Other Financial and Corporate Governance Disclosures

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The Board of Directors of WATC is responsible for the performance of the functions of WATC under the Western Australian Treasury Corporation Act 1986.

In order to ensure that WATC carries out its functions in the best interests of the State, clients and other stakeholders, the Board of Directors (the Board) of WATC sets the strategic direction of WATC, with the agreement of the Minister, and establishes the policies and principles under which WATC operates.

The corporate governance processes established by the Board ensure that it is able to fulfil its statutory obligations, guide the affairs of WATC and oversee WATC’s performance. The Board relies on and holds to account the Chief Executive Officer for the operational management of WATC and implementation of the strategic direction.

Board Composition

The membership of the Board is determined in accordance with Section 5B of the Western Australian Treasury Corporation Act 1986 (the Act) and comprises:

An appointed director may hold office for a term not exceeding three years, which is specified in the instrument of appointment, but may be reappointed from time to time.

The directors of WATC at 30 June 2017 are shown in Table 5.

The Secretary to the Board was Mr Steven L Luff, Chief Financial Officer.

Table 5: Board of Directors at 30 June 2017

¹ The Chief Executive Officer is the only director with executive responsibilities.

n/a: not applicable.

Board Responsibilities

The Board is responsible for the performance of the functions of WATC under the Act. These functions include:

In fulfilling this role, the Board guides and monitors the affairs of WATC. This includes:

Board Committees

To assist in the execution of its responsibilities, the Board has established an Audit Committee and a Remuneration Committee.

Audit Committee

The role of the Audit Committee, as set out in the Terms of Reference approved by the Board, is to give the Board additional assurance regarding the quality, integrity, reliability and adequacy of WATC’s accounting and internal control systems, financial reporting and compliance processes.

The Audit Committee is responsible for contact with WATC’s external and internal auditors to ensure that significant issues and information arising from the auditors’ activities are brought to the attention of the Board. At meetings of the Audit Committee, the external and internal auditors are invited to address the Audit Committee without management present. The Chairperson reports to the Board after each meeting, including any findings and recommendations of the Committee.

The members of the Audit Committee at 30 June 2017 were:

The Secretary to the Committee was Mr Thomas W Branch, Compliance Officer.

The members of the Audit Committee are non-executive directors.

Remuneration Committee

The Remuneration Committee reviews and makes recommendations to the Board on remuneration packages and policies applicable to the employment terms and conditions of all members of WATC’s staff, including the Chief Executive Officer.

With the approval of the Board, the Remuneration Committee uses the services of external remuneration experts to advise on appropriate levels of remuneration and other terms and conditions of employment for WATC staff, including the Chief Executive Officer.

The remuneration and allowances payable to appointed directors are determined by the Treasurer on the recommendation of the Minister for Public Sector Management. The terms and conditions of service for the Chief Executive Officer require the concurrence of the Minister.

The members of the Remuneration Committee at 30 June 2017 were:

The Secretary to the Committee was Ms Rebecca L Ridgway, Human Resources Manager.

Attendance at Meetings by Directors

Details of attendance at the Board and Board Committee meetings by each director during the year are shown in Table 6.

¹ J M Collins was invited to attend Audit Committee Meetings.

Constitution and Proceedings of the Board

The Constitution and proceedings of the Board are provided for in Schedule 2 to the Act.

Board and Senior Executives Remuneration

The annual remuneration for WATC’s board and senior executive was as follows:

* An extra pay period in 2015/16 resulted in a higher annual reported remuneration for most employees.

** Commenced term on 1 October 2015.

*** Employee of the Western Australian State Government, therefore no compensation paid for this Board position.

Statutory Corporations (Liability of Directors) Act 1996

WATC’s directors are bound by the provisions of the Statutory Corporations (Liability of Directors) Act 1996. Accordingly, directors are required to comply with the same fiduciary responsibilities and duties of loyalty and good faith owed by directors of companies incorporated under the Corporations Act 2001. In accordance with Clause 18 of Schedule 2 to the Western Australian Treasury Corporation Act 1986, directors are required to leave the room and not take part in deliberations of matters in which they have some material personal interest.

Insurance Policy

An insurance policy has been taken out to indemnify members of the Board against liabilities under Sections 13 and 14 of the Statutory Corporations (Liability of Directors) Act 1996. The amount of the insurance premium paid for 2016/17 was $59,802.

Professional Advice

Directors are entitled, with the prior approval of the Chief Executive Officer, to obtain such resources and information from WATC, including direct access to management and professional advisers, as they may require in order to carry out their duties as directors. Directors are also entitled, with the prior approval of the Chairperson, to seek independent professional advice, at the expense of WATC, to assist them to carry out their duties as directors.

Ethical Standards and Codes of Conduct

The Board acknowledges the need for, and the continued maintenance of, the highest standards of corporate governance practices and ethical conduct by WATC’s directors and staff and has established codes of conduct for directors and staff respectively.

The staff Code of Conduct (the Code) reflects and supports WATC’s values and provides employees with a clear, concise and relevant guide to standards of behaviour in the workplace. The Code also applies to directors unless there is an inconsistency, in which case the Directors’ Code of Conduct will apply.

WATC has also adopted the Western Australian Public Sector’s Code of Ethics and endorsed, in principle, the code of conduct developed by the Australian Financial Markets Association.

Performance Evaluation

As part of good governance, the Board undertakes to evaluate its performance each year.

Compliance

The role of WATC’s compliance function is to ensure that WATC maintains its high prudential standards and has the appropriate procedures in place to comply with the Act and other relevant legislation, its policies and industry standards.

Auditors

External Audit

Section 21 of the Act states:

“The provisions of the Financial Management Act 2006 and the Auditor General Act 2006 regulating the financial administration, audit and reporting of statutory authorities apply to and in respect of the Corporation and its operations.”

In accordance with the provisions of the Financial Management Act 2006 and the Auditor General Act 2006, WATC’s external auditor is the Auditor General for Western Australia. The Auditor General utilises the services of Ernst & Young to conduct the annual audit.

Internal Audit

WATC’s internal audit function is outsourced to KPMG. Appointment to this role by WATC is subject to the Common Use Arrangements authorised by the Department of Finance for accessing audit services and financial advice.

Quarterly Report to the Treasurer

With the exception of the June quarter, WATC submits a quarterly report on its operations to the Treasurer. This report is tabled in Parliament by the Treasurer.

Pricing Policy

WATC operates in a dynamic market where the price of its lending to the public sector is primarily driven by the cost of its borrowings. This cost fluctuates according to the prevailing level of interest rates. WATC sets its lending rates at a competitive level after taking into account the cost of funds, market risk, administration costs and the return on capital. The pricing for financial advice and funds management is determined on a cost-recovery basis.

Registry and Treasury Operations

Link Market Services Limited (Link) acts as agent for the provision of registry services on behalf of WATC. Contact details for Link are listed here.

WATC uses the systems and services detailed in Table 7 to facilitate confirmation and settlement of financial transactions.

Table 7: Confirmation and Settlement Services and Systems

Changes in Written Law

There were no changes to the Western Australian Treasury Corporation Act 1986 during the 2016/17 financial year.

Ministerial Directives

No ministerial directives were received during the 2016/17 financial year.

Legislation

Legislation Administered

Western Australian Treasury Corporation Act 1986.

Legislation Impacting on WATC’s Activities

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