Telstra 2012 Annual Report Download - page 73

Telstra Corporation Limited and controlled entities
43
Directors’ Report
Telstra has well established procedures to monitor and manage
compliance with existing environmental regulations and new
regulations as they come into force. Telstra has not been fined
or prosecuted for, or convicted of, any significant breaches of
environmental regulation during the financial year.
The Australian Government's Clean Energy Legislation
introduced a carbon pricing mechanism from 1 July 2012. The
carbon pricing mechanism requires 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 not directly liable to purchase emission
permits, but the position will continue to be monitored. Telstra
will, however, experience an indirect cost impact as a result of
the impacts on electricity prices, and may experience other cost
impacts associated with the Telstra supply chain.
Non-audit services
During fiscal 2012,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 2012 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 and services greater than $250,000 require
approval from the Audit Committee;
• where the nature or scope of an external engagement
changes such that the prior approval obtained is insufficient,
subsequent approval of the revised engagement must be
obtained. The same approval levels noted above apply;
• all additional engagements approved as per the above points
are reported to the Audit Committee at the next meeting;
• fees earned from non-audit work undertaken by Ernst &
Young are capped at 1.0 times the total audit fee; and
• the provision of non-audit services by Ernst & Young is
monitored by the Audit Committee via quarterly reports to the
Audit Committee.
Ernst & Young is specifically prohibited from performing any of
the following services:
• bookkeeping services and other services related to preparing
our accounting records or financial statements;
• financial information system design and implementation
services;
• operation or supervision of IT systems;
• appraisal or valuation services, fairness opinions, or
contribution in kind reports;
• actuarial services;
• internal audit services;
• management or human resources functions including the
provision of advice and benchmarking services in relation to
executive remuneration;
• temporary staff assignments;
• broker or dealer, investment advisor, or investment banking
services;
• legal services or expert services unrelated to the audit;
• tax planning and strategy services; and
• receiver/liquidation services.
A copy of the auditors' independence declaration is set out on
page 50 and forms part of this report.
Rounding of amounts
The Telstra Entity is a company of the kind referred to in the
Australian Securities and Investments Commission Class Order
98/100, dated 10 July 1998 and issued pursuant to section
341(1) of the Corporations Act 2001. As a result, amounts in
this report and the accompanying financial report have been
rounded to the nearest million dollars ($m), except where
otherwise indicated.
This report is made on 9 August 2012 in accordance with a
resolution of the Directors.
Catherine B Livingstone AO
Chairman
9 August 2012
David I Thodey
Chief Executive Officer and Executive Director
9 August 2012