Monitoring

We ensure compliance with reporting obligations as a first step to ensuring transparency of corporations. We use information from reports, complaints and other sources to determine where there are individual corporations requiring direct support or interventions, and broader issues that need to be addressed through education and training.

Promote timely lodgement of annual reports

The CATSI Act emphasises the importance of compliance and reporting as a mechanism to improve transparency and accountability. Access to corporation information is important and that information needs to be timely so that members, communities, creditors and government agencies are confident that the public Register of Aboriginal and Torres Strait Islander Corporations is accurate and up-to-date. This is why ORIC has a strong focus on maintaining high compliance rates with reporting obligations.

Reporting requirements vary according to the registered size of a corporation—large, medium or small—and its income. Unless they are granted an exemption (either from reporting at all or an extension of time), corporations are required under the CATSI Act to lodge their annual reports with the Registrar within six months of the end of the financial year; 2015–16 reports were due on 31 December 2016.

Reporting compliance, nationally

For the financial year 2015–16, 2513 of the 2604 corporations required to report were compliant. More corporations than ever before were compliant: 2513 is 77 more than the previous year (2436 of the 2509 corporations required to lodge reports complied). In percentage terms, the reporting compliance rate decreased slightly, from 97.1 to 96.5 per cent.

The number of corporations required to provide 2015–16 reports (2604) is different to the total number of registered corporations (2904 as at 30 June 2017) as it’s based on corporations registered at 31 December 2015 and excludes corporations under liquidation or being deregistered.

Reporting compliance by region

Table 15: Compliance with 2015–16 reporting, by region as at 30 June 2017

Figure 17: Reporting compliance by region as at 30 June 2017

History of reporting compliance

For the past seven years, reporting compliance has exceeded 95 per cent. That consistently high compliance rate among Aboriginal and Torres Strait Islander corporations is testament to the generally good governance of the sector, and ensures the accuracy and reliability of the free public register.

Figure 18: Reporting compliance for all corporations from 2006–07 to 2015–16

To optimise compliance, the Registrar keeps in touch with corporations and assists them as needed. Our communication strategy in 2016–17 comprised:

• periodic reminders and offers of guidance, by email, letter or telephone and through notices and messages on the Registrar’s website, the ORIC Oracle and Koori Mail
• follow-up of key groups and specific sectors, such as RNTBCs and corporations helped by bigger corporations operating in remote regions
• face-to-face visits by ORIC’s regional officers, particularly to corporations in remote locations and outside metropolitan areas—regional officers helped to complete reports as well as to build capacity for the future
• telephone reminders to newly registered corporations reporting for the first time and to corporations that were late to lodge in the previous year
• telephone outreach to corporations in breach—ORIC staff identified corporations that for whatever reason did not submit their annual reports by the due date and, where appropriate, assisted them to complete
• formal warning notices were sent to corporations that were in breach and that failed to respond to reminders
• publishing a list of corporations in breach on the ORIC website.

Assess complaints

Under the CATSI Act one of the functions of the Registrar is to deal with complaints involving Aboriginal and Torres Strait Islander corporations. Complaints serve a very useful and important purpose. A complaint can be made by phone, email, fax or in person, and it is often the first indication of disharmony at a corporation and therefore the first sign that something may be starting to go wrong.

Every six months the Registrar publishes on the ORIC website a statistical overview of complaints involving corporations—see 'Statistical reports' under 'Establishing'.

Table 16: Complaints involving corporations from 2012–13 to 2016–17

*Note: this figure includes complaints carried over from the previous year.

As shown in table 16, in 2016–17 ORIC finalised 827 complaints compared to 748 last year, representing an increase of 10.5 per cent.

Of the complaints received during 2016–17, the top three categories were:

• the conduct of directors or breaches of directors, officers or employees’ duties
• corporation meetings
• matters outside the Registrar’s jurisdiction, such as compliance with funding agreements, corporation business decisions and staffing.

Table 17: Number of complaints received by complexity from 2013–14 to 2016–17

Figure 19: Complaints received by complexity from 2013–14 to 2016–17

In 2016–17 on average, ‘straightforward complaints’ were answered within four working days (compared to three days last year), ‘detailed complaints’ were finalised in eight days (compared to nine days last year), while the most ‘complex complaints’, which often required considerable background research and follow-up with third parties, were resolved in 56 days (71 days last year).

Around half of the complaints made to ORIC over any 12-month period are ‘straightforward’. In many cases, this means that the person contacting ORIC simply wants an explanation of the rules, and some information about how they can resolve their concerns through the use of good governance practices. This is usually information on the use of the dispute resolution rule, or the rules setting out members’ rights to request a meeting, to replace directors, or to attend, speak and vote at general meetings. It may also be about a matter outside the Registrar’s jurisdiction.

Where possible and appropriate, as part of its complaints-handling process ORIC also assists the subjects of complaints by providing:

• information about good corporate governance
• guidance on what constitutes a breach of the CATSI Act or a corporation’s rule book, and how to rectify the breach
• options that may help to resolve concerns raised in a complaint
• information to corporation members and directors on rights and responsibilities under a corporation’s rule book.

The Registrar’s fact sheet, Complaints involving corporations, and policy statement, PS‑02: Complaints involving corporations, are also helpful documents. Both are available on the ORIC website.

Sometimes complainants allege fraud or misappropriation of funds at a corporation. Such allegations are taken very seriously but ORIC will always ask for evidence to support the claims. This is crucial—no case can be built or action taken if there is insufficient supporting evidence. Hearsay and suspicion alone is insufficient.

Manage disputes

The Registrar treats all disputes sensitively and takes into consideration the culture and traditions of Aboriginal and Torres Strait Islander people. With early intervention and careful management, a dispute can often be resolved and the damage minimised. A well-managed dispute can improve a corporation’s resilience. As well as consulting with all parties involved and taking care to tailor responses to suit a corporation’s particular needs, ORIC helps corporations build capacity to prevent disputes from flaring up.

In 2016–17 ORIC helped to resolve 24 disputes, compared to 34 in the previous year. Five were ongoing from the previous year; 19 were raised during 2016–17. Disputes by nature are complex. Six of the 24 disputes we helped to manage were within RNTBCs, which are more complex than usual as they have the potential to cross into native title matters, which are outside the jurisdiction of ORIC. The average resolution time for disputes in 2016–17 was 63 days.

Corporations are often very appreciative of the assistance ORIC staff provide during a dispute. In the case of this New South Wales corporation, ORIC suggested a resolution and agreed to chair the meeting at which it would be moved:

Thank you! That makes it a lot simpler and palatable … The chairperson was very appreciative of you being willing to chair the meeting … Again, thanks for your effort.

Sometimes, the presence of a neutral third party triggers a significant shift, as with this corporation: 

Your presence at the mediation and AGM and your chairing of the general meeting ensured that [the corporation] addressed the issues and conducted ourselves in a respectful and compliant manner.

ORIC responds to disputes in accordance with its Case categorisation and prioritisation model. Relevant circumstances include whether:

• the corporation receives Australian Government funding, holds land or native title, has a large number of members or has stopped functioning
• an Australian Government agency has requested help
• essential community services are at risk
• there is a broader public interest in resolving the dispute.

ORIC supports corporations in dispute by:

• listening and providing information—by telephone, email or face-to-face
• offering advisory opinions—a formal letter from the Registrar giving an opinion about how the CATSI Act and the corporation’s rule book applies to the matter
• facilitating small-group problem-solving sessions and workshops to manage the dispute
• calling, attending and chairing general or directors’ meetings
• recommending rule book amendments to reduce the likelihood of disputes and to provide an effective dispute resolution process.

See also the fact sheet, Dispute resolution, and the policy statement, PS-22: Disputes involving corporations.

Conduct examinations

In 2016–17 ORIC completed examinations of 45 corporations. In 2016–17 ORIC adopted a new performance measurement framework and has updated the way we count examinations and their outcomes, which means this year's data is not directly comparable to data from previous years.

The Registrar has the power under the CATSI Act to prompt an examination of a corporation’s books and records. The purpose of examinations is to assess the standards of corporations’ governance and the health of their finances. An examination may include checks that a corporation is:

• operating in accordance with the CATSI Act and its rule book
• keeping up-to-date financial records and managing its finances in line with its policies, procedures and delegations
• properly managing any conflicts of interest and benefits to related parties.

Each year the Registrar conducts a routine program of examinations. Additional examinations are initiated by the Registrar in response to potential governance issues raised about a corporation.

Examinations are provided for in the CATSI Act to proactively protect the interests of Aboriginal and Torres Strait Islander people and communities. They perform an important function in detecting early signs of trouble.

An examination can confirm that a corporation is managing its affairs effectively, and the governance of the corporation is to a high standard.

For more information see the policy statement PS-25: Examinations.

The 2016–17 year started with seven examinations carried over from 2015–16. During 2016–17 the Registrar started 57 examinations and completed 45.

Table 18: Examinations completed by state/territory 2016–17

Of the examinations completed in 2016–17 a share of 22.2 per cent were of corporations in the health and aged care sector and another 22.2 per cent were of corporations providing community services.

Table 19: Examinations completed by activities 2016–17

Of the 45 corporations where examinations were completed during 2016–17:

• 19 corporations (42.2 per cent) were found to be operating well so a management letter was issued and no further action was required
• 19 corporations (42.2 per cent) needed to address minor matters, so they were issued with a compliance notice under section 439-20 of the CATSI Act
• 6 corporations (13.3 per cent) were found to have serious issues. These were issued a show cause notice requiring them to explain why they should not be placed under special administration
• 1 corporation was found to be not operating and referred for deregistration.

Nineteen examinations were in progress as at 30 June 2017.

Table 20: Outcomes of examinations from 2012–13 to 2016–17

Note: In 2016–17 ORIC has updated the way we count examinations and their outcomes, which means this year's data is not directly comparable to data from previous years.

Viewing the data as a graph, below, it is clear that this year a higher proportion of examinations resulted in a management letter, and fewer resulted in a compliance or show cause notice.

Figure 20: Outcomes of examinations as a percentage of all examinations from 2012–13 to 2016–17

Conduct investigations

Potential breaches of the law, including the CATSI Act, are brought to the Registrar’s attention in a number of ways, including from:

• complaints or inquiries from members of the public
• referrals from funding agencies (including other government departments), other regulators or the police
• statutory reports from examiners, auditors and external administrators (liquidators, special administrators, voluntary administrators and receivers)
• the Registrar’s staff.

The Registrar carefully considers how to respond to all potential breaches of the law, but does not undertake a formal investigation of every complaint or matter that is brought to his attention.

In deciding whether or not to conduct a formal investigation, the Registrar considers resources, the available evidence, the public interest, and how recently the alleged breach occurred. This is referred to as an assessment. If the available information suggests a breach that is serious, ongoing, and provable, the Registrar may investigate.

A formal investigation is the first step toward initiating (or ruling out) prosecution.

2016–17 started with eight matters on hand from 2015–16:

• 2 referrals for assessment
• 6 matters under investigation

During 2016–17 a further 10 matters were referred to ORIC for assessment. In 2016–17 ORIC completed assessments of seven matters. Three were closed with no further action warranted, and four were found to warrant an investigation.

By 30 June 2017 ORIC had concluded investigations into five matters, with:

• two progressing to briefs of evidence for criminal prosecution referred to the CDPP
• one progressing to a brief of evidence for civil action
• two closed with no further action required, due to insufficient evidence.

As at 30 June 2017 nine matters remained on hand:

• five referrals for assessment
• four matters under investigation.