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Encouraging democratic control and improved compliance practices

Organisations are emailed reminders about their compliance obligations before the obligation arises. Between 1 May 2017 and 30 June 2017, we issued:

  • 45 reminders about financial report lodgement
  • 27 reminders about the requirement to lodge information for an election
  • 24 alerts about training for office holders
  • five reminders about lodging statements of loans, grants and donations.

Documents lodged, including annual returns of information, financial reports and election information, are assessed for compliance.

The ROC applies a risk-based approach designed to direct resources to areas where non-compliance risk is highest. In the first two months of the ROC’s operation, 274 regulatory matters were transferred from the FWC and a further 387 were lodged with the ROC. Of those, 378 regulatory matters have been subject to risk-based assessment and closed.

Annual returns of information

Annual returns provide information about office holders, election requirements, branches and member numbers for the organisation.

In 2016–17, one organisation did not comply with its statutory obligation to lodge its annual report by 31 March 2017. This is the third consecutive year we have achieved 99% or higher of registered organisations who lodged their annual returns on time.

Financial returns

Financial returns include lodgements by organisations and their branches of financial reports, applications for exemptions from financial reporting and applications for reduced reporting requirements.

Compliance rates for the lodgement of financial returns within the statutory timeframe have incrementally improved over three years. Ninety-eight per cent of reporting units lodged financial returns on time during 2016–17, compared to 95% in 2014–15 and 96% in 2015–16.

Figure 5: Percentage of financial returns lodged within statutory timelines, 2014-17

figure-5-percentage-of-financial-returns-lodged-within-statutory-timelines-2014-17.png

Improving financial reporting compliance

To improve compliance with financial reporting requirements, the ROC has continued a risk-based approach developed by the FWC. The contents of all reports are reviewed against key compliance requirements (primary review) and around 20–25% are subject to advanced review. Applications for exemptions from financial reporting and applications for reduced financial reporting requirements are reviewed against all legislative criteria that are required to be met to gain an exemption from reporting or reduced reporting requirements.

The ROC has adopted measures developed and used by the FWC to assess financial reporting compliance. These measures include whether:

  • disclosures, required by the reporting guidelines, are made
  • all statutory timeframes are met
  • the required documents are lodged
  • appropriate notes are made regarding the preparation of accounts.

Seventy per cent of financial reports initially met the compliance measures in 2016–17, compared to 56% in 2015–16.

Table 8: Compliance of financial reports due in 2015–16 and 2016–17
Type of review 2016-17 2015-16
Primary review 68% 48%
Advanced review 45% 39%
Review of applications for reduced reporting requirements and applications for exemptions 98% 93%
Total of financial reports that met compliance 70% 56%