Governance charters and delegated authorities statements - best practice made mandatory

Published
19 February 2015

In the final part of our series on 'Raising the bar: meeting new standards in school governance' we look at the requirements for NSW non-government schools to have a Governance Charter and a Statement of Delegated Authorities. We explain the relationship between the two obligations, mandated under the NSW Registered and Accredited Individual Non-government Schools Manual and the NSW Registered and Accredited System Non-government Schools Manual (NSW Registration Standards or Standards).

As we noted in the previous article in this series whereas the ‘individual school standards’ spell out the new governance requirements in detail (3.9.3.1 – 3.9.3.6) the ‘system school standards’ simply state that systems schools are required to have policies and procedures in place that are ‘similar’ to those required for individual non-government schools.


Governance Charter

Standard 3.9.3.1 prescribes that the 'responsible persons' at a non-government school must have in place and implement policies and procedures in relation to 'a school charter or document identifying the governance structure of the school and the respective authority, role and responsibilities of each of the school's 'responsible persons' and any other person or body concerned in the management of the school' - which we refer to as a 'governance charter'.

The governance charter can also be used to meet another obligation of a school under the Standards, being the requirement to document supervisory arrangements and reporting requirements for the school’s ‘responsible persons’ including any governing body and school executive (also at 3.9.3.1).

Governance charters (also called governance statements) are used by various types of organisations, such as public companies, to explain their governance frameworks. These charters are also used to show how organisations meet their legal and regulatory requirements and protect key stakeholder interests.

Having a governance statement is also a legal requirement for public companies under the ASX Listing Rules. For example, the Listing Rules require ASX listed entities to provide a corporate governance statement in their annual report, or on their public website, disclosing the extent to which they have followed the ASX Corporate Governance Principles & Recommendations (3rd Edition) (CGPRs).

According to the CGPRs, listed entities should 'view their corporate governance statement not as a compliance document but rather as an opportunity to demonstrate that their board and management are alive to the importance of having proper and effective corporate governance arrangements and to communicate to security holders and the broader investment community the robustness of their particular approach to corporate governance'.

In the same way that ASX-Listed entities view their shareholders as stakeholders, non-government schools should view parents, students, alumni and school community members as their stakeholders. A governance charter ensures accountability and transparency to these stakeholders, which in turn will ensure better governance. The publication of a governance charter on a school's website will ensure a high standard of disclosure, which can enhance a school's reputation.

Contents of a Governance Charter

Standard 3.9.3.1 sets out the various requirements of a Governance Charter. The inclusion of information on the following governance features will assist a school to meet its requirements:

  • legal structure;
  • approach to governance;
  • board/governing body composition;
  • responsibilities of the principal;
  • identities of responsible persons; and
  • the school's processes for:
    • responsible decision making;
    • financial reporting;
    • child protection and safety; and
    • risk management and compliance.

Schools should take care when preparing the Governance Charter to ensure that the information contained in it is accurate and approved by its board and responsible persons - especially if it will be made publicly available. From a reputational perspective, any false or misleading information contained in the Governance Charter may come back to haunt a school in the event that it is scrutinised in response to inquiries.

Statement of Delegated Authorities

In general, the purpose of a delegated authority schedule or 'statement' is to clearly explain the delegation 'boundaries' of senior management or 'responsible persons' in an organisation. It sets out which authorities, or responsibilities, can be delegated and when board or senior management approval is required to make decisions which may expose an organisation to risk (e.g. through legal or financial arrangements and contracts).

A Statement of Delegated Authorities is a key risk management tool which, if properly implemented, will establish limits with respect to any loss that may be suffered by reckless or corrupt acts.

Standard 3.9.3.1 prescribes that a non-government school's Statement of Delegated Authorities must:

  • identify the respective authority within the governance structure; and
  • describe the process for withdrawing a delegated authority.

In addition to the information required by Standard 3.9.3.1, including further detail about a school's responsible decision making processes will improve the robustness of the policy. For example, including information such as:

  • which matters can be delegated by the board/governing body;
  • how to manage a conflict of interest;
  • who is responsible for decisions regarding daily management of the school; and
  • which decisions require higher approval.

While in the past, having a governance statement and delegated authority policy may have been 'best practice', and utilised only by schools with mature governance frameworks, the changes to the Standards makes these mandatory for all schools. These changes should be welcomed, as they will improve governance standards in schools, rather than adding to the regulatory burden.

Webinar

To recap, the previous articles in this series addressed the following topics:

If you have more questions on any of the topics we've addressed in this series, CompliSpace will be hosting a live Webinar ‘Raising the bar: meeting new standards in school governance’ on 27 February 2015 at 3pm Eastern Daylight Savings Time. This will be presented by David Griffiths, Managing Director CompliSpace. He will further explain the new governance standards and answer your questions about how to implement robust governance related structures, policies and procedures in your school. For more information and to reserve your webinar seat here click here.

 

CompliSpace Media

CompliSpace is an Australian company that helps over 600 non-government schools across Australia with their governance, risk, compliance and policy management. What makes us different is that we monitor over 200 sources of legal and regulatory change to ensure our clients have the updated policies and tools they need to meet new requirements. We share that knowledge with the broader Education community via School Governance.