Telstra 2011 Annual Report Download - page 76

61
Telstra Corporation Limited and controlled entities
Directors’ Report
Telstra notes the Australian Government's
announcement on 10 July 2011 that it intends to
legislate to introduce a carbon pricing system from 1
July 2012. The system will require companies with
operations that emit greenhouse gas emissions above a
certain threshold to purchase carbon emissions permits,
at an initial price of $23 for each tonne of carbon dioxide
equivalent greenhouse gas they emit.
Telstra is currently in the process of assessing the
potential impacts of the proposed system on its
business. Based on the information currently available,
it appears unlikely that Telstra will be directly liable
under the system to purchase emission permits.
However, Telstra may experience an indirect cost
impact from the system as a result of the impacts on
electricity prices and other parts of Telstra's supply
chain. Telstra is currently reviewing the Government's
announcement and will undertake an assessment of its
likely implications for Telstra once the final detail of the
system is settled, but Telstra does not believe it will be
material for the company.
Non-audit services
During fiscal 2011,Telstra’s auditor Ernst & Young has
been employed on assignments additional to its
statutory audit duties. Details of the amounts paid or
payable to Ernst & Young for audit and non-audit
services provided during the year are detailed in note 8
to the financial statements.
The directors are satisfied that the provision of
non-audit services during fiscal 2011 is compatible with
the general standard of independence for auditors
imposed by the Corporations Act 2001 (the Act), and
that the nature and scope of each type of non-audit
service provided did not compromise the auditor
independence requirements of the Act for the following
reasons:
• all recurring audit engagements are approved
by the Audit Committee each year through the
Audit Committee’s approval of the annual audit
plan;
• additional audit and non-audit services up to
$100,000 require approval from the Chief
Financial Officer which is communicated to the
Audit Committee at the next meeting;
• additional audit and non-audit services between
$100,000 and $250,000 require approval from
the Chairman of the Audit Committee; services
greater than $250,000 require approval from
the Audit Committee;
• fees earned from non-audit work undertaken by
Ernst & Young are capped at 1.0 times the total
audit fee; and
• the provision of non-audit services by Ernst &
Young is monitored by the Audit Committee via
semi-annual reports to the Audit Committee.
Ernst & Young is specifically prohibited from performing
any of the following services:
• bookkeeping services and other services related
to preparing our accounting records of financial
statements;
• financial information system design and
implementation services;
• appraisal or valuation services, fairness
opinions, or contribution in kind reports;
• actuarial services;
• internal audit services;
• management or human resources functions;
• temporary staff assignments;
• broker or dealer, investment advisor, or
investment banking services; and
• legal services or expert services unrelated to the
audit.
A copy of the auditors’ independence declaration is set
out on page 68 and forms part of this report.
Rounding of amounts
The Telstra Entity is a company of the kind referred to
in the Australian Securities and Investments
Commission Class Order 98/100, dated 10 July 1998
and issued pursuant to section 341(1) of the
Corporations Act 2001. As a result, amounts in this
report and the accompanying financial report have been
rounded to the nearest million dollars ($m), except
where otherwise indicated.
This report is made on 11 August 2011 in accordance
with a resolution of the directors.
Catherine B Livingstone AO
Chairman
11 August 2011
David I Thodey
Chief Executive Officer and Executive Director
11 August 2011