Appendix 1: Suggested improvements to committee terms of reference and related documents

As a result of our performance audit of the Guardians of New Zealand Superannuation, we make the following suggestions to improve the terms of reference documents for Board and executive committees.

Terms of reference for Board committees

Audit and Risk Committee

The terms of reference document should include:

• the minimum number of committee members required for the committee;
• the minimum experience necessary for the Committee (as a whole) for example, Chartered Accountant, Funds Specialist, or Risk Manager;
• the frequency of reviews of risk management systems, compliance systems, delegated authorities, external/internal audit plans and the risk profile; and
• who has the responsibility to:
  • approve significant accounting policy changes;
  • evaluate the Guardians' potential exposure to fraud;
  • assess/evaluate the Guardians' adequacy and effectiveness of their internal control environment; and
  • review the annual risk profile.

Responsible Investment Committee

The terms of reference document should include the Guardians' interpretation of “responsible” and investments that “avoid prejudice to New Zealand's reputation as a responsible member of the world community”.

Board Governance Statement

The document should include:

• the range of skills and experience necessary for the Board;
• the restriction that established committees cannot take action or make decisions on behalf of the Board unless specifically authorised to do so;
• the responsibility for Board members to at all times comply with the express terms and spirit of their fiduciary obligations, including acting honestly and in good faith in the best interest of the Guardians;
• the responsibility for Board members to ensure that information they hold is in strict confidence and to be used in the best interest of the Guardians;
• the responsibility for the Board to maintain and ensure compliance with internal policies and procedures;
• the responsibility for the Board to maintain an up-to-date risk profile for each of the Guardians' business operations;
• how the performance of each Board Committee is to be reviewed each year; and
• the formal induction and training procedures for new Board members.

Terms of reference for executive committees

Communications Committee

The document should state who is responsible for:

• reviewing and approving external communications;
• message development and dissemination planning;
• the stakeholder relations strategy and overseeing its implementation; and
• the media relations strategy and overseeing its implementation.