Best Practice Board Reporting

HB 403 2004 Best Practice Board Reporting

HB 403 2004 Handbook Best Practice Board Reporting First published as HB 403 2004. COPYRIGHT Standards Australia International All rights are reserved. No part of this work may be reproduced or copied in any form or by any means, electronic or mechanical, including photocopying, without the written permission of the publisher. Published by Standards Australia International Ltd GPO Box 5420, Sydney, NSW 2001, Australia ISBN 0 7337 5934 3

HB 403 2004 2 Preface This Handbook was prepared by the Standards Australia Committee MB-004, Business Governance. Boards are responsible for the entities they manage and for providing leadership and advice to the entity. They should provide strategic guidance to the organisation and effective oversight of the management of the organisation. Following the incidence of corporate failures globally and in Australia, Boards, and Board decisions, are under increasing scrutiny by the media, investors and the public at large. Directors (especially non-executive Directors) need to understand the entity s business (including business-specific technical issues) as well as the legislative, regulatory and business environment in which the entity operates. Consequently, it is vital for Boards to receive information they require to fulfil their duties effectively. The information provided to the Board should enable them make well-informed decisions that are in the best interests of all stakeholders. As the ability of a Board to perform its role effectively depends on the integrity of the information it receives, it is critical for the information to be sufficient, accurate, relevant and timely. Sufficiency of information is also crucial to enable the Board to make appropriately informed decisions. The objective of this Handbook, therefore, is to provide guidelines on reporting to the Board, so that Directors (especially non-executive Directors) can effectively discharge their duties in the best interests of their entities. It is also meant to assist management and others who may be involved in the preparation of the reports. In view of the wide range of entities addressed by this Handbook, as well as the wide range of industries they operate in, their size and nature of operations, this Handbook sets out guidelines that can be adapted to suit particular needs. The Handbook is not prescriptive and does not take a one size fits all approach as to the nature, volume and content of information a Board must receive.

3 HB 403 2004 Contents Page 1 Scope and General 1.1 Scope... 4 1.2 Application... 4 1.3 Relationship with Other Standards... 4 1.4 Definitions... 4 1.5 Regulatory Context... 5 2 Drivers of Reports to the Board 2.1 Corporate Governance... 6 2.2 Regulatory, Legislative Context... 6 3 Characteristics of Effective Information... 8 4 Stakeholders and their Responsibilities... 11 5 Categories and Classifications of Reports to the Board 5.1 Introduction... 13 5.2 Financial Reports... 13 5.3 Other Financial Reporting... 14 5.4 Non-Financial Reports... 14 5.5 Content of Reports to the Board... 15 6 Maintaining the Integrity of Information Provided in Reports to the Board 6.1 Introduction... 18 6.2 Reporting Process... 18 6.3 Confidentiality and Security Aspects... 19 7 Protocols Relating to Presentation of Board Papers... 20 BIBLIOGRAPHY... 21

HB 403 2004 4 1 Scope and General 1.1 Scope This Handbook provides guidelines on the content, presentation and other features of information presented in board reports, so that Board members can discharge their duties in the best interest of the entity. It is directed at board members, its key stakeholders and those involved in the preparation of the reports. This Handbook does not deal with information that an entity may be required to present to external stakeholders. The scope of this Handbook is limited to internal reporting. It is common practice for the principal Board of larger entities to have subcommittees, such as a Board Audit Committee, a Remuneration Committee and a Risk Management Committee. For the purposes of this Handbook, the reporting to, and by, these Committees of the Board is also covered by the term internal reporting. 1.2 Application This Handbook is intended to apply to all entities governed by a Board. Consequently, although some aspects of this Handbook may not be applicable, the general principles set out in the Handbook can be adapted and adopted by all entities. 1.3 Relationship with Other Standards 1.4 Definitions Readers should refer to the AS 8000 series, Corporate governance, AS 4360, Risk management and HB 402, Business Planning and HB 405, Disclosure and Transparency Framework. 1.4.1 Business judgement Any decision to take or not take action in respect of a matter relevant to business operations. Standards Australia www.standards.com.au

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