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Corporate Governance Statement
30 June 2008

The Juvenile Diabetes Research Foundation and its board are committed to achieving and demonstrating the highest standards of corporate governance. The company's corporate governance framework was revised in 2003 and later reviewed in 2007 in light of the best practice recommendations released by the Australian Security Exchange Corporate Governance Council in August 2007. The board continues to review the framework and practices to ensure they meet the interests of members.

The relationship between the board and senior management is critical to the company's long-term success. The directors are responsible to the members for the performance of the company in both the short and the longer term and seek to balance sometimes competing objectives in the best interests of the company as a whole. Their focus is to enhance the interests of members and other key stakeholders and to ensure the company is properly managed.

Day to day management of the company's affairs and the implementation of the corporate strategy and policy initiatives are formally delegated by the board to the Chief Executive Officer and senior executives.

A description of the company's main corporate governance practices is set out below. All these practices, unless otherwise stated, were in place for the entire year.

The board of directors
The board operates in accordance with the broad principles set out in its constitution as adopted by the company on 8 April 2000.

Board composition
The constitution states:

• There may be up to 4 office bearers of the company, namely:
  
  1. The chairperson 
  2. 2 vice chairpersons; and
  3. the treasurer
• Each of the office bearers is a director of the company.
• There must be:
  
  1. Not less than 10 directors; and
  2. Subject to rule 8.6, not more than 20 directors
• Every director must be a member of the company to qualify for appointment.
• The company shall appoint 10 of the directors pursuant to rule 8.5 and the directors so elected will be entitled to appoint up to 10 further directors.

Responsibilities

The responsibilities of the board include:

• Providing strategic guidance to the company including contributing to the development of and approving the corporate strategy
• Reviewing and approving business plans, the annual budget and financial plans including available resources and major capital expenditure initiatives
• Overseeing and monitoring:
  
  • Organisational performance and the achievement of the company's strategic goals and objectives
  • Compliance with the company's Code of Conduct (see page 12)
  • Progress of major capital expenditures and other significant corporate projects including any acquisitions or divestments
• Monitoring financial performance including approval of the monthly management accounts and annual financial reports, and liaison with the company's auditors
• Appointment, performance assessment and, if necessary, removal of the Chief Executive Officer
• Ratifying the appointment and/or removal and contributing to the performance assessment for the members of the senior management team including the COO
• Ensuring there are appropriate management processes in place and approving major corporate initiatives
• Enhancing and protecting the reputation of the organisation
• Overseeing the operation of the company's system for compliance and risk management

Directors' Independence

The board has adopted specific principles in relation to directors' independence. In order to remain independent, the director must declare to the Chairperson and refrain from voting on related issues if:

• They are a principal of a material professional advisor or a material consultant to the company, or an employee materially associated with the service provided
• They are a material supplier or customer of the company, or an officer of or otherwise associated directly or indirectly with a material supplier or customer
• They have any interest and any business or other relationship which could, or could reasonably be perceived to, materially interfere with the director's ability to act in the best interests of the company.

Term of office

The company's Constitution specifies that all directors must retire from office at each annual general meeting (AGM). Where eligible, a director may stand for re-election.

Chairperson and Chief Executive Officer
The Chairperson is responsible for leading the board, ensuring directors are properly briefed in all matters relevant to their role and responsibilities, facilitating board discussions and managing the board's relationship with the company's senior executives.

The CEO is responsible for implementing company strategies and policies.

Independent professional advice
Directors and board committees have the right, in connection with their duties and responsibilities, to seek independent professional advice at the company's expense. Prior written approval of the Chairperson is required, but this will not be unreasonably withheld.

Corporate Reporting
The CEO and COO have made the following certifications to the board:

• That the company's financial reports are complete and present a true and fair view, in all material respects, of the financial condition and operational results of the company and are in accordance with relevant accounting standards
• That the above statement is founded on a sound system of risk management and internal compliance and control which implements the policies adopted by the board and that the company's risk management and internal compliance and control is operating efficiently and effectively in all material respects.

Board committees

The board has established a number of committees to assist in the execution of its duties and to allow detailed consideration of complex issues. The outcomes of committee meetings are tabled at the subsequent board meeting.

Finance Committee
The finance committee includes the following directors:

Trevor Allen (Chairperson)
Stephen Higgs

In addition to the directors listed above, the finance committee also includes two independent non-director members:

Allison McMartin
Geoff Nesbitt

The finance committee has appropriate financial expertise and all members are financially literate and have an appropriate understanding of the sector in which the company operates.

The main responsibilities of the finance committee are to:

 

• Review, assess and approve the annual full and concise reports, the monthly management accounts and all other financial information published by the company
• Assist the board in reviewing the effectiveness of the organisation's internal control environment covering:
  
  • Effectiveness and efficiency of operations
  • Reliability of financial reporting
  • Compliance with applicable laws and regulations
• Recommend to the board the appointment, removal and remuneration of the external auditors, and review the terms of their engagement, the scope and quality of the audit and assess performance
• Consider the independence and competence of the external auditor on an ongoing basis
• Report to the board on matters relevant to the committee's role and responsibilities.

 

The finance committee has authority, within the scope of its responsibilities, to seek any information it requires from any employee or external party.

External Auditors
The company appoints external auditors who clearly demonstrate quality and independence. The performance of the external auditor is reviewed annually and applications for tender of external audit services are requested as deemed appropriate. PricewaterhouseCoopers was appointed as the external auditor in 2002.

The external auditor is requested to attend the annual general meeting and be available to answer member questions about the conduct of the audit and preparation and content of the audit report.

Risk assessment and management
The board is responsible for ensuring there are adequate policies in relation to risk management, compliance and internal control systems. Company policies are designed to ensure strategic, operational, legal, reputation and financial risks are identified, assessed, effectively and efficiently managed and monitored to enable achievement of the organisation's objectives.

Considerable importance is placed on maintaining a sufficiently strong control environment. There is an organisational structure with clearly drawn lines of accountability and delegation of authority. Adherence to the Code of Conduct (see below) is required at all times and the board actively promotes a culture of quality and integrity.

The company's risk management policy and the operation of the risk management and compliance system is managed by the organisation's Risk Management Committee which consists of staff chaired by the COO. The board receives bi-monthly reports from this group as part of the Report on Operations provided prior to each board meeting.

Environment, health and safety
The organisation recognises the importance of environmental and occupational health and safety (OH&S) issues and is committed to the highest levels of performance. To help meet this objective, a staff survey is conducted annually to determine the key areas of OH&S risk that impact staff. The results of the 2007 survey were assessed by the Risk Management Committee, and mitigating steps put in place to minimise identified risks.
The organisation has undertaken an environmental audit to determine ways to minimise its impact on the environment. JDRF is committed to minimising this impact through recycling and energy conservation programs.

Code of Conduct
The organisation has developed a statement of values and a Code of Conduct (the Code) which has been fully endorsed by the board and applies to all directors and employees. The code reflects the highest standards of behaviour and professionalism and the practices necessary to maintain confidence in the organisation's integrity.

In summary, the Code requires that directors and employees must never permit their personal interests to conflict, or even appear to conflict, with the interests of the Foundation.

The Code and values are discussed with each new director and employee as part of their induction training and all directors and employees are asked to sign an annual declaration confirming their compliance.

A copy of the Code of Conduct is available by contacting the organisation.