”The
AEC does not appropriately act upon identified non-compliance. It is
not making effective use of its enforcement powers and as such has
not implemented a graduated approach to managing and acting on
identified non-compliance.” [ANAO,
“Administration
of Financial Disclosure Requirements under the Commonwealth Electoral
Act”,
17 September 2020]
After quite a few Australians on social media bragged on Monday of last week about our independent agency conducting federal elections, it seems we all found out three days later that in fact it has rather mucky feet of clay......
Australian
National Audit Office (ANAO), Auditor-General Report No. 8 Of
2020–21, Administration of Financial Disclosure Requirements
under the Commonwealth Electoral Act, excerpt:
Conclusion
6. The
AEC‘s management of the financial disclosures required under Part
XX of the Commonwealth Electoral Act 1918 is partially effective.
7. The
arrangements that the AEC has in place to administer the financial
disclosure scheme are limited in their effectiveness as:
a.
across the four year period examined, while the AEC has obtained 5882
annual and election returns, as at 30 June 2020, 75 returns have not
been obtained. There have also been delays with the submission of
returns to the AEC with 22 per cent of annual returns and 17 per cent
of election returns lodged after the legislated due date;
b.
the AEC does not make effective use of available data sources to
identify entities that may have a disclosure obligation that have not
submitted a return;
c.
there is insufficient evidence that the returns that have been
provided are accurate and complete;
d.
there is limited analysis undertaken of returns that are obtained;
and
e.
risks to the financial disclosure scheme are not managed in
accordance with the risk management framework.
8. Compliance
monitoring and enforcement activities are partially effective with
the result that the AEC is not well placed to provide assurance that
disclosure returns are accurate and complete.
Supporting
findings
9. Across
the four year period examined by the ANAO the AEC has obtained 5882
annual and election returns, and as at 30 June 2020, has not obtained
75 returns. Compliance with legislated timeframes has also been an
issue, with 22 per cent of annual returns and 17 per cent of election
returns lodged after the legislated due date. Forty four entities
have submitted annual returns on average over 30 days late on two or
more occasions, with 12 (27 per cent) having lodged, on two or more
occasions, on average over 120 days late. Additionally, the AEC does
not make effective use of available data sources to identify entities
that may have a disclosure obligation and have not submitted a
return.
10. There
is insufficient evidence that annual and election returns are
accurate and complete. While the AEC checks that all fields have been
completed and looks for some obvious errors it does not compare the
figures disclosed with other data available from internal or external
sources, instead relying on its annual compliance review program to
provide sufficient evidence that the annual and election returns are
accurate and complete.
11. The
effectiveness of the analysis undertaken by the AEC is limited.
Annual returns submitted by third parties and donors are not
analysed. Election returns submitted by candidates, senate groups or
election donors are not analysed. The analysis that is undertaken of
annual returns submitted by political parties and associated entities
is limited as there is no detailed analysis of the financial
information, and effective data analytics and data matching
techniques are not employed by the AEC.
12. Risks
to the financial disclosure scheme have not been managed in
accordance with the AEC’s risk management framework. While the risk
appetite and tolerance statement of this framework states that the
AEC has a low/moderate risk tolerance for risks associated with the
disclosure function there is no evidence that risks relating to all
entities that have a disclosure obligation have been assessed and are
being managed appropriately. Additionally, there is no treatment plan
in place for the risk that has been identified by the AEC, being the
risk of non-compliance by political parties.
13. While
the AEC has identified some lessons that it could learn from other
electoral bodies that regulate financial disclosure schemes, there is
little evidence of any resulting changes having been made to how the
Commonwealth scheme is administered. The AEC has also not taken
adequate steps to implement agreed recommendations from a review it
commissioned in 2012 of the disclosure compliance function (which
concluded that the AEC needed to become more proactive in its
approach).
14. The
AEC does not apply an appropriate risk based approach to planning and
conducting compliance activities.
- While most reviews are planned on the basis of a risk assessment, there are a number of limitations in the risk assessment methodology employed.
- Over the period assessed the AEC did not undertake a compliance review of any election donor returns or of any annual returns that included no financial disclosures (that is, a nil return).
- The number of reviews, and the resources allocated to them, have declined considerably across the five year period analysed. These reductions do not reflect an assessment that the risk of non-disclosure or non-compliance has reduced and this situation is also at odds with the significant growth that has occurred in the total value of receipts and other figures included in the financial disclosure returns provided to the AEC.
15. Planned
compliance activities are not implemented in a timely and effective
manner. Of the 168 reviews that were planned to have been conducted
over the five year period examined by the ANAO, 58 (35 per cent) have
not been completed. While completion rates have improved in the last
two years this is due to the AEC significantly reducing the number of
planned reviews, narrowing the scope of planned reviews, and reducing
the value of the transactions being tested. There has also been a
marked decline in the number of full reviews that are being conducted
on large entities with disclosure obligations.
16. The
AEC does not appropriately act upon identified non-compliance. It is
not making effective use of its enforcement powers and as such has
not implemented a graduated approach to managing and acting on
identified non-compliance.
The
full report at:
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