CORPORATE GOVERNANCE

RTÉ Authority members are appointed to ensure that RTÉ is properly accountable to the Government, licence payers, viewers and listeners. In this role, RTÉ Authority members are committed to best practice in corporate governance.

RTÉ has adopted the Code of Practice for the Governance of State Bodies, approved by the Government on 2 October 2001, together with the corporate governance and other obligations imposed by the Ethics in Public Office Act, 1995 and the Standards in Public Office Act, 2001.

RTÉ is a statutory corporation established under the Broadcasting Authority Act, 1960 and, as a result, the provisions of the revised Combined Code on Corporate Governance, as adopted by the Irish Stock Exchange and the London Stock Exchange, are not applicable to RTÉ, namely:

• RTÉ is accountable to the Minister for Communications, Marine and Natural Resources. RTÉ has no share capital. Accordingly, provisions relating to shareholder relations and the conduct of Annual General Meetings are not applicable;
• The Authority is appointed by and its remuneration set by Government. Consequently, those requirements of the Combined Code relating to the appointment of Authority members, including the timing of their appointment and the composition of the Authority, and the remuneration of Authority members are inapplicable. Similarly, a performance evaluation of the Authority and its individual members is not considered appropriate; and
• The remuneration of the Director-General is set within a range determined by the Ministers for Finance and Communications, Marine and Natural Resources

However, RTÉ supports the principles and provisions of the Combined Code and has therefore undertaken appropriate steps to achieve compliance with its principal requirements, insofar as these are relevant to RTÉ.

Compliance statement
RTÉ has complied throughout the financial year under review and up to the date of this report with:

a) the specific provisions of the Framework Code of Best Practice for Corporate Governance in State Bodies as set out in the Code of Practice for the Governance of State Bodies; and

b) the provisions in the Principles of Good Governance in section 1 of the Combined Code that are relevant to RTÉ, except that:

• RTÉ has not appointed a Senior Independent Authority member; and
• The details of Authority members’ remuneration on page 37 does not include amounts paid to Authority members in their capacity as employees or programme contributors, but does include amounts paid to them by way of fees.

RTÉ Authority
Under the terms of the Broadcasting Authority Act, 1960 and subsequent legislation, RTÉ Authority members are appointed by the Government for a period not exceeding five years, with membership numbering between seven and nine members, one of whom the Government appoints as chairman. At present, the Authority comprises nine members, one of whom was appointed following an election by staff. Each member’s term of office will terminate on 20 June 2008.

Authority members have varied backgrounds, skills and experience and each brings independent judgement to bear by constructively challenging the Director-General and Executive Board and helping to develop RTÉ’s strategic objectives. They act as trustees for the public interest, while executive management takes responsibility for day-to-day operations. Biographical details of Authority members are set out on pages 26 and 27 and of the Executive Board on pages 28 and 29.

On appointment, all Authority members are provided with briefing documents on RTÉ and its operations.

The Authority meets in accordance with a regular schedule of meetings and also meets on other occasions as considered necessary. All Authority members have full and timely access to the information necessary to enable them to discharge their duties. Full Authority papers are sent to each Authority member in sufficient time before Authority meetings and any further papers or information are readily available to all Authority members on request. There is a clear distinction between the responsibilities at the head of RTÉ through the separation of the position of chairman of the Authority, who is non-executive, and the Director-General.

Authority members have access to advice and the services of the RTÉ Group Secretary who is responsible for ensuring the Authority procedures are followed and that applicable rules and regulations are complied with. RTÉ’s professional advisors are available for consultation with the Authority, as required. Individual Authority members may take independent professional advice and training, if necessary, at the expense of RTÉ.

The Authority has a policy in place which indemnifies Authority members in the event of legal actions taken against them in the course of their duties as Authority members.

There is a formal schedule of matters reserved to the Authority for consideration and decision, but certain other matters are delegated to Authority committees. The committees comprise the Remuneration and Management Development Committee, Programme Committee, Audit Committee and Corporate Development Committee. The Authority papers sent to Authority members prior to each Authority meeting include the minutes of all committee meetings which have been held since the previous Authority meeting and the chairman of each committee is available to report on the committee’s proceedings at Authority meetings, if appropriate.

Membership of these committees is set out on page 27 and details of the number of committee meetings and meeting attendance is set out on page 33.

The Audit Committee has written terms of reference and meets a minimum of four times a year. It comprises three Authority members, all of whom are considered independent. The responsibilities of the Audit Committee are set out in the Audit Committee Report on pages 35 and 36.

The Remuneration and Management Development Committee comprises four Authority members, all of whom are considered independent, and is assisted, as appropriate, by a nominee from the Department of Communications, Marine and Natural Resources. The responsibilities of the Remuneration and Management Development Committee are set out in the Remuneration Report on pages 37 and 38.

The Programme Committee comprises three Authority members, all of whom are considered independent. This committee considers key developments and plans in respect of television and radio programmes and schedules. At each of its meetings, the committee meets with the Managing Directors of Radio, Television and News & Current Affairs and their senior management colleagues and reviews programme output and upcoming strategy and plans. The Chairman of the Programme Committee is the Authority’s representative on the RTÉ Audience Council and she keeps the Committee briefed on the Council’s deliberations.

The Corporate Development Committee comprises five Authority members, four of whom are considered independent and one of whom is an employee. This committee was appointed during the last quarter of 2005 to focus on the preparation of a corporate plan for consideration and adoption by the Authority.

RTÉ Authority members’ remuneration
The Authority’s report on Authority members’ remuneration is set out on pages 37 and 38.

Independence of Members of the Authority
Each Authority member brings independent judgment, challenge and rigour to the Authority’s deliberations. The Authority has reviewed the independence of its members using the guidelines of the Combined Code. Having regard for the integrity, strength of character and objectivity of Authority members, all Authority members are considered independent under those criteria except for Anne Doyle, who was a member of the 14th Authority, and Joe O’Brien, who is a member of the 15th Authority, both of whom are RTÉ employees. For this reason alone, these Authority members do not meet the independence criteria of the Combined Code.

Due to a potential conflict of interest regarding the television rights to the Ryder Cup, Fintan Drury resigned from the Authority with effect from 19 January 2006.

Relationship with Government and licence holders
The relationship between RTÉ and the Department of Communications, Marine and Natural Resources (the then Department of Posts and Telegraphs) was formally established in 1960. The Chairman of the Authority and executive management meet regularly with Government to discuss operating and financial performance.

RTÉ publishes an annual Statement of Commitments, RTÉ’s commitments to viewers and listeners on its output for the year ahead. RTÉ’s performance in meeting these commitments is evaluated annually by external consultants appointed by Government as part of the Licence Fee review process.

Internal Control
The Authority has overall responsibility for the Group’s systems of internal control and for reviewing their effectiveness. These systems are designed to provide reasonable but not absolute assurance against material misstatement or loss.

The Authority confirms that an ongoing process for identifying, evaluating and managing RTÉ’s significant risks has operated throughout the year and up to the date of approval of the financial statements. This process accords with the Turnbull Guidance (Internal Control: Guidance for Directors on the Combined Code), issued in September 1999.

The key components of the system of internal control currently in place are:

• A clearly defined organisation structure, with formally defined authority limits and reporting mechanisms to higher levels of management and to the Authority;
• Established procedures to identify, control and report on key risks;
• Comprehensive budgeting systems, with annual financial budgets approved by the Authority;
• Timely monthly reporting, with actual results reported against budget and considered by the Authority on a monthly basis; and
• Comprehensive policies and procedures relating to operational and financial controls, including capital expenditure. Large capital projects require the approval of the Authority.
  

These controls are reviewed systematically by internal audit, on a risk based approach. The Head of Internal Audit reports to the Director-General and to the Audit Committee and has direct access to the Audit Committee chairman.

The Authority confirms that, through the Audit Committee, it has conducted a review of the effectiveness of the system of internal control up to and including the date of approval of the financial statements and reported thereon to the Authority.

The process adopted by the Authority to undertake the review of the effectiveness of the system of internal controls included:

• Consideration of the authority, resources and co-ordination of those involved in the identification, assessment and management of significant risks faced by RTÉ;
• Review and consideration of the output of the risk assessment and management process;
• Monitoring of risk reports from management;
• Review of the programme of internal audit and consideration of major findings; and
• Review of the report of the external auditors, who, as part of their normal procedures, test aspects of the systems of internal control and report any significant weaknesses to the Audit Committee.

Going concern
After making enquires, the members of the Authority have a reasonable expectation that RTÉ has adequate resources to continue in operational existence for the foreseeable future. For this reason, they continue to adopt the going concern basis in preparing the financial statements.

Attendance at Authority and Authority committee meetings during the year ended 31 December 2005