Financial compliance

Updated: 14 November 2011

All financial compliance activities have a strong focus on educating and informing those who have financial disclosure obligations, with the aim of improving the timing and quality of disclosure for those reviewed, and their respective donors.

The AEC has a number of powers to investigate compliance. It utilises these powers in two ways, the compliance review program and Special Matters investigations.

Subsection 316(2A) of the Act gives the AEC authority to investigate whether persons with specified financial disclosure obligations have met those obligations. Subsection 17(2C) of the Act requires the AEC to include particulars of the operation of ss.316(2A) in this report.

The compliance review program utilises ss.316(2A) to check whether financial disclosure returns comply with the statutory disclosure obligations in Part XX for political parties and associated entities. Compliance reviews are routine in nature, not being initiated by suggestion of any breach of disclosure obligations, and in general terms can be seen as being similar to financial statement audits.

The aim of compliance is to review annual disclosure returns lodged by political parties. Due to resource limitations, some political parties will have each year's return reviewed while others will receive less frequent coverage, although every party can expect to receive at least one compliance review in the course of a three year electoral cycle. It is usual practice to review returns of associated entities in conjunction with a review of their related political party.

Special Matters investigations are carried out under ss.316(3) of the Act to determine if an offence may have been committed under s.315, or issue a notice under ss.316(3A) to establish whether an organisation is an associated entity or was an associated entity at a particular time.

There is currently no provision in the Act empowering the AEC to undertake compliance reviews on donors, candidates, Senate groups or third parties who incur political expenditure. However, changes contained in the Bill would enable the AEC to conduct compliance reviews of all participants in the disclosure scheme. With the importance of independents in the current parliament a compliance review of their return would be an important element of the disclosure schemes aims.

Compliance review program

Highlights of the compliance review program between 2007 and 2011 include:

  • better identification and reporting of gifts-in-kind,
  • improvement in parties' internal reporting and record keeping,
  • increased use of electronic records to undertake reviews of political party financial records.

Compliance reviews begin with a request to a political party or associated entity to supply relevant documents against which the furnished disclosure return can be verified, such as their accounting records, bank statements, and other financial documents. This request is accompanied by a notice under ss.316(2A) which requires the agent of a political party or financial controller of an associated entity to produce the required documents in the manner specified.

The review process uses audit procedures and techniques to verify the annual returns of political parties and associated entities by reference to underlying financial and other records and systems. The review process also considers whether the records and systems capture all relevant information, including 'in-kind' transactions.

During 2009 and 2010 the AEC requested records electronically, where they existed, and undertook increasing amounts of analysis electronically on a dedicated secure network at the AEC's National Office in Canberra. From 2011 the AEC will undertake all reviews electronically where such records exist (almost all parties and associated entities use electronic accounting packages). Electronic records allow for compliance reviews to be undertaken at the AEC's premises, with less disruption to the political parties and associated entities, resulting in more comprehensive, efficient and cost effective reviews.

The review of a political party's financial records may include some or all of the underlying party units (for example, branches, clubs and committees) and associated entities. As a major party may have more than 500 party units, these are examined on a sample basis.

The review may also entail a visit to the office of the party or associated entity to view supporting documents and records. During such a visit, the review findings will be discussed in detail with the party.

During the period between 2007–2010 the AEC did not use its powers under ss.316(2A)(c) to require persons to appear and give evidence. Neither did the AEC prosecute any person for failing to provide the required documents in this period.

The majority of compliance reviews result in amended returns being lodged.

There is a legal obligation to comply with a notice issued under ss.316(2A) of the Act with ss.316(5A) making it an offence for failing to comply, but only where a person has not done so to the extent that they are capable. However, the AEC is of the view that the current penalties that apply for failure to comply with a s.316 notice are not substantial enough to dissuade noncompliance, and should be increased.

Refusal or failure to comply with a s.316 notice should trigger an administrative penalty. There should also be an equivalent to the accumulating penalty for each day that compliance remains outstanding.


The Act be amended to increase penalties for failure to comply with a s.316 notice, with an equivalent to the accumulating penalty for each day that compliance remains outstanding.

Special matters

The AEC considers matters that come to its attention to determine whether disclosure obligations have been met or whether a disclosure obligation exists.

Matters which come to the attention of the AEC are the subject of a preliminary assessment, using the information which has come to notice and routine enquiries, as to whether further investigation is warranted. Where appropriate the AEC will utilise its powers to investigate under ss.316(3) of the Act.

Special matter enquiries undertaken between the 2007 and 2010 elections include the following matters:

Free flights accepted by Mr L Springborg MP – this special matter was raised as a result of allegations made in The Australian newspaper about Mr Springborg accepting free flights. The AEC's enquires determined that Mr Springborg had accepted free flights, but they were either appropriately disclosed or accepted by Mr Springborg in his capacity as a Queensland MP and therefore no disclosure obligation existed.

Alcoa Allsite Operators – this special matter was raised as part of the AEC's ongoing donor discrepancy identification. When a donor return could not be obtained an investigation was initiated which identified the donor and resulted in a donor return being lodged.

Provision of a ute to Member for Griffith (the Hon Kevin Rudd MP) – this matter was identified in an interview with ABC online with the then Prime Minister Kevin Rudd, regarding a vehicle he had the use of as a mobile office. The AEC investigation determined that Mr Rudd had received the vehicle in his capacity as a Member of Parliament and therefore no disclosure obligation to the AEC existed.

GetUp Limited – the AEC examined the status of GetUp Limited following requests from Opposition Senators in September and October 2010, to determine whether it is an associated entity. The AEC had previously investigated the status of GetUp Limited in 2005.

The AEC reviewed the information in its possession along with additional information that has come into the public domain since 2006 including company and internet searches and media reports. Following an investigation it was determined that there is still no information or available evidence that indicates that GetUp meets any of the six grounds set out in the definition of "associated entity" as provided in s.287(1) of the Act, and therefore no disclosure obligation as an associated entity exists.

Health Services Union (HSU) – this matter was raised as a result of allegations made in the Sydney Morning Herald regarding HSU expenditure that was authorised by Mr Craig Thomson that had not been disclosed. The tests applied by the AEC concluded that, while returns from the HSU were lodged late, there was no public interest at stake in pursuing further action in relation to late lodgement of the returns. This is because the principle aim of the Act is to secure their lodgement and make them available for public inspection.

Coastal Voice – this matter was raised by the request of an Opposition Senator in August 2010 to determine whether the Coastal Voice Community Group Incorporated (Coastal Voice) was an associated entity of the Australian Labor Party. After examining information provided with the request, along with other publicly available information from ASIC, media reports and the internet, the AEC concluded that there was no available evidence to show that Coastal Voice operates wholly, or to a significant extent for the benefit of the ALP, or that it meets any of the six grounds set out in the definition of "associated entity" as provided in s.287(1) of the Act.


No disclosure matter has been prosecuted since the 2007 election. Eight cases for failure to lodge a disclosure return were referred to the CDPP on 14 May 2010. On 28 July 2010, correspondence was received from the CDPP advising that there was insufficient evidence to commence prosecutions in all eight matters.

No further action was taken in these matters.

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