governance-principles-boards-public-sector-aus_april-2016

Governance
principles
forboardsofpublicsector
entitiesinAustralia
April 2016

© 2016 Governance Institute of Australia
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i© 2016 Governance Institute of Australia Governance principles for boards of public sector entities in Australia
These Governance principles for boards of public sector entities in Australia
developed by Governance Institute of Australia recognise that, for public sector
governance, one size does not fit all and they are designed to be applicable to the
various types of public sector entities that exist.
Different legal structures established for public sector entities have implications for
the type of governance framework that is implemented by each entity. Those entities
that are statutory bodies (including universities), or commercialised government-
owned entities (including government and state-owned corporations, government
business enterprises and government trading enterprises) will have a governing
body, generally, but not always, called a board.
The ‘board’ of a public sector entity is required to consider the myriad of
accountabilities and level of transparency enshrined in the entity’s constituting
legislation and the public sector framework within which it operates. The board must
also consider the complexities associated with the entity’s potential collaboration or
interaction with other government agencies and Minister(s), as well as the common
and statutory laws of fiduciary duties directors are subject to. There are also many
instances where responsibility for achieving a state, territory or national outcome
spans more than one national or state department or agency. These factors all
provide significant challenges to those sitting — or contemplating seeking a position
— on a public sector board. Board members need to understand that acting in
the public interest, for example, cannot go outside of what the entity has been
established to do, so there is freedom within constraint.
There are varying practices and different governance models within which public
sector entities already operate. These Principles do not detract from those
governance principles already in place in various jurisdictions, or seek to reinvent
the good work that they have undertaken. Rather, their focus is on harnessing and
developing common governance principles to enable cohesiveness, consistency and
efficiency focused on promoting community wellbeing and trust, while allowing the
Commonwealth, states and territories to tailor their governance arrangements to
flexibly address the priorities of each level of government.
At the whole-of-government level, a principles-based governance framework
provides consistency for those on the boards of the myriad type of public sector
entities in terms of practice and behaviour, and also for those external stakeholders
seeking a degree of accountability and transparency in the way in which public
money is spent and services provided. The Principles are designed with a public
value proposition in mind.
This will help public sector entities, their boards and relevant Ministers and
government departments to build the trust of the community and better the
performance of the public sector.
I thank our members who have contributed to the development of these Principles
and commend them to you.
Simon Pordage FGIA
President
Governance Institute of Australia
Foreword

1© 2016 Governance Institute of Australia Governance principles for boards of public sector entities in Australia
ThePrinciples
Principle 1: Clarify and document the public sector 5
entity’s relationship with the government
1.1: Clarify and document the accountability of the public sector entity 5
to the government
1.2: Clarify and document the public sector entity’s relationship with 5
the Minister(s)
1.3: Define the board’s oversight responsibilities 6
1.4: Define and record delegations of authority 7
Principle 2: Ensure that the board adds value to the 8
community and other stakeholders
2.1: Clarify the long-term strategy of the public sector entity 8
2.2: Document the processes which inform the structure and composition 8
of the board
2.3: Develop processes to evaluate the board and management 9
2.4: Clarify how board remuneration is determined and reviewed 10
Principle 3: Embed ethical behaviour and integrity 11
and promote community wellbeing and trust
3.1: Develop, document and implement an ethical framework using appropriate 11
codes, policies and practices
3.2: Develop structured processes to monitor conduct and 11
professional behaviour
Principle 4: Oversee effective stewardship of resources 13
4.1: Develop rigorous processes to manage and safeguard the 13
organisation’s resources
4.2: Develop performance measures and processes to monitor them 13
4.3: Manage and safeguard knowledge and information resources 14
4.4: Establish effective audit arrangements 14
Principle 5: Protect the public interest through 15
effective risk management
5.1: Establish an appropriate risk management framework 15
5.2: Establish an oversight function 15
Principle 6: Engage openly and honestly 16
with stakeholders
6.1 Define the stakeholders and the organisation’s strategy in regards 16
to engagement
6.2: Develop effective communication with stakeholders 16
6.3 Develop a framework for handling grievances and whistleblowers 16
Principle 7: Make timely and balanced disclosure 17
7.1: Document the organisation’s reporting requirements to government 17
7.2: Clarify access to information from the entity 17

2 © 2016 Governance Institute of AustraliaGovernance principles for boards of public sector entities in Australia
ThebasisofthePrinciplesandRecommendations
Governance is the framework of rules, relationships, systems
and processes within and by which authority is exercised and
controlled in organisations. It encompasses the mechanisms
by which organisations are held to account.
There is no single model of good governance. A public sector
entity must always have regard to the law that creates it,
and the policy and all relevant rules and directives of public
administration within which it operates to ensure that an
integrated governance framework is in place. An integrated
governance framework may need to consider the potential for
collaboration and interaction with other public sector agencies.
Governance practices will evolve in light of the constituting
legislation, terms of reference and context of particular entities
— governance is dynamic.
The Commonwealth, state and territory public sectors are
comprised of multiple types of organisational forms. They are
generally established by an Act of Parliament administered
by the executive government through the relevant Minister,
or are deemed by legislation to be a public sector entity
because they are controlled by another public sector entity or
by a specific constituting Act for the purpose of fulfilling an
identified public good.
Ministers take advice from a range of sources. However,
their primary advice on portfolio matters is the chief
executive (Secretary or Director-General) of the government
department(s) which report to them. For example, the Federal
Treasurer has a number of entities that hold accountability to
them, but their main source of advice is the head of Treasury.
The Treasurer will expect that person also to have some line
of vision into and relationship with the entities within the
Treasurer’s portfolio.
The accountabilities enshrined in government legislation or
as prescribed by the relevant Minister provide a challenge to
those private sector individuals seeking public sector board
appointments without due consideration of the significant shift
in the independence paradigm.
See Governance Institute’s Good Governance Guide: Due
diligence for candidates for public sector boards.
The Governance Principles for boards of public sector entities
provide guidance to those public sector entities which share
the following common foundations of good governance:
• constitutional, legal and government frameworks
• vision and strategic planning
• risk management
• proper authorisations and delegations in decision-making
• accountability, transparency, integrity, effectiveness and
efficiency
• leadership, values and rules of conduct.
These Principles and Recommendations are not prescriptions,
but guidelines designed to produce an outcome that is
effective and of high quality and integrity and that recognise
the political and operating environments that differ from those
of the private sector. They do not require a ‘one-size-fits-all’
approach to governance. They state recommendations for
practices designed to optimise organisational performance
and accountability in the interests of all of an organisation’s
stakeholders , including the community served by public
sector entities.
A whole-of-government approach to governance
There are varying practices and different governance models
within which public sector entities operate across jurisdictions.
While we recognise the measures already in place to develop
governance guidelines across the country, we believe that
through the design of an overarching governance framework
in the form of principles, whole-of-government governance
practice in public sector entities can be improved. In turn,
better governance practices can lead to improvements in
behaviour, culture, innovation, productivity, performance,
efficiency and effectiveness.
Importantly, a whole-of-government focus does not detract
from those governance principles already in place in various
jurisdictions, or seek to reinvent the good work that they
have undertaken. Rather, our focus is on harnessing and
developing common governance principles to enable
jurisdictional collaboration, cohesiveness and consistency
focused on community wellbeing and prosperity while allowing
the Commonwealth, states and territories to flexibly tailor
directions and actions to align to each situation.
At the whole-of-government level, a principles-based
governance framework provides consistency for those within
public sector entities in terms of practice and behaviour,
and also for those external stakeholders seeking a degree of
accountability and transparency in the way in which public
money is spent and public sector entities are governed.
Principles that are designed with a public value proposition in
mind can also facilitate better community outcomes, such as
increased wellbeing and prosperity.
The application of the Principles and
Recommendations
Different legal structures established for public sector entities
have implications for the type of governance framework
that is implemented by each entity. Those entities that are
statutory bodies (including universities), or a commercialised
government-owned entity (including government and state-
owned corporations, government business enterprises
and government trading enterprises), or a public-private
partnership or joint venture will have a governing body,
generally called a board.
The form of the board may include any of the following:
• a statutory board which has been constituted by an act of a
Commonwealth, state or territory parliament
• a statutory authority which has been constituted by an act of
parliament but has no control of funds

• a board of a company (given that a company in this context
would be an entity controlled by another public sector
entity) which has been established by the constitution of
the company
• a board of a commercialised government entity (such as
a government-owned corporation, government business
enterprise, state-owned corporation or government trading
enterprise), which has been set up by either an Act of
Parliament or the constitution of the corporation.
A governing board is empowered to set the strategic direction
and oversee the management and performance of the
organisation within the framework set by the Minister and
relevant department. Ultimately, members of these boards
take on a ‘directorship’ role similar to that in a company.
The Principles and Recommendations are particularly relevant
to Commonwealth, state and territory public sector entities
that have governing boards but are not-for-profit entities.
They are adaptable for those public sector entities that are
often referred to as being ‘departmental’ in design and which
do not have governing boards established by law, but other
bodies such as an advisory council. While commercialised
government-owned entities may also refer to the ASX
Corporate Governance Council’s Corporate Governance
Principles and Recommendations and the G20/OECD
Principles of Corporate Governance (2015), these guidelines
may also be of relevance and of benefit to the entity.
Because these Principles and Recommendations are relatively
generic in nature, public sector entities other than those
mentioned above may choose to adapt them.
Monitoring the Principles and Recommendations
Public sector entities are encouraged to monitor their ongoing
performance against the Principles and Recommendations.
The key areas of governance in annual reporting relate to each
of the Principles and Recommendations and consideration
should be given to disclosure in the spirit of these Principles.
The publication of a brief commentary on governance by
each entity in an annual report promotes transparency.
The commentary should be limited to an explanation of any
specific governance practices at variance to the Principles
and Recommendations. This is known as ‘if not, why not’
reporting. Under the ‘if not, why not’ approach taken by the
Principles and Recommendations, if a public sector entity
considers a Recommendation is inappropriate to its particular
circumstances, it has the flexibility not to adopt it — a flexibility
tempered by the requirement to explain why to its stakeholders.
Fiduciary duty of directors
The common law imposes fiduciary duties on directors which
prevent directors using their position to obtain personal
advantage. These fiduciary duties overlap with the statutory
duties imposed on directors under the Corporations Act. The
courts have classified these fiduciary duties under four headings:
• to act bona fide in the best interests of the company
• to exercise powers for a proper purpose
• to retain discretion
• to avoid conflicts of interests.
The fiduciary duties apply to each Principle and
Recommendation, regardless of whether the board members
are subject to duties under the Corporations Act or not.
References
All references to Good Governance Guides are to guides
published by Governance Institute of Australia, available at
governanceinstitute.com.au/GoodGovernanceGuides.
Glossary
Board: The body charged with the legal and constitutional
responsibility for governing the public sector entity.
Board members: Comprising directors, who are board
members. The term ‘board members’ is used in this document,
rather than directors, as not all public sector entity boards will
be governed by the Corporations Act.
Executive government: Examples include the Governor
(Queen’s representative) and Executive Council (usually the
Premier and total Ministry). Composition may vary between
states and territories.
Governance: Governance encompasses the system by
which an organisation is controlled and operates, and the
mechanisms by which it, and its people, are held to account.
Ethics, risk management, compliance and administration are
all elements of governance.
‘If not, why not’ approach: If the board of a public sector
entity considers that a particular governance principle
or recommendation is not appropriate to its particular
circumstances, it is entitled not to adopt it, subject to an
explanation as to why it has not adopted it.
Minister: Minister of the Crown and legally and politically
accountable to the Parliament for the administration of their
department(s) and other public sector entities under
their purview.
Principle: One of the enumerated principles in this document.
Principles-based approach: The use of principles to
underpin the governance practices of public sector entities.
A principles-based approach differs from a black-letter
law approach and encourages entities to observe the
‘spirit’ of governance that is being sought, rather than
imposing obligations or requirements. There is no ‘one-
size-fits-all’ approach to governance in the public sector
— which governance practices an entity chooses to adopt
is fundamentally a matter of constitutional and legal
frameworks, as well as for the board members to decide. A
principles-based approach allows entities to assess each
situation and consider the most appropriate governance
model and framework for each organisation.

Public sector: Government departments and agencies at
the Commonwealth, state and territory levels; however, the
main focus of this document is on public sector entities with
boards, including:
• statutory boards constituted by an act of state/territory or
federal parliaments
• boards of companies (given that a company in this context
would be an entity controlled by another public sector
entity) which have been established by the constitution of
the company
• boards of commercialised government entities, such as
a government-owned corporation (GOC), government
business enterprise (GBE), state-owned corporation (SOC)
or government trading enterprise (GTE), which have been
set up by either an Act of Parliament or the constitution of
the corporation
• internal decision-making or advisory boards of management
or executive teams which have been formed by the charter
or terms of reference approved by the Director General
or Departmental Secretary (see Good Governance Guide:
Governance in organisations without boards).
Public value: Value for money for the taxpayer dollars, that
is, maximising the available benefit from every dollar spent in
providing the services and programs to optimise economic,
social, physical and cultural community wellbeing.
Stewardship: In terms of stewardship, resources are meant
to include such things as operational, capital, human and
intellectual resources utilised by the entity.
Whole-of-government: A collective approach of departments
and/or agencies rather than an agency-centric approach
where responsibility for achieving a state, territory or federal
outcome/policy spans more than one federal or state
department or agency.
Whole-of-government governance: A common set of
governance principles for public sector entities, combined
with ‘if not, why not’ disclosures against the principles in
annual and other reports.

Recommendation 1.1: Clarify and document
the accountability of the public sector entity to
the government
For the most part public sector entities with boards are
creations of statute. They are created to carry out certain
functions for government that have been approved by the
responsible Parliament.
Generally, the enabling legislation will include the functions
that the entity is authorised to perform. These functions
impose responsibilities and duties to engage in certain
activities. Powers may also be stipulated to support the
functions of the entity, for example the power to delegate
some functions.
Together, these functions, responsibilities and duties form the
basis of the accountability of the entity to government.
Accountability of the public sector entity involves the
consideration by the board of the entity’s and board’s role and
obligations within the context of the whole of government. This
accountability is met through the assignment of responsibilities
based upon mutually agreed performance expectations and
standards. Public sector entities have a responsibility to
answer for their performance and are generally subject to
reputational damage and potentially subject to penalties for
non-performance. For accountability to be assigned fairly and
enforced, the responsible persons or bodies need to be given
the authority, resources, support and reasonable control over
events to achieve the desired outcomes.
Public sector entities should seek clarification and document
their accountabilities to government. This should include
accountabilities to both the Minister and relevant government
departments to ensure a clear and shared understanding is
gained by all parties. There are variances in the relationships
that public sector entity boards have with their Minister
and relevant department — all have a degree of operational
autonomy to carry out their public function at arm’s length
from central government; however, all are accountable to their
Minister(s). It is usual practice for the board to be accountable
and report to the relevant Minister. In some cases it is
customary for the board to report to a department as the
Minister’s agent and have a more formal reporting relationship
with the department.
Entities may be subject to ministerial direction and control in
relation to certain aspects of their functions and operations
but not in relation to others. The entity should clarify the
accountabilities to the relevant Minister(s), where applicable.
Principle1:Clarifyanddocumentthepublicsector
entity’srelationshipwiththegovernment
The relevant Minister(s) and the public sector entity should
have a written agreement about the priorities for the entity,
projects to be undertaken and some key performance
measures containing milestones and expected outcomes.
The board will need to assess and report on the funding
implications of the agreed priorities for the entity.
Some public sector entities have greater degrees of autonomy
than others (often regulators and integrity bodies), which is
usually specified in legislation. Other accountabilities are also in
place through integrity and central agencies such as the Auditor-
General, the Public Service Commission, the Ombudsman, anti-
corruption bodies and Departments of Treasury and Finance.
This will vary from jurisdiction to jurisdiction.
There may also be omnibus legislation to which the entity
is subject, such as the NSW State Owned Corporations Act
1989, or a specific statute for particular boards or authorities.
Oversight mechanisms in government processes should be
defined to ensure accountability and ensure that public funds are
spent with integrity. Enforcement mechanisms are also critical
for their effectiveness in keeping public officials accountable
for their actions. However, the board should have sufficient
independence to discharge its responsibilities and, where
permitted by legislation, the chair should be independent.
Recommendation 1.2: Clarify and document
the public sector entity’s relationship with
the Minister(s)
The functions (terms of reference, constitution or charter of the
board, as applicable) should clearly establish the accountabilities,
responsibilities, tenure and obligations of the board, as well
as those of other participants in the governance framework,
including the shareholding or relevant Minister(s), where
applicable. Other accountabilities are also in place through
central agencies such as Departments of Premier and Cabinet
and Treasury and Finance and oversight by the Public Service
Commission, Auditor-General, Ombudsman and integrity bodies.
This will vary from jurisdiction to jurisdiction, but a public sector
board should identify these and document them.
Public sector entities should document:
• the powers vested in the entity and the basis on which such
powers rest (what is in the board’s ambit and what is not, as
provided in the enabling legislation)
• the identities and roles of the key participants (for example,
relevant Minister, chair, board members, chief executive or
equivalent etc)
Recommendation 1.1: Clarify and document the accountability of the public sector entity to
the government
Recommendation 1.2: Clarify and document the public sector entity’s relationship with the Minister(s)
Recommendation 1.3: Define the board’s oversight responsibilities
Recommendation 1.4: Define and record delegations of authority

• the powers vested in each participant and the basis on
which such powers rest (for example, do the powers arise
from legislation?)
• clarity of roles as between the board and the shareholding
or relevant Minister(s) as to who
- sets the strategic direction of the business
- appoints the chair of the board and its members
- appoints the chief executive or managing director
- determines the remuneration of the board and CEO
• the recruitment and selection of the board members
• the reporting responsibilities of each participant and
the identity of the participant to whom those reporting
obligations are owed (for example, does the chief executive
report to the board or to the relevant Minister directly?)
• the function of the board and agreed priorities
• the extent of the board’s decision-making powers, including
powers of delegation
• whether the relationships between participants are formally
based in a performance agreement, and the nature of the
performance agreement
• the frequency of review of any performance agreement
• the processes to manage communication with government
• the system to record and monitor the communications
and interactions.
The board’s requirements and relationship with the
shareholding or relevant Minister(s) should also be regularly
reviewed to ensure that there is no misalignment with
government priorities as they relate to the objects of the
entity, unless otherwise prescribed. It is inevitable that
there will be times when the direction of government policy
and/or legislation may change and the board will need to
be responsive to such changes, Having a good working
relationship with the shareholding Minister(s) and other key
stakeholders will facilitate appropriate responses and manage
risk effectively. The ultimate goal is to achieve a common or
shared understanding as to how the relationship is to work.
While formal clarity is desirable, discretion and judgment will
need to be exercised in the conduct of the relationship.
The board should be independent of management or political
participation and resilient to changes in the machinery
of government. While such bodies may not be entirely
independent, in that they are subject to the Minister’s
direction and control and possible departmental funding,
defining the terms of the relationship with the Minister will
provide clarity as to how it will operate.
Determine the protocols for dealing with the Minister
and the Minister’s office
There are many and varied relationships with Ministers,
as the relationship will operate in different ways across
different governments.
There should be protocols in place to provide for proper
and transparent communication with the Minister’s office
through a set of operating boundaries. These boundaries are
integral to the system of responsibility and accountability in
government. Protocols govern the interaction between the
Minister’s office and the public sector entity.
The board should clarify how the relationship will operate
with both the Minister and their staff, and determine and
agree with the Minister and their office the protocol for the
interaction between the entity and the Minister’s office and
document it. The board should also document any decisions
made as a result of that interaction and seek agreement on
those decisions.
Where the board is at variance with the decision of the
Minister, minutes should detail board deliberations on the
subject matter, including why it has come to a different view
and any resource allocation issues and risks associated with
implementation. Consideration should be given to the matter
being disclosed in the annual report as an executive decision
of the Minister. Where the Minister gives a direction to the
board, this should also be disclosed in the annual report.
Recommendation 1.3: Define the board’s
oversight responsibilities
The board should document in a board charter or terms of
reference:
• the respective roles and responsibilities of the board and
management
• those matters expressly reserved to the board and those
delegated to management.
Ideally, members of the board will decide over which of the
following they have direct control or oversight:
• nomination and appointment of members
• membership and role of board committees
• corporate governance matters, including frequency and
agendas of board and committee meetings, and the
appointment of the secretary to the board
• matters pertaining to stakeholders including meetings,
communications and relations
• approval of annual reports and accounts
• the audit function
• approval of the entity’s policies
• executive succession planning.
Role of the chair
The role of the chair is to lead the board, encourage
independence and diversity of thought in the boardroom, and
establish a collegiate culture that is not captive to group think.
While the board is charged with acting in the best interests of
its stakeholders, the chair’s role in the public sector can face
different challenges than those operating in the private sector.

The chair must take into account the government’s policy
objectives, the role of the shareholding or relevant Minister(s)
and the board’s contribution to government outcomes. Ideally,
the chair needs to be astute to ensure that the agency can
interact effectively with the government. The chair must also
promote team dynamics and work with the board to set the
overall tone for the organisation, including establishing an
agreed set of values for the culture of the organisation and
setting expectations in terms of behaviour.
Recommendation 1.4: Define and record
delegations of authority
Delegations of authority in a public sector entity establish who
has the authority to make decisions, including commitments
to expenditure and taking action on behalf of the organisation.
When considering any proposed delegations of its authority,
the board of a public sector entity must be satisfied in the
first instance that it has a clear source of power to delegate.
Members of the board of a public sector entity have discretion
conferred upon them by the Corporations Act 2001(if the
organisation is incorporated under the Act) and may also have
discretion conferred upon them by enabling legislation.
A board can only delegate the right to engage in an activity
if the board has the power to engage in that activity itself.
Therefore, it is important that public sector entities check their
enabling legislation for any limits placed on the powers of the
board and/or the ability to delegate such powers.
Having satisfied itself as to its clear source of power, the
board should prepare a formal instrument of delegation
setting out the delegations approved by it. The board
should also ensure that the delegations clearly reflect the
board’s intention. A delegation of authority should be made
to particular ‘positions’ (for example, chief financial officer)
rather than to a specific individual. A delegation schedule or a
register should be maintained and processes put in place to
ensure that the register is current. The register should at least
be on the public sector entity’s intranet so that other staff may
be aware of the delegations involved. This provides a useful
checking mechanism to ensure that delegations are being
exercised legitimately. The exercise of significant powers
should also be captured in a delegations manual, schedule or
similar document.
The recipients of delegations should always check to see
if they can delegate further as sub-delegations may not
be permitted.
Subject to any restrictions in legislation on the board’s power
to delegate, the board may delegate powers or functions to
any of its members, a subcommittee, the CEO or a
staff member.
See Good Governance Guide: Government businesses —
delegations of authority.

Principle2:Ensurethattheboardaddsvaluetothe
communityandotherstakeholders
Recommendation 2.1: Clarify the long-term strategy of the public sector entity
Recommendation 2.2: Document the processes which inform the structure and composition
of the board
Recommendation 2.3: Develop processes to evaluate the board and management
Recommendation 2.4: Clarify how board remuneration is determined and reviewed
Recommendation 2.1: Clarify the long-term
strategy of the public sector entity
The board’s role is to add value to the entity by providing
leadership and setting strategic objectives of the entity, which
are usually defined in the enabling legislation of the organisation.
The strategic objectives may be articulated in a corporate
plan, a strategic plan, a business plan or any similar document.
The board provides input to and approval of management’s
development of the strategic plan, including performance
objectives. The board’s role includes monitoring management’s
implementation of strategy and the entity’s performance.
In general, boards of public sector entities are established
with a long-term view. The longer-term view should take
account of:
• longer-term value drivers of the entity
- feedback from its stakeholders, including the community
- members of the board actively overseeing and
understanding the strategy and regularly monitoring, along
with management, the implementation and effectiveness
of strategic plans
- risk management, including strategic risks and the
relationship of those with the board’s strategy and
key objectives.
The shareholding or relevant Minister(s) and board should
understand the board’s structural requirements to fulfil the
objectives set for the board. There should be processes in place
that ensure resilience in the face of changes to the structure of
government administration and other changes in government.
Other government obligations include mechanisms to ensure
stewardship, accountability and transparency and timeframes
for when the board will assess whether it has fulfilled its
purpose and whether there is a continuing need for its
functions. The strategy should be documented, reviewed and
updated regularly to meet requirements and remain relevant.
Recommendation 2.2: Document processes
which inform the structure and composition of
the board
A public sector entity should have a board of an appropriate
size, composition, skills and commitment to enable it to
achieve its objectives and to discharge its duties effectively.
An appropriate process should exist for board member
succession, with emphasis on the timing required for
replacement to maintain a balance between new and existing
board members. A board skills matrix identifies the skills,
knowledge, experience, capabilities and diversity desired
of a board to enable it to meet both the current and future
challenges of the entity. The creation of a board skills matrix
is an opportunity for considered reflection and productive
discussion on how the board of directors is constituted
currently and also how it believes it should best be constituted
in the future to align with the strategic objectives of the entity.
The selection and appointment processes should identify the
current skills, knowledge, experience and capabilities of the
board, and any gaps in skills or competencies that can be
addressed in future board member appointments, as well as
desired behavioural competencies and the environment or
context in which the entity operates.
See Good Governance Guide: Creating and disclosing a board
skills matrix.
Diversity of opinion is essential to the proper functioning of
a board, but the larger the board, the greater the difficulty in
achieving consensus when making decisions. In the private
sector, the majority of companies have a maximum of up to
ten members on the board.
While the selection and appointment of members on the
boards of public sector entities is usually the responsibility of
the shareholding or relevant Minister(s), a board evaluation
enables identification of the particular skills that will best
increase board effectiveness and provides an opportunity
for the board to offer advice to the shareholding or relevant
Minister(s) in relation to board renewal and succession
planning. The chair should engage with the government on
potential candidates for appointment to the board.
The majority of the board should be independent members,
as this makes it harder for any individual or small group of
individuals to dominate the board’s decision-making and
maximises the likelihood that the decisions of the board will
reflect the best interests of the entity. The independence of
individuals for board positions should be taken into account
when engaging with the government on proposed candidates
for appointment to the board.
In order to enable an efficient mechanism for advice on the
selection and appointment of members, the board of a public
sector entity should establish a nominations committee (or

similar mechanism) with a majority of independent members.
Such a committee can make recommendations about the
necessary and desirable competencies of the members. It is
important that the board’s charter clarify whether the board
is able to recommend its own appointments, or whether
suggestions for board appointments should be provided to
the shareholding or relevant Minister(s) for consideration. The
board or the nomination committee should regularly assess
the independence of each member.
Diversity
The entity, where practicable, should seek to adopt a board
membership profile that largely reflects the composition of the
Australian community it serves. In its advice to the Minister,
there should be tangible efforts to increase the representation
of women, diverse ethnic groups, a range of age groups,
people with disabilities, and Indigenous Australians. Where
services are provided by the public sector entity, the board
should seek to ensure that its advice to the Minister responds
to and reflects the reality of Australia’s diverse community.
See Good Governance Guide: Matters to consider in the
selection and nomination of directors.
Induction and professional development
Public sector entities should have processes and policies in
place which clearly outline the induction processes for newly
appointed board members. Regardless of whether they are
a first-time or experienced member, a well-formed induction
process should provide the newly appointed board member
with information about the entity (including the reason for its
formation as set out in the explanatory notes to the legislation
and any speeches by the Minister), its operations, governance
frameworks and all other details necessary to enable them to
perform their role effectively. Entities are encouraged to adopt
processes and policies relevant to their organisation for the
initial interaction with the newly appointed board member.
A member appointed to the board of a public sector entity
should be provided with a detailed induction pack that
provides them with a wide range of information about
the entity, the board and the board members, and the
accountability and relationship of the board with the
government.
The public sector entity should provide appropriate
professional development opportunities for board members
to develop and maintain the skills and knowledge required for
the fulfilment of their role, including the availability of mentors,
recognising any legislative requirements in relation to skill
sets which may relate to specific sectors within which the
board operates.
Committees
Board committees can add value to the community and other
stakeholders through the exercise of delegated authority of
the board to deal with specific matters.
Guiding principles are:
• Each committee should have a formal charter setting out its
role, responsibilities, composition, structure, membership
requirements, quorum and reporting requirements.
• Committees should have sufficient members to adequately
discharge their responsibilities. A minimum of three
members is usually considered appropriate. Usually,
members should be non-executive members. If this is not
possible, the majority of members should be non-executive
members. Executive member participation can usually be
better achieved by inviting executive members to attend
where they have important information or recommendations
to provide to the committee. Where executive members sit
on the committee, they should be in the minority.
• At least one member of the committee should be able to
demonstrate relevant expertise and experience in dealing
with the matters for which the committee has responsibility.
If there is a particular area where the committee is lacking
a skill, the committee should look to the board to appoint a
member with the necessary skill or recommend to the board
that it obtain specialist advice as an interim measure.
See Good Governance Guide: What a board committee charter
should address.
Clarify secretariat support
Appropriate administrative and secretariat support for the
board is integral to ensuring that the operation of the board
remains efficient and effective. The role of the board secretary
in the public sector is pivotal to the organisation of key
meetings, including the preparation of indexed agenda papers
and well documented minutes.
The function may be provided by the relevant department
or there may be a dedicated position prescribed by law.
Irrespective of the arrangements in place, appropriate
professional development should be provided to the provider
of the secretariat function to ensure it contributes to and
enhances the effectiveness of the board.
See Governance Institute of Australia’s best practice
governance documents: Best practice minutes; Best practice
agenda; and Best practice action items list, as well as Good
Governance Guide: Issues to consider when recording and
circulating minutes of directors’ meeting.
Recommendation 2.3: Develop processes to
evaluate the board and management
Board evaluation
A board evaluation is seen as an essential tool to assist
in achieving better board performance and effectiveness.
The board should develop comprehensive and transparent
processes to evaluate its performance.
Assessment of the board’s performance should be undertaken
in relation to the objectives of the agency, the performance
requirements relevant to the corporate or strategic plan, and
annual business plans.

Boards should firstly establish the purpose of the review
and the participants’ desired outcomes. Clearly identified
objectives enable the board to set specific goals for the
evaluation and make decisions about the scope of the
review. The board needs to articulate its expectations of high
standards of performance to set a benchmark against which it
can measure itself.
An internal performance assessment of the board should
include the assessment of individual board members
and the chair, an assessment of current and future board
requirements, and a skills gap analysis to determine if the
capability mix is appropriate and fit for purpose to assist in
appropriate succession planning and board renewal.
The board of a public sector entity should put in place a policy
and mechanism for annual evaluations of the board and for
an externally facilitated evaluation to take place every two
to three years. The discipline of an annual board evaluation
not only involves examining past and current performance,
but has a strategic focus in looking forward at how the board
can be effective in adding value to the performance of the
entity. The board should undertake a regular review of the
implementation of the recommendations arising from
the evaluation.
See Good Governance Guide: Issues to consider in board
evaluations.
Evaluation of management
The board of a public sector entity should establish a process
for evaluating the performance of its management team and
addressing any issues that arise from the evaluation.
Recommendation 2.4: Clarify how board
remuneration is determined and reviewed
The board needs to identify and observe any relevant
entitlements and guidelines set by government in relation
to both board and management remuneration. Board
remuneration may be set by a relevant government
department or may be prescribed in statute.

Principle3:Embedethicalbehaviourandintegrity
andpromotecommunitywellbeingandtrust
Recommendation 3.1: Develop, document and implement an ethical framework using
appropriate codes, policies and practices
Recommendation 3.2: Develop structured processes to monitor conduct and
professional behaviour
Recommendation 3.1: Develop, document
and implement an ethical framework using
appropriate codes, policies and practices
Public sector entities can contribute to community wellbeing
and trust through embedding the principles of ethical
behaviour to foster and consolidate a culture of integrity,
objectivity, transparency and respect for others. Entities
should provide guidance on solving ethical dilemmas through
the articulation of a value statement, which acknowledges
and promotes clarity of the position of the public sector entity
within the community.
The board is responsible to ‘set the tone from the top’
in relation to culture and ethical behaviour. Whole-of-
organisation governance is about how authority is exercised
and controlled below the board in an organisation. Authority
cascades from the board to the CEO to the executive
management team and throughout the organisation.
The aim is to align each individual employee’s values and
behaviours with public sector requirements and to promote
community wellbeing and trust. The reputation of the public
sector requires those in governance and management roles to
be beyond reproach and to be serving the public interest. This
requires people to consistently demonstrate integrity and ethical
behaviour, which is best driven by having clearly articulated
ethical and behavioural standards and having them reinforced in
practice, including management’s actions to eliminate or mitigate
incentives or opportunities that might prompt personnel to
engage in dishonest, illegal or unethical behaviour.
Both the government of the day and the public require
confidence in government officials and the manner in which
their decisions are made. Boards of public sector entities will
benefit from having frameworks that will assist them in making
ethical decisions as part of good public administration.
Public sector entities should develop and implement a
framework that encourages ethical behaviour and integrity
in decision-making. Such a framework should be based on
the concepts of public transparency and accountability. Most
governments incorporate into their public sector legislation
specific provisions and requirements relating to codes of
conduct and regard should be had to these prescribed
requirements. The board should also consult reference
material dealing with conflicts of interests, probity and ethical
behaviour as published on the websites of various integrity
bodies and as required within their jurisdictions. It is for the
individual entity to choose the most appropriate framework for
its needs unless otherwise specified by legislation.
The important issue for the entity is to consider the
appropriate structures, including policies, for boards and
employees to refer to for guidance concerning ethics,
behaviour, rules, probity and managing conflicts of interest.
See Good Governance Guide: Ethics in the public sector and
Guidelines: Whole-of-organisation governance.
Recommendation 3.2: Develop structured
processes to monitor conduct and professional
behaviour of board members
Public sector entities should consider developing a board
members’ handbook to provide clear guidance. A member
handbook may be a mix of board policy and operational
matters and is distinct from the board charter. It may contain
(or make reference to) any code of conduct and/or conflicts
of interest policy, as well as board members’ duties and
liabilities. It might include guidance on:
• articulating the organisation’s expectations of the
board member
• developing principles on how board members can raise
concerns outside board meetings
• documenting reporting lines
• establishing the protocols for dealing with politicians
or media
• developing guidance on managing the relationships of board
members with lobbyists (particularly with regard to the issue
of the perception of the nature of the relationship), and
• developing guidance on managing the relationships
between the key stakeholders involved in the governance of
the organisation.
Board members of a public sector entity may have a fiduciary
duty under common law (and under statute, if the government
business is incorporated under the Corporations Act) or statute
applicable to the public sector entity to act in the best interests
of the organisation they serve. Depending upon the jurisdiction,
members of the board of a public sector entity may also have
other specific duties under public sector legislation. Board
members should not benefit from the public sector entity, and
should not be influenced by their wider associations when
making decisions that affect the public sector entity.
It is important that the public sector entity can demonstrate
that there are policies and procedures in place to guide board
members in acting appropriately.

The community expects that board members of public sector
entities will not be influenced or appear to be influenced by
personal interests when making decisions. Real or perceived
conflicts of interest have the potential to undermine public
confidence and the integrity of the entity, and are a risk
not only to the reputation of the entity itself but also to its
principal shareholders if it is a government business. It is
essential, in order that the potential not be realised, that the
board of a public sector entity performs its duties in a fair and
unbiased way and in the public interest.
The board of a public sector entity should therefore
consider how it will manage conflicts of interest and related
party transactions and develop structured processes to
monitor conduct and professional behaviour. Governance
arrangements in these areas need to consider personal and
group behaviours, and their management is central to the
entity’s ethics and culture.
This has particular application for boards of commercial
enterprises within the public sector, where the profit motive
can introduce challenges that are not dealt with under codes
of conduct and value statements that apply to the public
sector as a whole.
See Good Governance Guide: Public sector entities —
conflicts of interest and related party transactions.
The board should consult other reference material dealing
with conflicts of interests, probity and ethical behaviour as
published on the websites of various integrity bodies.

Principle4:Overseeeffectivestewardshipofresources
Recommendation 4.1: Develop rigorous processes to manage and safeguard the
Recommendation 4.2: Develop performance measures and processes to monitor them
Recommendation 4.3: Manage and safeguard knowledge and information resources
Recommendation 4.4: Establish effective audit arrangements
Recommendation 4.1: Develop rigorous
processes to manage and safeguard the
A fundamental tenet of public administration is the need for
public sector entities to oversee effective stewardship of
resources. Effective implementation of this stewardship role
requires the establishment of rigorous processes that ensure
that the objectives and obligations of the public entity are met.
These objectives should align with community expectations
and may be financial or non-financial in value.
The provision of various services, the granting of licences, the
oversight of public lands and resources and infrastructure
delivery and maintenance are all examples of the stewardship
of resources that public sector entities manage and control on
behalf of the community. Outcomes-based objectives in public
sector entities are developed on the basis of an expectation
of the creation of value for the community. Ensuring the
preservation of the integrity of these resources is vital in
maintaining community confidence in government.
Public sector entities should have a robust internal control
framework that addresses the risks attached to the
management of the entity’s resources. The aim is to provide
both internal and external assurance of value for money
for the community. The internal control framework may
include monitoring functions of controls and performance
such as audit; compliance functions; information processing
and document management; physical controls of assets;
authorisation of transactions; and integrity of financial reporting
in accordance with well understood and accepted standards.
Recommendation 4.2: Develop performance
measures and processes to monitor them
Public sector entities should develop performance measures
and monitoring processes to ensure effective stewardship of
resources. The articulation of these performance measures
should accurately reflect the effectiveness and efficiency
of the public sector entity, including both financial and
non-financial performance and reflect a ‘fit for purpose’
approach to sound resource management. The entity has a
responsibility to communicate its performance to the relevant
Minister(s) and department under which it is administered.
Key results areas may not always be quantifiable and
qualitative outcomes may be difficult to measure.
However, governments will be seeking to gain stakeholder
understanding of the achievement of public policy through
reporting against key results areas. The public sector entity
should clarify how it will measure progress against its key
performance indicators (KPIs) and in what form progress can
be measured.
A primary purpose of KPIs is accountability for the public
sector entities and improving performance. Public sector
entities should establish both long-and short-term KPIs,
which cascade throughout the entity. As a first step, public
sector entities need to clarify whether KPIs are imposed by
legislation or determined by the entity. Irrespective of how
they are determined, establishing relevant and appropriate
KPI’s which reasonably represent performance is core to
being able to reliably monitor performance against strategic
and operational goals.
Public sector entities should regularly review their KPIs to
ensure that they continue to be meaningful and the measures
are useful. A public sector entity should clarify what the KPIs
are intended to measure, and whether what is being measured
is aligned with the strategic objectives of the organisation.
See Good Governance Guide: Key Performance Indicators
(KPIs)—both financial and non-financial.
Define the board’s requirements for internal
reporting
The board should clearly define its expectations for reporting
to it by management. The reporting of results needs to be
formally included with the board papers and listed as an
agenda item to discuss at each relevant board meeting. This
will ensure that board members retain oversight of results and
are kept informed as to how well the entity is tracking relative
to board expectations. The board as a collective has the
right to seek external advice in order to fulfil board members’
duties. This should be documented in the board charter.
Board members cannot substitute reliance upon the advice
of management for their own attention and examination
of an important matter that falls specifically within the
board’s responsibilities.
The activities of any controlled entities of the organisation
should also be considered in the internal reporting framework.

Recommendation 4.3: Manage and safeguard
knowledge and information resources
The board should establish policies to protect the entity’s
knowledge and information, to preserve its intellectual
property and to minimise data leakage which may lead to
breaches of privacy. Processes should be established to
capture and manage information, as well as the records
created or received in the course of business, including
policies and procedures in relation to the storage of records.
Regard needs to be had to any relevant legislation and
information standards required by the government that
public sector entities must observe. Consideration may
need be given to Commonwealth/state legislative
requirements or policy directives relating to secrecy, which
may limit disclosures.
Consideration should be given to establishing formal policies
and procedures covering, but not limited to the following:
• management of public records, including state archivist’s
requirements relating to record-keeping and document
retention
• cyber security
• data file integrity
• commercially sensitive information.
Recommendation 4.4: Establish effective audit
arrangements
Effective audit arrangements involve a mature relationship with
the Auditor-General’s office in the relevant jurisdiction and
having an effective internal audit function in place within
the entity.
The internal audit function:
• supports good governance
• improves the effectiveness of risk management, control and
governance processes, and
• helps to instil public confidence in an organisation’s ability
to operate efficiently and effectively.
Where the entity establishes an audit committee, or a
combined audit and risk committee, it should develop a
charter for the committee, which clarifies the oversight
role of the committee, its responsibilities and composition.
This accommodates smaller entities whose board size may
preclude the constitution of separate board committees and
provides the entity with the flexibility to tailor their framework
in a manner best suited to their role, history, size and culture.
Where an audit committee is established, it should comprise
a majority of independent members. Due to the nature of the
responsibilities of the audit committee, appointed members
should collectively possess broad business, financial
management, if possible, and public sector experience, and
sufficient entity knowledge. Public sector entities should also
aim to achieve a mix of expertise and qualifications relevant
to the nature and function of the entity, its size, complexity
and responsibilities.
Better practice examples of audit committees are provided by
the Commonwealth and states and reference could also be
made to private sector examples.
Internal audit
The internal audit’s role is primarily one of providing
independent assurance over the internal controls and risk
management framework of the entity. A distinguishing feature
of internal audit is its independence — it is independent in the
sense that it is not subject to the authority of the areas of the
entity it audits. Internal audit’s core competencies are in the
areas of:
• reliability and integrity of financial and operational
information
• effectiveness and efficiency of operations and resource
usage
• safeguarding of assets
• compliance with laws, regulations, policies, procedures
and contracts
• adequacy and effectiveness of the risk management
framework.
The board should develop and annually review a charter for
its internal audit function which formally outlines its role
and responsibilities and how it independently verifies and
safeguards the integrity of the entity’s financial reporting.
External audit
As a rule the Auditor-General has a statutory role as the
external auditor of all public sector entities and any controlled
subsidiaries. The public sector external audit mandate is
normally to provide an opinion on an entity’s annual financial
statements and to more generally undertake performance
audits of the efficiency and effectiveness of the operation of an
entity or of functions within an entity, at the auditor’s discretion.
The Auditor-General, subject to procedural fairness processes,
reports directly to Parliament on audits undertaken.

Principle5:Protectthepublicinterestthrough
effectiveriskmanagement
Recommendation 5.1: Establish an appropriate risk management framework
Recommendation 5.2: Establish an oversight function
Recommendation 5.1: Establish an appropriate
risk management framework
Public sector entities are entrusted with the management of
public resources, and managing and protecting the assets
appropriate to their functions.
Operating in areas of political uncertainty, and in light of the
definition of risk as ‘the effect of uncertainty on objectives’ in
the international standard ISO 31000:2009 Risk management
— Principles and guidelines, public sector entities need to
be resilient to enable them to manage known risks and to
respond effectively to new risks as they emerge.
In establishing an appropriate risk management framework,
public sector entities should consider any necessary
alignment with whole-of-government strategic approaches to
risk management in order to both protect and create value for
the community.
The entity’s strategy and the opportunities attached to
it involve risks that must be recognised, monitored and
managed. A proactive and clear understanding of how the
management of risk maps to the strategies of the entity
is essential, and assists all employees to understand that
effective risk management contributes to the sustainability
of the entity.
The management of risk is far broader than financial risk
alone. For example, information technology, work health and
safety, environmental and social impacts and operational
and, where applicable, project risks all need to be considered
when developing a risk management framework. To effectively
manage risk and pursue opportunity, a public sector entity
requires a risk-aware culture that drives behaviour aligned
to strategic objectives. Areas of focus include the nature of
risks, how they should be measured and valued, what risk
combinations are possible, and most importantly, what risk
appetite and risk tolerance the entity has. Some of the more
common risk categories are regulatory and legislative change,
economic conditions, human resources and cyber security.
The risk to the reputation of an entity may be affected in many
ways, including by circumstances that cannot be predicted.
The board should therefore be aware that the failure to
manage small risks may multiply to the point where the
reputation of the entity and the relevant Minister and their
department is significantly damaged.
The board should ensure that management establishes an
appropriate risk management framework and drives public
value within the limits of risk that the board sets (the risk
appetite) in order to meet the strategic objectives of the entity,
and should undertake regular reviews of its effectiveness.
An effective risk management framework will ensure that
opportunities can be identified to maximise the objectives
of the entity and not stifle innovation through being too risk-
averse, founded on the fear of project failure, Parliamentary
scrutiny and adverse media interest. In considering risk
appetite, the board should understand the risk tolerances
and appetites at ministerial portfolio level. Risks need to be
weighed against potential rewards. For the public sector,
these rewards are ultimately achieving or exceeding the
intended outcomes from the delivery of public services
(enhanced effectiveness). Rewards may also take the form of
intermediate outcomes such as reduced cost and elimination
of waste (better economy); and the delivery of more and
higher quality services for given inputs (greater efficiency).
The use of a risk management standard such as ISO
31000:2009 provides principles-based guidance on
developing the framework. The framework should be
developed with regard to the size and complexity of the entity.
See Governance Institute’s Risk management for directors:
A handbook. The handbook has been developed for the
private sector but would be of value to boards of public
sector entities.
Recommendation 5.2: Establish an oversight
function
The board of the public sector entity should establish an
oversight function in relation to risk management to ensure
that adequate consideration is given to risk analysis, including
the identification and treatment of emerging risks, and realising
opportunities. This can utilise scenario testing and embed
strategic risk management as a KPI in performance plans.
The establishment of a dedicated risk committee can underpin
the entity’s approach to maximising its strategic objectives
through the oversight of well managed risk. Alternatively,
an entity may choose to have a combined audit and risk
committee, or spread the oversight of risk management
across all or a number of board committees or retain the
oversight function itself, subject to legislation or government
policy direction. Public sector entities need the flexibility to
tailor their framework in a manner best suited to their role,
history, size and culture.
As part of the risk management framework, the board should
have a controls assurance process function in place to ensure
that the assessment of residual risk is not understated. The
use of an internal audit function could assist the board by
providing the necessary control assurances and reviewing
the operational effectiveness of the board’s risk management
framework (See Principle 4).

Principle6:Engageopenlyandhonestly
withstakeholders
Recommendation 6.1: Define the stakeholders and the organisation’s strategy in regards
to engagement
Recommendation 6.2: Develop effective communication with stakeholders
Recommendation 6.3: Develop a framework for handling grievances and whistleblowers
Recommendation 6.1: Define the stakeholders
and the organisation’s strategy in regards to
engagement
The public sector entity should define the interests of all
stakeholders and develop an understanding of the role
that stakeholders have in or with a public sector entity. The
entity should communicate key financial and non-financial
information in a timely fashion to stakeholders to build trust
and confidence in the entity and to inform decision-making at
a whole-of-government level.
Stakeholders may include:
• those who are the focus of the entity’s activities and services
• those directly involved with or responsible for the activity of
the entity
• those who devise, pass, and enforce laws and regulations
that affect the function of the entity
• those not affected by or involved in an entity, but with an
interest in its processes or the outcome of its activities
• those specifically named in legislation.
Public sector entities need to ensure that they can explain
and defend their decision-making and that they have clear
procedures for dealing consistently and equitably with
stakeholders. This includes developing an engagement
strategy with entity-wide protocols and checklists for dealing
with external stakeholders. In this regard, the board should
consult with community engagement policies and guidelines
within the Commonwealth and relevant states before creating
their own policies and protocols on these matters.
Recommendation 6.2: Develop effective
communication with stakeholders
The public sector entity should:
• know who their stakeholders are
• treat them with respect
• consult regularly, and
• have regard to the input of stakeholders.
The entity should establish effective communication strategies
to ensure that stakeholders’ needs are taken into account by
choosing the most appropriate methods and technologies to
inform, consult, involve, collaborate and provide feedback to
the various stakeholders. These strategies may take the form
of protocols, plans and nominated engagement activities.
See Good Governance Guide: Stakeholder engagement
(public sector).
Recommendation 6.3: Develop a framework for
handling grievances and whistleblowers
The public sector entity should develop a procedure for
handling complaints, including a policy for handling grievances
and whistleblowing.
The board of the organisation should ensure that the policy
and procedures are in place, preferably available on the
website of the entity, to ensure ready access by stakeholders
and also that a framework is in place to preserve the
anonymity of those making complaints. The public sector
entity should ensure that the entity’s policy is in accordance
with the relevant state and Commonwealth legislation.
Public sector entities should also identify guidance material
on whistleblowing and handling complaints and grievances
available from the relevant integrity bodies.

Principle7:Maketimelyandbalanceddisclosure
Recommendation 7.1: Document the organisation’s reporting requirements to government
Recommendation 7.2: Clarify access to information from the entity
Recommendation 7.1: Document the
organisation’s reporting requirements to
government
Expenditure of public funds and asset and resource management
bring an expectation of accountability and transparency. The
board should establish the public sector entity’s participation
in the whole-of-government reporting. Developing clear and
unambiguous lines of reporting, accountability and responsibility,
both within the operating context of the entity and with its
stakeholders, including managing the relationship with the
relevant Minister(s) and other portfolio entities, will facilitate a
whole-of-government approach.
The entity should identify laws and government directions
relevant to the entity, its services or any particular project and
document the entity’s reporting requirements to government.
The high-level reporting requirements are set in legislation for
the public sector in Australia. At a detailed level, the state and
national government treasuries/finance ministries set broad
reporting requirements for government agencies with varying
levels of detail required.
Disclosure and reporting requirements will include ensuring
that the entity has a proper process and procedure to comply
with their obligations under privacy legislation, relevant state
and Commonwealth legislation and has transparent reporting
and responsible cooperation with other jurisdictions, including:
• sharing information with other jurisdictions
• auditing by Auditors-General
• legal duty to encourage cooperation with others, for
example Division 2: Public Governance Performance and
Accountability Act 2013 (Cth).
The board should also clarify its annual reporting
requirements to the relevant Minister.
Recommendation 7.2: Clarify access to
information from the entity
The regular communication of information to the public
about the performance of the public sector entity is already
disclosed for legislative purposes, but may not be easy to
access by members of the public. A public sector entity
should provide information about itself to the public via its
website and update the information regularly. Transparent
decision-making includes disclosing the issues considered,
who was involved in making the decision, the options
considered in making the decision, what the experts thought
and why the particular choice was made. Disclosure can bring
advantages to a public sector entity because it provides:
• clarity of purpose, strengthens transparent decision-making
and provides the capacity to defend decisions
• clarity on whether disclosure is required for legislative
purposes or as a matter of good governance
• opportunities to assess if decisions alone may be made
public, or also the discussion behind the decision, bearing in
mind that some decisions are appealable
• opportunities for public sector entities to become familiar
with their stakeholders, as part of ensuring they meet
stakeholder requirements and expectations.
The board should clarify how and to whom access to
information from the entity will be provided. Consideration
should be given to differentiating reporting to the Minister,
reporting to the parliament (annual reporting), reporting to
the public and reporting to other stakeholders. Subject to
any legislative provisions or government directive, the board
should consider:
• What should be disclosed? — Establishing a pro-
disclosure culture can assist the public sector entity to
fulfil its duty to ensure that value is received and goals
are achieved in a way that meets the best interests of
stakeholders and the community as a whole. As a general
guide, reporting against both qualitative and quantitative
performance indicators for agencies should form the basis
for the disclosure activities of a public sector entity.
• When should it be disclosed? — A pro-disclosure culture
can assist a public sector entity to regularly inform the
public of any significant issues as and when they occur.
• Why is it being disclosed? — Consideration needs to be
given to:
- disclosure in the interests of good governance
- the increasing expectations of stakeholders for more
open government
- assisting the public to understand better how decisions
are made in the public sector entity and how those
decisions will affect them — the public interest test
- the evaluation of the success or otherwise of the activities
of the public sector entity, and
- maintaining the public’s confidence in the integrity of
the public sector entity and meeting its obligations
to stakeholders.
• To whom does it need to be disclosed? — Consideration
needs to be given to:
- identifying the key stakeholders
- identifying if targeted disclosure is required for different
stakeholders

- involving stakeholders in the decision to improve decision-
making as part of the process, and
- ensuring that information is broadly available and widely
disseminated, accessible and easy to comprehend.
• How to effectively make that disclosure? — Consideration
needs to be given to:
- balanced reporting — both the good and bad news
- relevance and timeliness
- assurance and accuracy
- correction — having a policy on the obligation to correct a
false impression or misinformation
- accessibility — tailoring the reporting to stakeholder needs
- appropriately classifying information to ensure that
information is not being inappropriately secured and made
difficult to access
- being proactive in the release of information
- ensuring accountability and transparency after the event
for decisions taken in the public’s name
- use of a website.

New South Wales ACT
T (02) 9223 5744
F (02) 9232 7174
E nsw@governanceinstitute.com.au
Queensland
T (07) 3229 6879
F (07) 3229 8444
E qld@governanceinstitute.com.au
South Australia Northern Territory
T (08) 8132 0266
F (08) 8132 0822
E sa@governanceinstitute.com.au
Victoria Tasmania
T (03) 9620 2488
F (03) 9620 2499
E vic@governanceinstitute.com.au
Western Australia
T (08) 9321 8777
F (08) 9321 8555
E wa@governanceinstitute.com.au
governanceinstitute.com.au

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