Corporate governance

Corporate governance - EECU

This information is a summary of the key aspects of EECU’s Corporate Governance and Risk Management Systems. The policies and practices adopted by the board, using prudential standards and best practice guidelines, ensure that EECU maintains a governance framework of a high standard.

Board of directors



The board of directors of the credit union has the responsibility for the overall management and strategic direction of the credit union.

The board has established policies to govern the conduct of board meetings and training in order to maintain director awareness of emerging issues and to satisfy all governance requirements.

The board deals with:


  • setting and reviewing strategic and business setting the risk appetite for the credit union’s operations;
  • approving risk management systems;
  • approving financial budgets and performance criteria;
  • appointing members to the sub-committees;
  • approving staff remuneration policies;
  • approving remuneration and benefits for the General Manager and senior management.

Board tenure



Elected directors are appointed by members for a term of 3 years. Subject to meeting the eligibility criteria directors may stand for re-election at the end of their term of office.

Directors appointed by the board are only done so to fill a casual vacancy or a skills need. The term of appointment for a director filling a casual vacancy expires at the end of the next annual general meeting. A director appointed to the board to fill a skills need is appointed to the board for a maximum term of 3 years and cannot be appointed more than twice.

Each director must be eligible to act as a director under criteria set out in the credit union’s constitution and in the Corporations Act 2001. Directors must also satisfy the fit and proper criteria set down by the Australian Prudential Regulation Authority (APRA).


Board renewal



The board has a formal renewal program to ensure that within its ranks it has the skills, knowledge, experience and diversity required to effectively steer the credit union forward. The board Governance Committee acting as the Nominations Committee is responsible for the oversight of the board renewal process.

Director skills and representation



An annual skills and representation assessment is conducted in accordance with EECU’s Corporate Governance Management System to identify any gaps on the board and provide direction for setting out the mix of skills, diversity and shareholder representation that the board is looking to achieve in its succession planning.

Independence



All board members are independent of management and free of any business or other association that could materially interfere with their independent judgement. Directors are required to declare to the board whether they are aware of any actual or material conflicts of interest, other than as member of EECU.

Professional advice



Directors have access to all relevant credit union information and to EECU management. Directors may seek independent professional or legal advice to assist with matters before the board and may receive financial support from EECU to do so.

Code of conduct



EECU is committed to following ethical principles in all aspects of the business. It is EECU’s policy that all directors and staff have a duty to behave in an ethical manner both within the workplace and in dealings with members, stakeholders and the community in general.

In order to demonstrate equity and objectivity this includes a requirement that board members are generally not aware of the names of any members for whom they are giving consideration.


Conflicts of interest



The board has developed a policy to assist directors in identifying, reporting and managing potential or known conflicts of interest which may arise for directors, management and staff. Directors and the General Manager must keep the board informed of any known or potential conflict which may arise. Transactions between directors and the credit union are subject to the same terms and conditions that apply to all members.

Remuneration - board of directors and management



The board is authorised under the constitution to recommend an aggregate annual amount of director remuneration to members in general meetings of the credit union. To date the board has elected to remain honorary. The credit union pays for all expenses incurred by directors in discharging their duties, including travel, accommodation and training expenses. There are no other benefits received by directors from the credit union.

All management are remunerated by salary packages only. There are no bonus or equity benefits available to management.


Performance evaluations



Performance evaluations are completed for the board, its committees, directors, the General Manager and senior managers in accordance with EECU’s Corporate Governance Management System. This includes the objective of encouraging enhanced performance and ensuring all parties have the necessary skills and knowledge to discharge their duties.

Board committees



Sub-committees have been formed to assist the board in dealing with certain matters. Directors form these committees with attendance from associate directors and management staff where appropriate.

Audit Committee



The Audit Committee is established to oversee the financial reporting and risk management process. Its role includes:

  • Monitoring audit reports received from internal and external auditors, and management’s responses thereto;
  • Liaising with the auditors (internal and external) on the scope of their work, their independence and their experience in auditing similar entities;
  • Monitoring the credit union’s internal audit and compliance process;
  • Reviewing financial reports which are provided to members of the credit union, or APRA.

Risk Committee



The Risk Committee is established to oversee the credit union’s current and future risk appetite, risk reporting and risk management process. Its role includes:

  • Reviewing the risk profile of the credit union and ensuring that adequate risk management systems are in place.
  • Reviewing the performance and setting the objectives of the credit union’s Chief Risk Officer (CRO);
  • Overseeing the appointment and removal (if necessary) of the CRO;
  • Establishing and reviewing the Business Continuity Plan of the credit union;
  • Reviewing the credit union’s corporate insurance for adequacy and completeness.

Governance Committee



The Governance Committee is established to ensure good governance in accordance with prudential standards and best practice guidelines. Its responsibilities include:

  • Managing policy development relating to governance matters;
  • Maintaining the process for identifying and recruiting future board members;
  • Acting as the board’s Nomination Committee;
  • Acting as the board’s Remuneration Committee;
  • Providing oversight of the board election process;
  • Ensuring effective induction, and ongoing education of board members;
  • Ensuring that performance evaluations of the board and its committees as well as the General Manager and senior management take place annually and are consistent with EECU’s Corporate Governance Management System;
  • Making annual recommendations to the board on the remuneration of the General Manager and each of his direct reports (other than administrative).

The company secretary



The company secretary is accountable to the board, through the chairperson, on all matters to do with the proper functioning of the board.

Risk management systems



The board has adopted systems of risk management and compliance to meet the requirements of the relevant prudential standards and any other risk inherent in the business. The board is committed to disclosure in accordance with prudential standards and financial reporting requirements as required by the Corporations Act 2001 and any other required disclosures. Key risk management systems include:

  • Capital management
  • Liquidity risk management
  • Loans risk management
  • Fraud risk management
  • Corporate governance management
  • Outsourcing management
  • Data risk management
  • Operational risk management
  • Market risk management
  • Large exposure management
  • Business continuity management
  • Fit & proper management

Compliance



The credit union has a staff member who is responsible for compliance, including maintaining the awareness of staff for all changes in applicable legislation and responding to staff inquiries on compliance matters. The officer also monitors EECU’s Australian financial services licence (AFSL) and Australian credit licence (ACL) obligations. The credit union also has Complaint and Investigation Officers for member complaints and disputes should they arise.

Internal audit



The internal audit function is principally carried out by AFS & Associates (AFS), chartered accountants. AFS provide internal and external audit services to several credit unions, and other entities. AFS review internal controls and regulatory compliance and are assisted where appropriate by the member of staff who is responsible for risk and compliance.

Controls and compliance are also examined by the external auditors. The work performed by the external and internal auditors is examined by the Audit Committee to ensure that it is consistent with the current audit requirement and that there is no impairment of their independence.

This role is supplemented by other external compliance reviews performed by security audits on the credit union’s data processing centre for adequacy of the back-up, disaster recovery and internet security systems.


Regulation



The credit union is regulated by:

  • APRA for prudential risk management;
  • ASIC for adherence to the Corporations Act, accounting standards disclosures in the financial report, AFSL and ACL requirements. The AFSL and ACL requirements set minimum standards for conduct and disclosure when providing financial services and credit facilities.

Both APRA and ASIC conduct periodic inspections and the external auditor reports annually to both on compliance with respective requirements. The external auditor also reports to APRA on prudential policy compliance and to ASIC on AFSL compliance.

Communication to members



The board aims to keep members informed with ready access to balanced and understandable information about EECU and its corporate goals via electronic means and newsletters.

Members have the right and are encouraged to participate in general meetings of the credit union, either in person or by proxy.

A copy of the annual report is accessible on EECU’s website and is available to members on request to EECU via email or hardcopy.