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The Department of Home Affairs has issued its draft guidance “Modern Slavery Act 2018: Draft Guidance for Reporting Entities” (Draft Guidance) for the new Modern Slavery Act 2018 (Cth) (the Act).
Welcome to Edition 45 of Boardroom Brief.
This is a service specifically targeted at the needs of busy non-executive directors. We aim to give you a “heads up” on the things that matter for NEDs in the week ahead – all in two minutes or less.'
Amendment by the Treasury Laws Amendment (Enhancing Whistleblower Protections) Bill 2017 (Cth). As pointed out by the AICD and other representative bodies, in 2018 directors will need to focus closely on the issue of “corporate culture”: what it means, what are its successful elements, and what are the legal implications of getting it “wrong”. An example is the Treasury Laws Amendment (Enhancing Whistleblower Protections) Bill 2017 (Cth)introduced into Parliament this week, which proposes to amend the Banking Act 1959 No. 6 and Corporations Act 2001 No. 50. The bill proposes to:
See the Minister for Revenue and Financial Services, the Hon Kelly O’Dwyer’s media release. Directors will need to ensure that their own corporate whistleblowing policies are robust and comply with the new legislation.
ASIC calls on preparers to focus on financial report quality and new requirements. A key enforcement priority for ASIC over the past few years has been the quality, reliability and usability of financial reports. This focus seems likely to continue in the medium term. As part of ASIC's Financial Reporting Surveillance Program, financial reports are selected for review, based on risk-based criteria and at random, to determine compliance with the Corporations Act and accounting standards. ASIC recently announced its key focus areas for year-ending 31 December 2017 financial reports of listed entities and other entities of public interest with many stakeholders. See ASIC’s media release. One thing to note is ASIC’s view that companies must have appropriate processes and records to support information in the financial report rather than simply relying on the independent auditor, particularly in areas requiring the exercise of judgment, such as impairment testing. These items should be finding their way to the Board (through the audit committee) for consideration.
ASX selects distributed ledger technology to replace CHESS. If Directors needed any further evidence of the disruptive potential of blockchain and distributed ledger technology (DLT) over the next few years, they need look no further than the decision of the ASX to replace CHESS with DLT developed by its technology partner Digital Asset (DA). The decision follows the successful build of enterprise-grade DLT software for core equity clearing and settlement functions, and the completion of extensive suitability testing by ASX and DA over the past two years. The testing confirms ASX’s confidence in the functional, capacity, security and resilience capabilities of DA’s application of DLT to meet the needs of Australia’s financial marketplace and maintain the highest regulatory and operational standards. The testing included two independent third party security reviews of DA’s technology and was conducted in parallel with a stakeholder consultation program, which included briefing of regulators, to enable ASX to develop a comprehensive understanding of what the market wants in replacing CHESS. ASX will now work with stakeholders on finalising the scope of Day 1 functionality for the new system, drawing on its extensive consultation that will continue in 2018. Day 1 functionality and the proposed timing for transition are expected to be released for market feedback at the end of March 2018. For further information see ASX’s media release. See also the Treasurer of Commonwealth of Australia, the Hon Scott Morrison’s media release. The decision is particularly significant as it represents the earliest adoption of DLT in an area of critical financial infrastructure anywhere in the world.
MYEFO. As Christmas looms we will see Commonwealth and State Governments sign off on their respective mid-year economic and fiscal outlook statements. While there have been some positive developments for Australia thanks to a higher than expect trade-weighted index, policy makers will have the holiday break to ponder their response to what many expect will be persistent low wages growth and anaemic consumer spending. Many expect Treasury and the RBA’s growth forecasts for the current and next fiscal year to be cut as a result.
Tax cuts: If Christmas trading data is weak, and given the RBA has almost nowhere to go on rates - we can expect to see tax cuts play a prominent role in the political discourse early in 2018. While cutting taxes may seem an odd move for a heavily indebted Government, it is no doubt hoped that an improvement in sentiment will drive a recovery in consumer spending, which still makes up 60% of GDP.