement can assist a Commonwealth company to demonstrate that its governance is sound.

Paragraph 28E(j) requires the directors of the Commonwealth company to disclose the decision making process undertaken by the board of the Commonwealth company when it enters into a procurement or grant transaction where a director of the Commonwealth company holds a similar position on the other organisation that provides the good or service or receives the grant. The organisation providing the good or service or receiving the grant may take the form of a Commonwealth entity, Commonwealth company or a private company. The disclosure of the decision making process is only necessary where the value of the transaction, or if there is more than one transaction, the aggregate value of those transactions, is at least $10,000 (GST inclusive).

If the Commonwealth company’s annual report includes information under paragraph 28E(j) and there is only one relevant transaction, paragraph 28E(k) requires that the value of the transaction must be included in the annual report. If there is more than one transaction included under paragraph 28E(j), the number of transactions and the aggregate of value of the transactions must be included in the annual report.

Paragraph 28E(l) provides that the annual report must include any significant activities and changes that affected the operations or structure of the Commonwealth company during the period. This requirement intends to assist the reader of the annual report to understand the Commonwealth company’s performance over the past financial year.

Paragraph 28E(m) requires that the annual report include details of judicial decisions and decisions of administrative tribunals made during the period that have had, or may have, a significant effect on the operations of the Commonwealth company. Similarly, paragraph 28E(n) requires that the annual report include particulars of any report given during the reporting period about the Commonwealth company made by the Auditor-General, a Parliamentary committee, the Commonwealth Ombudsman, the Office of the Australian Information Commissioner or the Australian Securities and Investments Commission.

Paragraph 28E(o) provides that where directors of a company are unable to obtain information from a subsidiary needed for its annual report, that the company provide an explanation of what has not been obtained and its effect on its annual report.

In order to assist readers locate information, paragraph 28E(p) requires that an index be included in the annual report which identifies where the requirements of section 28F are located in a Commonwealth company’s annual report.

The note at the end of section 28E recognises that other legislation exists that may require Commonwealth companies to include additional information in their annual reports.

Section 28F Disclosure requirements for government business enterprises

Subsection 28F(1) provides that a government business enterprise that is a Commonwealth company is required to disclose the following information in the annual report:

·         an assessment of significant changes in overall financial structure and condition over the financial year;

·         an assessment of any events or risks that could cause reported financial information not to be indicative of future operations or financial condition;

·         dividends paid or recommended in relation to the financial year; and

·         details of any community service obligations, including an outline of actions taken to achieve the obligations and an assessment of the cost of fulfilling the obligations.

The note below section 28F recognises that section 300 of the Corporations Act 2001 also requires details on dividends.

Subsection 28F(2) provides that information can be excluded where the directors of the government business enterprise believe, on reasonable grounds, that it is commercially sensitive and would likely result in unreasonable commercial prejudice to the government business enterprise. The annual report must state whether information has been excluded.

Item 5 – At the end of Chapter 5

Item 5 adds “Part 3Amendments made by the Public Governance, Performance and Accountability Amendment (Commonwealth Company Annual Reporting) Rule 2016” at the end of Chapter 5.

Section 33 Application of amendments made by the Public Governance, Performance and Accountability Amendment (Commonwealth Company Annual Reporting) Rule 2016

Section 33 provides that the amendments made to the PGPA Rule by the Public Governance, Performance and Accountability Amendment (Commonwealth Company Annual Reporting) Rule 2016 apply in relation to any reporting period that begins on or after 1 July 2015.

 


Attachment B

 

Statement of Compatibility with Human Rights

 

Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.

 

Public Governance, Performance and Accountability Amendment (Commonwealth Company Annual Reporting) Rule 2016

 

The Public Governance, Performance and Accountability Amendment (Commonwealth Company Annual Reporting) Rule 2016 is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.

 

Overview of the legislative instrument

 

The Public Governance, Performance and Accountability Act 2013 (PGPA Act) sets out a framework for regulating resource management by the Commonwealth and relevant entities. Section 101 of the PGPA Act provides that the Finance Minister may make rules by legislative instrument to prescribe matters giving effect to the Act.

 

The Public Governance, Performance and Accountability Amendment (Commonwealth Company Annual Reporting) Rule 2016 is being made to amend the rule instrument made under the PGPA Act, the Public Governance, Performance and Accountability Rule 2014 (PGPA Rule). The PGPA Rule is to support the implementation of the PGPA Act.

 

The Public Governance, Performance and Accountability Amendment (Commonwealth Company Annual Reporting) Rule 2016 contains provisions that provide minimum requirements for the preparation of annual reports by Commonwealth companies under the PGPA Act.

 

Human rights implications

 

The legislative instrument does not engage any of the applicable rights or freedoms.

 

Conclusion

 

The legislative instrument is compatible with human rights as it does not raise any human rights issues.

 

 

Senator the Hon Mathias Cormann
Minister for Finance