There are many discrete roles within a public entity.
The chair leads the strategic direction of the public entity and its board of directors.
The chief executive officer manages the day-to-day operations of the public entity, its management and staff on behalf of the board.
The chief finance and accounting officer reports on the financial performance of the public entity to the board.
The board secretary supports the work of the board and is the main point of contact between the board and management.
This section has information on the following roles:
- board chair
- chief executive officer
- chief finance and accounting officer
- managers and other employees
The board of a public entity sets the strategic direction for the public entity and reviews progress in line with that direction.
The board must meet a range of economic, social and environmental objectives – and implement government policy – as required by the checks and balances imposed on them by parliament, the government and central agencies.
Section 81 of the Public Administration Act 2004 states that the board of a public entity must:
- act consistently with the functions and objectives of the public entity and within any business or strategic plan or other document relevant to the work program of the public entity
- inform the minister responsible for the public entity and the relevant departmental secretary of known major risks to the effective operation of the public entity and of the risk management systems that it has in place to address those risks
- provide the minister responsible for the public entity with any information relating to the public entity or its operations that is requested, unless prohibited from doing so by or under any law
- apply the Directors’ Code of Conduct issued by the Public Sector Standards Commissioner under the Public Administration Act (s. 63)
- ensure that adequate procedures are in place for assessing the performance of individual directors, dealing with poor performance by directors and resolving disputes between directors
- ensure that the public entity has relevant policies to deal with conflicts of interest and gifts to directors
- ensure that it has procedures in place to govern the conduct of its meetings and financial record keeping.
The Public Administration Act also:
- provides that the board is accountable to the responsible minister for the exercise of its functions (s. 85)
- provides that the minister is accountable to the parliament for the public entity’s exercise of functions and exercise of power in relation to the public entity (s. 85)
- prohibits a public entity from making loans to directors (or relatives or spouses of directors) (s. 82)
- enables either the public entity or the responsible minister to bring proceedings against the director of a public entity who contravenes Division 2 of Part 5 of the Public Administration Act (s. 87)
- permits a public entity to form and dissolve committees and delegate functions to members of the committee who are also directors of the public entity (s. 83)
- prevents a public entity from forming a subsidiary without notifying the responsible minister (s. 84)
- enables the responsible minister to apply for an injunction to restrain a board from contravening the Public Administration Act or any other law (s. 86).
The role and duties of a public entity board also include the following:
- setting the broad strategy for the public entity to meet its objectives and performance targets
- ensuring the preparation, and approving, strategic plans, annual reports, key procedures and policies
- approving decisions related to strategic initiatives such as commercial ventures, significant acquisitions, internal restructures and disposals
- approving the public entity’s annual budget
- ensuring that the public entity follows corporate planning guidelines provided by the minister, Treasurer or department.
- appointing the chief executive officer, where legislation permits
- establishing performance measures for the chief executive officer and a succession plan
- establishing and monitoring governance arrangements for the public entity, including reporting systems to meet the information needs of the minister, department, central agencies and the board
- establishing and reviewing policies regularly (for example, policies on fraud and conflicts of interest)
- fostering a culture and set of values with reference to the duties and values detailed in the Public Administration Act
- applying the Directors’ Code of Conduct issued by the Public Sector Standards Commissioner
- evaluating the performance of the board, public entity and chief executive officer.
- integrating risk management into the public entity’s strategic planning process
- notifying the minister of known risks to the effective operation of the board
- monitoring and reviewing the effectiveness and currency of internal financial and operational risk management, compliance and reporting systems and taking appropriate steps to address any issues which may arise
- ensuring that the public entity operates within the establishing legislation, within any delegations and within rules and procedures relating to the use of public funds.
The board should follow any corporate planning guidelines provided by the Treasurer and relevant minister and department.
The board chair leads the public entity and the board and manages its principal relationships (especially with the minister and department). The chair ensures compliance with the Public Administration Act 2004 and other legislation and obligations.
The chair is responsible for:
- building an effective board with the necessary skills and capabilities
- leading the directors and developing them as a cohesive and effective team
- assisting directors’ understanding of their role, responsibilities and accountability including the need to comply with the Directors’ Code of Conduct
- informing directors about developments in government policy, priorities and financial reporting
- setting the board’s agenda and ensuring issues are discussed and there are no potential conflicts of interest or duty
- ensuring interactive participation by all directors
- arranging adequate support for directors
- welcoming new directors and leading the process for their induction
- managing the evaluation of the performance of the chief executive officer and the board
- representing the board to external parties as an official spokesperson for the public entity
- establishing an effective and constructive working relationship with the chief executive officer
- acting as the liaison point between the board and senior management of the public entity
- informing the minister about significant issues and events
- delivering the public entity’s corporate plan and annual report to the minister
- actively encouraging a strong relationship between the internal audit and risk management committee and the board
- ensuring that all policies adopted by, or relevant to, the public entity or its board are given or made readily accessible to all directors (s. 80 of the Public Administration Act)
- ensuring that the board is compliant with the requirements of s. 81 of the Public Administration Act, which sets out the duties of the board of a public entity.
Chief Executive Officer
The chief executive officer (CEO) is responsible for the day-to-day management of the public entity in accordance with the law, the decisions of the board and government policies. The CEO must promote the public sector values to directors and employees.
The CEO is responsible under the Financial Management Act 1994 for appointing a chief finance and accounting officer (also known as a chief financial officer), although the CEO is responsible for the public entity’s accounts, presentation and provision of the public entity’s financial information.
The CEO is responsible for:
- managing the effective and efficient day-to-day operations of the public entity in accordance with the strategy, business plans and policies of the board
- translating the strategic plans of the board into action
- ensuring the public entity’s organisational functions are effective, including financial management, human resource management, information systems management, risk management including compliance, communications, marketing, fundraising, asset management and reporting
- keeping directors informed about existing and amended ministerial directions, amendments to relevant legislation, and other such critical information relating to the board’s functions and powers
- ensuring compliance and alignment with the public entity’s establishing legislation and government policies affecting the public entity (in particular, noting the requirements of government’s executive employment policy and the employee relations policy statement covering non-executive employment arrangements)
- maintaining effective communication and co-operation with stakeholders in collaboration with the chair
- overseeing the employment and management of staff
- implementing board decisions
- providing advice and information to the board on the public entity’s operational performance, any material issues concerning strategy, finance, reporting obligations, any other matters that arise, and any matters that may later require the board to notify the minister under s. 81 Public Administration Act 2004
- preparing the annual strategic plan, including organisational performance targets, for board approval
- preparing the public entity’s annual report
- in consultation with the chair, representing the public entity to external parties as an official spokesperson for the public entity
- liaising with, and where appropriate reporting to, the portfolio department.
As the accountable officer for a public body, the CEO is also responsible for:
- designating a position of chief finance and accounting officer in the public entity and designating other staff who receive money and make payments
- ensuring that proper accounts and records are kept
- providing the portfolio minister or the minister responsible for the Financial Management Act any financial information they request
- preparing financial statements and a report on operations
- completing the annual Financial Management Compliance Framework cycle as soon as possible after the end of each financial year
- writing off certain debts, losses or deficiencies in public accounts in accordance with the relevant regulations
- organising investigations into the loss, deficiency or destruction of public money or property that may have been caused by a serving or former officer of the public entity and deciding whether to seek to recover funds from the officer.
The Public Sector Standards Commissioner issued the Code of Conduct for Victorian Public Sector Employees under s. 63 of the Public Administration Act. The code is binding on all public sector employees, including the CEO.
The CEO is to keep directors and all public entity employees informed about the code and must ensure compliance by the public entity with the code.
The purpose of the code is to promote adherence to the public sector values prescribed in s. 7 of the Public Administration Act. These values are responsiveness, integrity, impartiality, accountability, respect, leadership and human rights. The CEO must promote the public sector values to directors and employees.
The CEO should ensure that staff are aware that failure to behave in the ways described in the code may lead to action under relevant misconduct processes. These processes need to be communicated to all employees and be consistent with the public sector employment principles (s. 8 of the Public Administration Act) and standards issued by the Public Sector Standards Commissioner.
The CEO must develop and implement policies and procedures tailored to their public entity to support application of the code.
Board and CEO Relationship
In many public entities, the board appoints the CEO and sets remuneration. If it doesn’t appoint, it often has a critical role in advising the minister on the capabilities and experience required of a potential CEO to deliver the strategic goals and priorities of the public entity.
The CEO is accountable to the board, supports the board in its governance role and provides leadership to the public entity.
The relationship between the CEO and the board is as follows:
- The board sets the broad organisational strategic direction and priorities, develops governance policies and determines clear and explicit measurements for the CEO’s performance.
- The CEO is the primary link between the board and staff of the public entity. The CEO communicates board policies and priorities to staff. The CEO presents organisational reports, submissions and budgets to the board. They report to, and is accountable to, the board as a whole but not to individual directors.
If a CEO is an executive director of the board under the public entity’s establishing legislation, then the CEO will attend every board meeting as a director.
However, if the CEO is not a director, then the CEO will usually attend board meetings at the invitation of the chair.
The chair and the CEO should have a strong relationship based on mutual respect, trust and understanding of each other’s role. The CEO must demonstrate ethical behaviour at all times.
Chief Finance and Accounting Officer
Under the Financial Management Act 1994, the CEO of a public entity must nominate a chief finance and accounting officer (CFAO). The term chief financial officer (CFO) is also sometimes used to describe this role.
The CFAO is responsible to the CEO for the public entity’s financial accounting and reporting, the effectiveness of the public entity’s audit arrangements and the efficient and effective use of resources. In a small public entity, the Minister for Finance may give approval for the CEO to perform the role of the CFAO.
Standing directions from the Minister for Finance require the boards of most public entities to establish an audit and risk management committee to oversee and advise the public entity on matters of accountability and internal control.
The CFAO is not a member of the audit and risk management committee but may have a standing invitation to attend relevant parts of the committee’s meetings to explain reports and answer questions.
The CFAO provides advice to the board on:
- financial management
- the public entity’s financial statements
- compliance with relevant state and federal taxation legislation including goods and services tax (GST)
- internal auditors if any
- liaison with external auditors
- audit process
- action taken on audit reports
- risk management, including internal control systems to avoid fraud and misappropriation.
The CFAO is also responsible for:
- managing public finances for which the public entity is accountable
- keeping proper accounts
- prudent and economical administration
- efficient and effective use of resources
- ensuring that audit recommendations are actioned within a reasonable time.
The CFAO may attend board meetings on the invitation of the chair for relevant agenda items.
A board secretary supports the operations of the board and is usually an employee of the public entity. The role is often largely administrative but – depending on the nature of the public entity – it may include a range of functions similar to those required of a company secretary in the private sector.
The board secretary, among other things, is responsible for arranging board meetings, collating and distributing board papers, attending meetings of the board and drafting minutes of those meetings.
If an employee of the department performs the board secretary role, the expectations and exact responsibilities of the role need to be understood by all parties.
A board secretary is required to advise the board when directors are unaware of relevant government policies or procedures and any updates that must be complied with. The secretary does not take part in the decisions of the board.
A board secretary should have a detailed knowledge of the establishing legislation of the public entity, the Public Administration Act 2004, the Financial Management Act 1994 and other legislation and government policies that affect the public entity.
Under the chair’s direction, the board secretary’s duties include:
- facilitating the induction of newly appointed directors
- facilitating professional development programs for the board
- ensuring effective information flows (within the board, to and from the board and its committees, and between the directors and the public entity’s management)
- advising directors on the legal obligations of directors and of the public entity
- advising the board and individual directors on corporate governance principles and plans
- advising the board on implementation of corporate governance programs such as risk management and performance assessment
- carrying out the instructions of the board, assisting in implementing corporate strategies and giving practical effect to the board’s decisions
- dealing with the public as appropriate.
As an employee, the board secretary owes the public entity common law duties of competence, care, obedience and good faith.
A board should require the secretary to sign a document agreeing to abide by values including duties of care, diligence and skill, acting in good faith, using powers for proper purpose and not using inside information.
The nature of this role may need to be discussed by all parties to help ensure that the secretary is not placed in unviable and ongoing conflict situations.
Managers and Other Employees
The board and its directors do not usually have a direct relationship with the staff of the public entity other than with the CEO, CFAO and board secretary. Another common exception is where specialist staff provide consultancy services or regular briefings to a board committee regarding their particular areas of operation.
The chair and the CEO are the contact points for the board for any access to a member of staff of the public entity and vice versa.
Directors should not go to staff directly without having first obtained express permission to do so. Most boards have protocols that require a director to approach the chair of the public entity to arrange access to an employee.
The chair may then seek access through the CEO. Should the CEO not agree to provide such access to an employee, then the chair may access public entity staff independently of the CEO in exceptional circumstances.
Where the board is the employer, it should be conscious of its obligations to comply with the public sector employment principles, and of its responsibilities to actively promote and support these principles.
Government has also established specific policies covering the employment and remuneration of both executives and non-executive employees.
All employees are required to familiarise themselves and act in accordance with the Code of Conduct for Victorian Public Sector Employees.
Most public entities have a wide range of stakeholders with an interest in their operations. Common stakeholder groups include:
- state government and cabinet as the owners of the public entity
- other ministers who are responsible for government functions affected by the operations of the public entity
- other state government departments that are co-operating with the public entity or that rely on the public entity for goods or services
- business partners including companies, government organisations and non-government organisations
- local government
- customers and clients
- the broader Victorian community.