Monitoring

Promote timely lodgement of annual reports

The CATSI Act emphasises the importance of compliance and reporting as a mechanism to improve transparency and accountability. Not only is access to corporation information important, 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 for 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; 2016–17 reports were due on 31 December 2016.

Reporting compliance, national

For the financial year 2016–17, 2602 of the 2746 corporations required to report were compliant. More corporations than ever before were compliant: 2594 is 81 more than the previous year (when 2513 of the 2604 corporations required to lodge reports complied). In percentage terms, the reporting compliance rate decreased slightly, from 96.5 to 94.46 per cent. Note, however, that all 142 large corporations (100 per cent) were compliant.

The number of corporations required to provide 2016–17 reports (2746) is different to the total number of registered corporations (3046 as at 30 June 2017) as it’s based on corporations registered at 31 December 2016 and excludes corporations under liquidation or being deregistered.

Reporting compliance by region

Table 16: Compliance with 2016–17 reporting, by region as at 30 June 2018

PM&C regional network	ORIC office	Number of corporations required to report	Number of corporations complaint	Percentage of corporations compliant
Eastern New South Wales	Coffs Harbour	382	367	96.07
Western New South Wales	Coffs Harbour	113	105	92.92
Far North Queensland	Cairns	311	304	97.75
Gulf and North Queensland	Cairns	117	106	90.60
South Queensland	Brisbane	220	204	92.73
Central Australia	Alice Springs	347	326	93.95
South Australia	Alice Springs	123	116	94.31
Top End and Tiwi Islands	Darwin	214	203	94..86
Arnhem Land and Groote Eylandt	Darwin	69	67	97.10
Kimberley	Broome	369	349	94.58
Greater Western Australia	Perth	379	362	95.51
Victoria and Tasmania	Canberra (national office)	102	93	91.19
	Total	2746	2602	94.76

Figure 16: Reporting compliance by region as at 30 June 2018

History of reporting compliance

For the first ten years of the operation of the CATSI Act, reporting compliance rose from 59 per cent to a peak of 97.3 per cent for the 2013–14 year. Since then the compliance rate has slipped back to 94.76 per cent.

Figure 17: Reporting compliance for all corporations for financial years from 2006–07 to 2017–18

History of reporting compliance

The Registrar devotes considerable resources to optimising corporations’ compliance with their reporting obligations:

• 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
• maintaining a list of corporations in breach on the ORIC website –
• referral of corporations in breach to the Commonwealth Director of Public Prosecutions for potential prosecution.

One of the proposed reforms to the CATSI Act, which was communicated to all corporations during the consultation period, was giving the Registrar discretionary powers to issue fines to corporations that fail to comply with their reporting obligations.

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.

Table 17: Complaints involving corporations in the last five years

Year	Number of complaints received	Percentage increase/decrease in complaints received over previous year	Number of complaints finalised*
2013–14	741	13%	750
2014–15	833	12%	834
2015–16	751	-9.8%	748
2016–17	810	8.7%	827
2017–18	831	2.6%	823

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

Of the complaints received during 2017–18, the top three areas of concern have persisted since 2016:

• the conduct of directors or breaches of directors, officers or employees’ duties
• corporation meetings
• other—matters within the Registrar’s jurisdiction but not easily placed within the other categories of complaints.

In 2017–18 on average, ‘straightforward complaints’ were answered within two working days (compared to four days last year), ‘detailed complaints’ were finalised in just over six days (compared to eight days last year), while the most ‘complex complaints’, which often required considerable background research and follow-up with third parties, were resolved in 46 days (51 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.

Table 18: Number of complaints received in the last five years, by complexity

Type	2013–14	2014–15	2015–16	2016–17	2017–18
Straightforward	225	336	331	403	409
Detailed	272	321	261	266	291
Complex	244	176	159	141	131
Total	741	833	751	810	831

Figure 18: Number of complaints received in the last five years, by complexity

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 not sufficient.

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 2017–18 ORIC helped to resolve 24 disputes—the same number as in the previous year. None were carried over from the previous year; all arose in the 2017–18 year. Disputes by nature are complex. Six of the 24 disputes we helped to manage were within RNTBCs. Because they have the potential to cross into native title matters, which are outside the jurisdiction of ORIC, disputes within RNTBCs tend to be even more complex. The average resolution time for disputes in 2017–18 was 36 days, down from the 63 days of the previous year. This reduction in resolution time is an indication that parties in this year’s disputes were willing to engage in a positive manner.

Corporations are often very appreciative of the assistance ORIC staff provide during a dispute. 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 2017–18 ORIC completed examinations of 53 corporations—eight more than the year before. During the year, as a result of additional funding from the minister, ORIC started a further 69 examinations—12 more than the year before.

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 an element of the CATSI Act, designed 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 on the ORIC website.

During the 2017–18 financial year the Registrar started 69 examinations and completed 53. Nineteen of those completed were carried over from 2016–17. As at 30 June 2018 there were 35 examinations still in progress.

Table 19: Examinations completed in 2017–18, by state/territory

State/Territory	Corporations
Australian Capital Territory	1
New South Wales	7
Northern Territory	14
Queensland	9
South Australia	0
Tasmania	0
Victoria	4
Western Australia	18
Total	53

In 2017–18 examinations were concentrated in three sectors as follows:

• 44 per cent of examinations were of corporations in the health and aged care sector
• 24 per cent were of corporations in the housing sector
• 21 per cent were of corporations that manage land.

Of the 53 corporations where examinations were completed during 2017–18:

• 25 corporations (47.2 per cent) were found to be operating well so a management letter was issued and no further action was required
• 23 corporations (43.4 per cent) needed to address minor matters, so were issued with a compliance notice under section 439–20 of the CATSI Act
• five corporations (9.4 per cent) were found to have serious issues. These were referred for a show cause process to explain why they should not be placed under special administration.

Thirty-five examinations were in progress as at 30 June 2018.

Table 20: Examinations completed in 2017–18, by activities

Main activities or corporations	Examinations
Health and aged care services	19
Drug and alcohol rehabilitation services	0
Community services	4
Land management	7
Registered native title bodies corporate (RNTBCs)	4
Other native title	1
Agriculture, forestry and fishing	2
Tourism	0
Art and cultural centres	0
Housing	8
Employment and training	3
Community stores	4
Communications (radio, broadcasting and language)	1
Total	53

Table 21: Outcomes of examinations for the past five years

Examination outcome	2013–14	2014–15	2015–16	2016–17	2017–18
Management letters	12	16	6	19	25
Compliance notice	26	33	27	19	23
Show cause notice	7	10	4	6	5
Other	1	0	2	1	0
Total	46	59	39	45	53

Figure 19: Outcomes of examinations as a percentage of all examinations 2012–13 to 2017–18

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.

The year started with five investigations in progress from the previous year. One of them was the routine batch investigation of corporations in breach of their reporting obligations. During 2017– 18 a further six investigations began. By the end of the year, ORIC had concluded six investigations, referring two briefs to the CDPP and four briefs for civil action.

As at 30 June 2018 five matters remained on hand.