Governance report
External auditor The role of the external auditor is to audit the financial statements of the company in accordance with applicable auditing standards in New Zealand and to report on its findings to the Board and shareholders of the company. The effectiveness, performance and independence of the external auditor is reviewed annually by the Audit Committee. The Board, after considering the recommendations of the Audit Committee, considers and reviews the appointment of external auditors. The Board requires the rotation of the audit partner for the statutory audit after no more than five years. The company’s external auditor is KPMG. Graeme Edwards has been the Audit Partner since 2019 and Laura Youdan has been the Assurance Partner since 2018. All services provided by KPMG are considered on a case-by-case basis by the Audit Committee to ensure there is no actual or perceived threat to independence in accordance with the policy. The Audit Partner and Assurance Partner have provided the Audit Committee with written confirmation that, in their view, they were able to operate independently during the year. KPMG has provided the Board with the required independence declaration for the financial year ended 30 June 2023. The Audit Committee has determined that there are no matters that have affected the auditor’s independence. It is the Board’s policy that all non-audit services proposed to be undertaken by the external auditor must be pre-approved by the Audit Committee. The Audit Committee considered and gave its approval for the auditor to undertake certain non-audit-related matters. Fees paid to KPMG are included in Note 9 of the notes to the financial statements contained on page 73 of this annual report. KPMG was paid $1.3 million for services in the financial year to 30 June 2023. Of this sum, $1.1 million was for audit-related services and $0.2 million was for non- audit-related services. Non-audit- related work did not exceed 25% of the amount paid for audit work. Further detail is provided on page 73 of this annual report. The auditor is regularly invited to meet with the Audit Committee including without management present. The auditor has been invited to attend the Annual Shareholders’ Meeting and will be available to answer questions about the audit process and the independence of the auditor.
Risk management Vector recognises that rigorous risk and opportunity management is essential for corporate stability, high performance and ultimately the success of our strategic objectives and vision. To drive sustainable growth and ensure operational resilience, it is important to anticipate risks to our business while capitalising on opportunities as they arise. Vector’s enterprise risk management (ERM) framework provides a flexible and purpose-built approach to the application of risk management across Vector and is consistent with the International Risk Management Standard. Vector’s risk management processes and tools are embedded within its business operations to drive consistent, effective and accountable decision-making. Consistent with the “Three Lines Model”, all Vector people are responsible for applying Vector’s identify, analyse, evaluate and treat risks. This risk mindset has been implemented through: – awareness of risk management’s value at operational, executive team and Board level; – embedding of risk assessments and discussions within key decision-making processes; – integration of specialised risk partners throughout the business; and – continuous development through both internal and external reviews. Vector continues to review and mature its ERM framework to reflect the evolving context within which we work. The company engages external advisors to assist in incorporating the latest developments in risk management and to reflect the current operating environment. The Board is responsible for ensuring that key strategic, operational, and financial risks are identified, and that appropriate controls and procedures are in place to manage those risks effectively. The Risk and Assurance Committee has overall responsibility for ensuring that the company’s risk management framework and processes are fit for purpose and effective, such that risks are appropriately identified, considered ERM framework within their individual roles to proactively and managed against Vector’s objectives and strategic vision. Spanning across Vector’s portfolio of businesses, Vector’s Group Risk function is tasked with the ongoing development and implementation of the ERM framework and risk processes. In addition to monitoring
the changing business landscape and macro-economic trends, this function integrates and works with all Vector business units to facilitate smart risk-based decision-making as well as consistent risk analysis and the evaluation of risk against Vector’s risk appetite. These perspectives inform the development of the Group Key Risk Profile which provides both the Board and executive team with a consolidated view of: 1. the strategically focused risks which could have a significant impact on the long-term value and sustainability of Vector’s business; and 2. the operational and financial risks which are assessed and managed as part of meeting key business objectives and maintaining operational resilience. Our key risks are shown on page 41. Health and Safety Vector is committed to conducting its business activities in such a way as to protect the health and safety of all workers of Vector and its related companies, the public and visitors in its work environment. Vector is committed to continual and progressive improvement in its health and safety performance. Page 22 of this annual report contains Vector’s performance in these areas, including its Total Recordable Injury Frequency Rate (TRIFR) and Lost- Time Injury Frequency Rate (LTIFR). The Board has delegated day-to-day responsibility for the implementation of health and safety standards and practices to management. The Board is committed to providing effective resources and systems at all levels of the organisation to fulfil its commitment to employees, customers, shareholders and stakeholders. Vector’s commitments and requirements for health and safety are set out in the Health and Safety Policy. Internal audit Vector’s business performance and internal audit function is overseen by the Risk and Assurance Committee, and the Audit Committee, and provides independent and objective assurance on the effectiveness of governance, risk management and internal controls across business operations. The team has unrestricted access to all Vector staff, records and third parties’ staff and records. The team liaises closely with KPMG, as Vector’s external auditor, to share the outcomes of the internal audit programme.
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Vector Annual Report 2023
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