Melissa F.
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In October 2023, Queensland Treasury (QT) released its latest audit committee guidelines for departments and statutory bodies. As part of this release, it introduced transitional requirements for entities to reach fully independent audit committee membership from 1 July 2025, taking a staged approach (See Audit Committee Guidelines: Improving Accountability and Performance – Queensland Treasury). 

What does this mean for my committee?

There are a few key terms for us to distinguish up front:

Independent member – means an audit committee member that is:

  • independent of management 
  • not an employee of the entity
  • not an employee of another Queensland public sector entity.

External member – means an audit committee member that is: 

  • independent of management 
  • not an employee of the entity
  • but can be an employee of another Queensland public sector entity.

When are the changes coming in and what are the requirements?

QT has introduced both immediate and future requirements for departments and statutory bodies to comply with:



(From October 2023 i.e. release of guidelines)

Independent ChairAll departments and statutory bodies should appoint an independent chair.
Independent MemberAll departments and statutory bodies should appoint at least one other independent member (excluding the chair).
External majority

All departments and statutory bodies should have a majority of external members.

An independent member is considered an external member for the purposes of achieving a majority.


(By 30 June 2025)

Independent majorityAll departments and statutory bodies should have a majority of independent members (one of which is an independent chair).


(From 1 July 2025)

Fully independentAll departments and statutory bodies should have fully independent membership.

Why is it important?

Through the composition of their audit committee, entities can project and protect a culture of independence. When entities appoint their own management to their audit committees or an employee of the entity that the audit committee oversees, it blurs lines of internal accountability and transparency. It also doesn’t allow for open scrutiny of activities the individual is involved in. 

Separating the day-to-day activities of management and employees from the audit committee’s oversight role is important. It’s not appropriate for audit committee members to be holding a dual role where they are charged with governance and are answerable to the committee; it creates a conflict.

We have also seen examples across the public sector where audit committee members that are also members of management and/or employees, have been able to influence internal audit’s program to avoid testing in their area. We’re not suggesting many would take advantage of this position, but it creates a perceived conflict.

Importantly, using fully independent members also taps into a wider pool of candidates with much-needed qualifications, knowledge, and experience. 

Will the depth of discussion suffer by replacing internal members?

The short answer is ‘no’. Not only will it make your audit committee more transparent and remove any perception of bias, but it will also expand the experience beyond the entity and the Queensland public sector. This allows you to benefit from industry knowledge and other critical skillsets that may not sit within the entity itself.

This is not to dismiss the value that the experience and expertise of those internal to the entity, including management, and the Queensland public sector can bring. Rather, as we have flagged since our report Effectiveness of audit committees in state government entities (Report 2: 2020–21), entities can enjoy the best of both worlds and have these individuals participate as invited guests, or on a regular or as needed basis.

Is this just for departments?

While composition has largely been an issue for departments, it’s still relevant to statutory bodies. Given audit committees for statutory bodies are usually a subset of its board, it’s acceptable that board members are classified as independent members, that is, as being independent from management.

However, statutory bodies that don’t have a board need to apply the same considerations as a department. They need to ensure that they are mindful of not appointing management, or employees, and in future years, employees of other Queensland public sector entities.

What does ‘must have regard to’ the guidelines mean?

Section 30 of the Financial Performance Management Standard (FPMS) says that in establishing an audit committee, accountable officers and statutory bodies must have regard to the audit committee guidelines document. The use of the word regard can be misleading, as in everyday language it’s commonly used to suggest that something is optional. However, for the purposes of the FPMS and audit committee guidelines, to have regard means to comply unless the entity proves the requirement does not apply to them.

Departments are required to have an audit committee under the FPMS, making it clear the guidelines apply to them. However, statutory bodies don’t have to have an audit committee, but if they do so, they also need to comply with the guidelines (unless they can identify the guidelines, or parts of them, do not apply to them).

Therefore, in this instance where audit committees are mandated for all departments, have regard means departments must comply with the guidelines. Departments are not able to argue that the guidelines do not apply to them because it is compulsory for departments to have audit committees.

What if I don’t comply?

From a QAO perspective, we see that QT has signposted for some time that external membership is critical. It has given sufficient notice in earlier drafts of the guidelines it circulated for consultation, and most recently, it communicated the release of the latest version — moving to full independence. We also identified this as a key component for achieving good governance as outlined in our report Effectiveness of audit committees in state government entities (Report 2: 2020–21).

Given this, we intend to raise a deficiency for those not complying with transitional requirements. We see the change as a critical element of good governance, and an important means to ensuring appropriate independent scrutiny, accountability, and transparency of public service delivery. 

What else do I need to consider?

Entities should familiarise themselves with QT’s audit committee guidelines, including the requirement to prepare a composition report. Under the guidelines, each audit committee chair needs to prepare a composition report as at 30 June each year (commencing 30 June 2024) and present it to the accountable officer or statutory body. The composition report should outline:

  • remaining tenure of the chair and other members
  • compliance with each of the composition requirements (section 3.2.4 in the guidelines)
  • issues in achieving or maintaining compliance (for example, member resignation)
  • recommended planned actions to address any compliance issues.

Entities should also ensure they update their audit committee charter to reflect any changes they make to the composition of their audit committee.  

If you have any questions related to these guidelines and our audit services, please do not hesitate to contact your QAO engagement leader. 


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