Report on ASX Corporate Governance Principles and Telstra Corporation

This report provides an in-depth analysis of Telstra Corporation's adherence to the Australian Securities Exchange (ASX) corporate governance principles. It begins with an executive summary and then delves into the implications of the eight ASX principles on Telstra's operations. The report examines the roles and responsibilities of the board of directors, senior management, and various committees, including the audit committee. It highlights the importance of ethical conduct, timely disclosure, and the protection of shareholder rights. Furthermore, the report includes a risk assessment procedure, analytical processes, and financial statements from 2015 to 2017 to assess the company’s financial health and performance. The report also covers the nature of Telstra's business, market overview, regulatory environment, and business strategies. It concludes with a discussion of financial management risks and potential mitigation steps, emphasizing Telstra's commitment to connecting people and delivering user-friendly technology and content solutions. Finally, the report includes a references section and an appendix with additional supporting materials.

RESEARCH ASSESSMENT

TABLE OF CONTENTS
1. Executive summary............................................................................................................1
2. Implications of ASX corporate governance principles followed by Telstra Corporation..1
3. Risk Assessment Procedure..............................................................................................10
4. Analytical process............................................................................................................12
5. Conclusion........................................................................................................................18
REFERENCES..............................................................................................................................19
Appendix........................................................................................................................................21

1. Executive summary
Telstra is a telecommunication and technology business that provides telecom services to
customers in order to increase connectivity and profitability. In this assessment, implications of
ASX corporate governance principles followed by Telstra Corporation will be discussed. The
eight principles are described in assessment followed by company effectively. The process and
importance of risk assessmentis evaluated in order to reduce the impact various resources and
risk on organisation. Income statement, ratio analysis and balance sheet are also provided for the
year 2015 to 2017 in the present report. Nature of Telstra, market overview, regularities and
business strategies are also described in this assessment. Risks involved in financial management
and statements as well as potential steps to reduce risk are also covered. The firm believes on
opportunities avalaible for people by connecting them well in this world.The business build
technology and content solutions that are simple and easy to use. The business is Australia’s
largest and fastest national mobile network.
2. Implications of ASX corporate governance principles followed by Telstra Corporation
The board directors of business are committed to maintain a high standard of
performance, safety and corporate governance for Orion Ltd. . The directors also support
principles and recommendations given by corporate governance (Wilsdon, 2016). The business
mainly focuses on ASX recommendations to ensure that they do not have a negative impact on
firm and shareholder’s interests.
s.
no.
ASX
principles
Guidelines Telstra corporate performance
1 Lay solid
foundations for
management
and oversight
First principle entails
that business entity
should disclose the
roles and
responsibilities of board
and management team.
It also lays emphasis on
including the manner in
which their
Board of directors
The board directors, Farooq Khan
(Chairman), Victor Ho (Executive
Director), Yaqoob Khan (Non-Executive
Director) are responsible for managing the
practices, policies, strategies, operational
activities and management of Telstra. The
board also has a duty to manage corporate
governance. The firm also ensures that
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performance will be
monitored.
business complies with all rules and
regulations. Identifying the business risks,
audit committee responsibilities etc.
Senior management
The main role of Telstra’s senior
management is to deliver strategic goals
and objectives determined by board. The
work is delegated to executive chairman
and to senior executives for day to day
management of operational activities such
as determination of group policies,
recommending strategies, reporting to
board and management of finance and
operations.
Diversity
The senior management and board
of directors are comprising individuals
according to the cultural diversity and
possessing appropriate qualification and
skilled employees. Investment strategies
are also followed by firm in order to carry
out investment activities.
2 Structure the
board to add
value
As per such principle,
there is a need to ensure
that board must have
appropriate size, skills,
composition and
commitment in relation
to discharging duties
more effectually.
Composition, structure and process
The board is formed for effective
size, composition and commitment to
discharge the duties and responsibilities
(Williams and Mummery, 2015).
Nomination committee
As a consequences of corporation
and size, the board does not have any
2

stand-alone nomination committee. The
board members are responsible for broad
membership, continue monitoring,
identifying the skill and experience needed
to board and competencies of directors.
The main focus is on addressing board
diversity.
Skills, knowledge and experience
The board members of Telstra
should ensure that members have
appropriate and mix of knowledge, skill
and experience to drive business
performance which will also help to
acquire many opportunities to face
challenges. Directors are appointed with
specific business, governance and
corporate skills as well as experience. They
are responsible for managing capital
market, general management, finance and
accounting affairs.
Conflicts of interest
The directors must disclose
potential and actual conflicts that are exists
between interest of directors and their
work or responsibilities to the board.
(Truter, Russell and Fary, 2014). In case if
the director is unable to solve conflicts
than according to the Corporation Act he
must be present in meeting or discussion
room to save approval of remaining
director in business effectively.
3

Company information
All the directors and senior
executives of firm have right to access all
company books according to the legal
requirements and with ethical standards.
The information will be confidential and it
is their duty to not disclose.
3 Act ethically
and
responsibly:
On the basis of ASX
guidelines, business
entity should make
focus on performing
activities in an ethical
and responsible way.
Code of conduct
The business developed a formal
code of conduct that sets and creates
awareness of expected employees,
directors and other members to carry out
their roles and responsibilities (McLellan
and McKinlay, 2014). Business is trying to
encourage and develop a culture that helps
to maintain and improve the image of firm
as a corporate citizen. The code includes a
set of policies such as discrimination,
health and safety, laws, interpersonal
conduct, conflict of interest, drug and
alcohol, etc. The objective of code is to
maintain a peaceful and effective
environment in business.
4 Safeguard
integrity in
corporate
reporting
Formal process needs to
be followed for
verifying and
safeguarding the
integrity of corporate
reporting.
Audit committee
As a consequences of corporation
and size, the board does not have any
stand-alone nomination committee. The
board members are responsible for
safeguarding the integrity of business
4

stakeholders reporting, approving the
financial reports, risk management
functions and monitoring all the financial
activities and performance of audit
committee.
External auditor
The external auditors are selected
in the firm for the purpose of reputation,
professional competence and provision for
values . The business external auditors are
responsible to attend AGM's and to answer
questions asked by shareholders to conduct
and prepare an auditor report efficiently.
The address is Rothsay Auditing Level 1,
Lincoln House, 4 Ventnor Ave West Perth,
Western Australia 6005.
5 Make timely
and balanced
disclosure
Emphasis needs to be
placed on timely and
balanced disclosure
aspects
Continuous disclosure to ASX
The company secretary Victor Ho
is appointed by Telstra and he is
responsible for coordinating and
overseeing the disclosure of information to
ASX as well as to communicate with ASX
and an approval of all announcement made
by directors (Barry, 2018). The business
policy requires all notifications from ASX
concerning business person which affects
price and value of securities as per the
Corporation Act and ASX listing rule 3.1 .
The staff should report to board members
in case of any price sensitive information.
5

In simple words, the Telstra will not
respond to market rumours unless it is
required to do by ASX listing rules or laws
. In the absence of executive chairman,
company secretary is responsible for
managing the and determining whether to
seek a trading halt efficiently.
6 Respect the
rights of
security
holders:
ASX principles lay
focus on protecting the
right of shareholders by
providing them with
valuable information
for decision making.
Board or company
should allow security
holders in relation to
exercising their rights
freely.
Website information
The public and governance
information about company is available for
investors on Telstra website
(http://www.orionequities.com.au). The
website contains complete information
regarding financial, announcements and
other information required for investors.
Investor’s relationship programs
It can be said that shareholders are
the main assets of company that increasing
their value is a mission for Telstra.
Information of business operational
activities and performance is required for
the shareholders to ensure and understand
that mission is being fulfilled by business
effectively and efficiently (Jepsen, Knox-
Haly and Townsend, 2015). The investor
relationship program includes information
communication process to shareholders.
The monthly and yearly information
required by shareholders is available on
company’s website. E-mail, website and
6

other sources are used by business to
promote the communication with
shareholders.
Meetings and electronic communication
The business encourages its
shareholders to participate in AGM and
other shareholder meetings in order to
provide information regarding business
operations. The company, registered
website and email address will help
shareholders to stay connected with
operations and other information. Annual
reports can be collected through internet.
7 Recognise and
manage risk
Sound risk management
plan needs to be
followed for ensuring
smooth functioning of
operations
Risk committee
As a consequences of corporation
and size, the board does not have any
stand-alone risk committee. The board
members are responsible for managing and
controlling appropriate risk management
framework. They are responsible for
reviewing and monitoring policies and
legal laws (SCHUTZ, 2017). It does not
matter either the risk is managed by risk
committee or full board.
Internal control
Directors of Telstra are responsible
for internal control over business
operational activities. Risk has a great
impact on business performance,
operations, financial activities and
7

reputation. Company has clear accounting
and internal control system to manage risk
to the accuracy of financial information
and other financial risk. Risk management
strategies are complies with governance
and other regularities to foster an
integrated approach where the
responsibilities are delegated to line
managers. Telstra is a LIC (Listed
investment company) that it has no direct
material exposure towards social
sustainability or environmental risks
(Runciman, 2016). The investment
committee is responsible for reviewing and
assessing proposed material investment.
This will consider the impact of material
investment to material environment,
economic, social or sustainability risk. The
approach is to develop operational
activities and changing market condition to
maintain risk management and assessment
plans as well as strategies.
Internal audit
Telstra does not have any
independent internal audit system due to
the size and nature of business operations
as well as ability to derive substantially
and benefits which are discussed as below:
The board members are responsible for
managing the internal audit (Pavlidis and
Hawkins, 2015). Assurance towards risk
8

management, control and functions for
government systems will help business to
achieve its objectives and goals effectively.
Evaluation of associated risk exposure and
security information with regulatory
compliance program will help to reduce
conflicts and also provide oversight to the
anti-fraud activities. Executive director and
company secretory are responsible for
implementing non-strategic amendment
towards risk management system in case of
potential requirement and changing
circumstances. The board also seeks
information and recommendations from
executive directors and company secretory
to make strategic changes towards internal
control process and risk management
where required.
8 Remunerate
fairly and
responsibly
Salary or pay structure
of directors should be
fair
Remuneration committee
Board does not have any
independent remuneration committee
because of the size and composition. The
board members are responsible for
reviewing remuneration and performance.
In addition to this, managing policies for
senior executive remuneration, terms and
condition for employment, performance
reviews and reviewing process of
achieving goals and targets is the main role
of committee (James, 2016). The business
incentive schemes and regarding
9

recommendations are also provided by
members to executive chairman in order to
make proposed changes.
Equity-Based Remuneration Scheme
The business does not have any
employee shares option plan and not issued
equity based remunerations yet to
management and directors. Under the share
trading policy of business, employee and
director option holders may not limit their
exposure to risk in any other firm. The
share trading policy is available on
company’s website.
3. Risk Assessment Procedure
Risk assessment procedure is crucial as well as important for firm in order to assess the
risk towards material misstatement exist effectively.
Assessing the risks of material misstatement
The auditor is able to assess risk of material misstatement by obtaining an understanding
of Telstra including internal audit control. This will be done at financial statement level and at
assertion level for account balance, transaction and disclosures classes . The risk assessment
point will help to provide basis for performing and designing other audit procedure. This will
include management inquiries, relevant individual, analytical process, enquiry and observations
(Flynn, 2015). According to ISA 315, risks which are evaluated as a significant risk must require
special audit and considerations. Risk assessment is a matter of judgement that matters such as
transaction complexity, risk of fraud, involvement of related party and a transaction from
outsider should be considered by company effectively.
Market overview
Telstra is a leading telecommunication and technology firm operating in Australia and
providing a full range of telecommunication services to customers and competing in the market .
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