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 Committee Board Regulatory Committee Board and Committees Managing Director /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 Committees NSW Parliament Shareholding MinisterPortfolio Minister

Risk Management Based on AUS/NZ 3460 Various Assessments Standard Terms Peer Review

Corporate Plan Mission Vision Values Objec tives Str ate gie s Init iati ves 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 Individual 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