Funding and Disclosure Report - Election 2001: Compliance Reviews

Updated: 7 January 2011

The AEC has investigatory powers under the Act to determine whether a person with financial disclosure obligations has complied with those obligations. The AEC undertakes a regular compliance review program, and also investigates disclosure matters that come to its notice through other means where this appears to be warranted.

Subsection 17(2C) of the Act specifically requires that the AEC include in this report particulars of the operation of subsection 316(2A), which provides authority for the AEC compliance review program.

AEC compliance reviews apply the principles set out in the Australian Auditing Standards to provide assurance as to whether a political party, associated entity or donor has met its disclosure obligations under the Act. Eighty-five compliance reviews were conducted in 2000–01 and 30 were conducted in 2001–02. Compliance reviews are not carried out during a federal election period.

Three main issues arose out of these routine compliance review activities:

  • Fundraisers – Parties and contractors were unclear about how to report income received through the use of contractors to undertake fundraising activities. A widely reported example was that of the use of Markson Sparks! as a contractor to organise and manage certain fundraising activities on behalf of the NSW branch of the Australian Labor Party. While the party reported donations from the contractor, and the contractor lodged a donor return in respect of various fundraising amounts, the amounts reported by the party and the contractor did not reconcile. As the Act requires donor returns from all persons who made donations to the fundraisers above the statutory disclosure threshold of $1 500, and also requires the party to provide details of such donations, it was not sufficient for the contractor and the party to aggregate these details. As a result, the party lodged an amended return and all political parties were reminded of the reporting obligations applicable to contract fundraising activities;
  • Reporting of loans – Failure by some parties to note that the legislation had changed to include a requirement to keep records of, and report, details of loans received from other than a financial institution. This resulted in failure to include required details in their financial disclosure returns. The AEC wrote to all registered political parties about the reporting requirements and seeking any necessary amendments to financial disclosure returns;
  • Availability of records – Pauline Hanson's One Nation party was unable to properly complete financial disclosure returns due to the winding up of certain aspects of party business and the alleged disappearance of financial records. The AEC found it necessary to liaise with the party and the provisional liquidator to ensure that the party had access to those financial records that were available in order that the party could lodge a more properly completed return. While amended returns were received, there remains doubt as to whether these were complete given the unusual circumstances involved.

In addition, compliance reviews highlighted to the AEC the diverse nature of parties, ranging from those that are large and mature with well-established systems through to those that are emerging, or are in decline. The reviews provide an opportunity for the AEC to inform parties about their disclosure obligations, and to gain an understanding of some of the issues parties face in meeting their compliance obligations.

While the majority of parties have satisfactory records and systems, there remain a number of parties (both small and large) which cannot, or will not, meet their statutory obligations in a timely way. The number of amended disclosure returns lodged (see Table 3) is in large part an outcome of the compliance review program.

Other matters

A number of matters were raised with the AEC (e.g. at Senate Estimates hearings) or in the media about whether certain financial transactions were being correctly reported in the appropriate return.

Matters raised at Senate Estimates hearings included issues and transactions related to the Citizens' Electoral Council (a registered political party), the National Club, the Millennium Forum, the Greenfields Foundation and Austereo. These matters were examined by the AEC through the compliance review program and additional investigatory activities as appropriate. Amended returns were obtained where necessary.