Aligning Internal Audit & Risk Management

Under the Governance Umbrella

Corporate Audit & Risk Manager

David van Beek

26 November 2008

TransGrid• Background

• Structure

• Governance

• Alignment of: – Risk Management– Audit

Background

• TransGrid owns operates the NSW high voltage electricity transmission network, connecting generators, distributors and major end users across the state

• Legislation – SOC Act – Energy Services Corporation

Background

• 12,500kms of transmission lines

• 83 substations

• $4.2b assets

• 950 staff

TransGrid’s Structure

• Board

• Managing Director

• Executive

• 7 Business Units

Governance

• Formalised• Key elements

– Board and Sub Committees– Managing Director– Exec Committees– Internal Control– Audits– Authorities

• Sub-delegations• Position Descriptions

– Corp Plan and Reports– Codes– Risk Management

TransGrid Corporate Governance Framework

Executive Board

TransGrid Board

Board Audit & Risk Committee

Board Remuneration and Structure

CommitteeCommittee

Board Regulatory Committee

Board and Committees

Managing Director / Executive

Executive Committee

Business Review Committee

Executive OH&S Committee

Executive Environment Committee

Executive Audit and Risk

Committee

Information Technology

Executive Committee

Capital Works Program Steering

Committee

Executive Protective Security

Committee

Executive Revenue Reset

Executive CommitteesOther Influences on Governance

Legi

slat

ion

and

Oth

er K

e y D

o cu m

ent s

e.g

Go v

ern m

ent D

irect

ive s

, Cod

e s o

f Pra

ctic

e

Ext

erna

l Aud

it s

Aud

it an

d R

isk

Act

ivit i

e s

Cor

pora

te P

lan s

/ R

epor

t s S

tate

men

t of C

orpo

rate

Inte

nt (

SC

I), A

nnua

l Rep

ort a

nd

Per

for m

ance

Rep

ort s

Inte

rna l

Con

trol F

ram

e wor

k

Cod

e of

Eth

ics,

Boa

rd C

ode

of C

ondu

ct a

nd S

upp l

ier

Cod

e

Inst

rum

ent a

nd S

ub-d

e leg

atio

n of

Aut

hor it

y/P

o sit i

on D

e scr

ipt io

n s a

nd

Per

for m

ance

Mon

itor in

g

Po l

icie

s/P

roce

dure

s/M

anua

ls

NSW Parliament

Shareholding Minister Portfolio Minister

Risk Management

• Based on AUS/NZ 3460

• Various Assessments

• Standard Terms

• Peer Review

Corporate Plan

Mission

Vision

Values

Objectives

Strategies

Initiatives

Strategic Risk Assessment undertaken for the longer term risks (>12months) associated with the organisation not achieving its Corporate strategies.

Operational Risk Assessment undertaken for the more immediate (<12months) risks associated with the organisation not achieving its objectives.

Fraud Risk Assessments

Project Risk Assessments

Environment Risk Assessments

OH&S Risk Assessments

Treatment Actions form Actions in the Business Unit Plans

Business Unit Plans

Business Unit Plans

Business Unit Plans

Individual Performance Agreements

Individual Performance AgreementsIndividual

Performance Agreements

Individual Performance Agreements

Individual Performance AgreementsIndividual

Performance Agreements

Individual Performance Agreements

Individual Performance AgreementsIndividual

Performance Agreements

Audit

• Risk based auditing

• Test controls against risks

• Rated based on risk

• Peer Review

Alignment of Audit and Risk Management

• Combined

• Joint responsibility

• Process and Procedures developed in one area

• Joint Board and Exec Committees

Challenges• Focus

• Integration of risk management

• Systems to manage risk

• Reporting of Risks

• Responsibilities

• Value add of the audit reports

• Value of the elements of audit and risk

Questions