ORIC yearbook 2014–15: Performance reporting | Regulation

See ORIC yearbook 2014–15 table of contents

Regulation

Examinations

In 2014–15 ORIC completed 59 examinations.

An examination reviews a corporation’s books and records and makes an assessment of the corporation’s governance standards. It includes checks that:

  • the corporation is being run properly according to its rule book and the CATSI Act
  • the corporation is managing its finances properly with proper records, procedures and policies
  • the directors, officers and employees are performing their duties appropriately
  • any material personal interests and benefits to related parties are being managed appropriately.

Examining a corporation’s books contributes to the intent of the CATSI Act as a special measure to advance and protect the interests of Aboriginal and Torres Strait Islander people and their respective cultures. Examinations are useful for early detection of issues in a corporation. They are also equally effective at revealing corporations that are running well as those that are experiencing financial or governance difficulties.

The Registrar conducts a rolling program of examinations to assess the corporate governance and financial health of a corporation. Some examinations undertaken by the Registrar are in response to potential governance issues raised about a corporation.

For more information see ORIC’s policy statement PS-25: Examinations available on the ORIC website.

This financial year the Registrar completed 59 examinations as set out in table 7.

Table 7: Examinations by state/territory 2014–15
Location by state/territory Number of corporations
Australian Capital Territory 0
New South Wales 6

Northern Territory

15
Queensland 13
South Australia 7
Tasmania 0
Victoria 2
Western Australia 16
Total 59

The examination program for this financial year covered corporations with the following activities:

Main activities of corporations Number of examinations
Table 8: Examinations by activities 2014–15
Health and aged care services 15
Community services 11
Land management 7
Registered native title bodies corporate (RNTBCs) 5
Other native title 4
Art and cultural centres 3
Housing 3
Employment and training 3
Native title representative bodies 2
Heritage, culture and language 2
Community stores 1
Communications 1
Education and schools 1
Women’s advocacy 1
Legal services—community or family violence 0
Total 59
Outcomes of examinations

The outcomes of the 59 examinations conducted over 2014–15:

  • 16 corporations (27 per cent) were found to be operating well and required no further action. They were each sent a management letter.
  • 33 corporations (56 per cent) were required to rectify less serious matters which were settled through the issue of a compliance notice[2] under section 439-20 of the CATSI Act.
  • 10 corporations (17 per cent) had serious findings and were issued with a ‘show cause notice’ under section 487-10 of the CATSI Act. These corporations were required to explain why they should not be placed under special administration.
Table 9: Outcomes of examinations from 2010–11 to 2014–15
Examination outcome 2010–11 2011–12 2012–13 2013–14 2014–15
Management letters 29 19 22 12 16
Compliance notices 34 31 26 26 33
Show cause notices 7 9 1 7 10
Other 2 2 2 1 0
Total 72 61 51 46 59

 

[2] Compliance notices provide direction for corporations on how to improve their standards of corporate governance and financial management after an examination is done.

Compliance notices are made available in the public Register of Aboriginal and Torres Strait Islander Corporations. They provide valuable information to a corporation’s members and other stakeholders (such as funding agencies and creditors) about the standards of corporate governance and financial management in a corporation at a given point in time.

Special administrations

In 2014–15:

  • 2 special administrations continued from the previous year.
  • 10 special administrations were started.
  • 7 special administrations were completed.
  • 5 special administrations were still in progress as at 30 June 2015.

Special administrations enable the Registrar to provide early and proactive assistance to corporations when they experience financial or governance difficulties. They allow the Registrar to appoint an independent, suitably qualified person (the special administrator) to work with a corporation to fix its internal problems and restore it to good health. Once this is achieved, the special administrator returns control of the corporation to its members.

In all cases the special administrator works in the best interests of the corporation and its members. Special administrations are quite different to receiverships, liquidations or voluntary administrations as defined under the Corporations Act 2001, which are usually driven by the interests of creditors.

The grounds for special administrations are broad. They are not restricted to insolvency or the inability to pay a debt. Section 487-5(1) of the CATSI Act outlines the grounds on which the Registrar can determine to place a corporation under special administration.

Five of the 10 new special administrations (or 50 per cent) in 2014–15 were started after the directors wrote to the Registrar asking for assistance.

Before it is placed under special administration, a corporation is accorded a period of natural justice. Through a ‘show cause’ procedure it’s asked why it should not be put into special administration. The time the corporation takes to respond depends on its particular circumstances but the Registrar usually allows at least 14 days.

The aim of every special administration is to achieve one or both of the following:

  • restore good operational order to the corporation—usually after a corporation has not complied with a provision of the CATSI Act or its rule book, has experienced financial difficulties or there has been a dispute
  • restructure the corporation—usually after the directors or members have asked the Registrar to intervene to review governance or organisational structures.

Special administration is unique to the CATSI Act. It is a special measure that acknowledges the role and circumstances of Aboriginal and Torres Strait Islander corporations.

Seven special administrations ended during 2014–15. Three were completed within six months in line with ORIC’s key performance indicator. Successful business turnaround was achieved in five corporations (71.4 per cent) and they were handed back to members’ control.

Table 10: Corporations placed under special administration 2014–15
Date appointed ICN Corporation | Special administrator(s) Date ended or due date | Outcome
17 Jul 2014 4709 Githabul Nation Aboriginal Corporation RNTBC 27 Feb 2015
    Peter McQuoid Handed back to members’ control
4 Aug 2014 624 Dubbo Koorie Housing Aboriginal Corporation 30 Jan 2015
    Peter Saunders Handed back to members’ control
15 Sept 2014 7877 Nauiyu Nambiyu Aboriginal Corporation 1 May 2015
    Austin Taylor and Stuart Reid Handed back to members’ control
24 Nov 2014 532 Minimbah Pre-school, Primary School Aboriginal Corporation 27 May 2015
    Brian Woods Handed back to members’ control
23 Dec 2014 248 Aboriginal Corporation for Sporting and Recreational Activities 23 Jun 2015
    Frank Lo Pilato and Tony Grieves Liquidator appointed
16 Feb 2015 7355 Pika Wiya Health Service Aboriginal Corporation 19 Aug 2015
    Jack James and Paula Cowan In progress
3 Mar 2015 3789 Mamu Aboriginal Corporation RNTBC 30 Sept 2015
    Gerry Mier and Tony Jonsson In progress
6 Mar 2015 500 Murchison Region Aboriginal Corporation 3 Sept 2015
    Andrew West and Kehsai Tesfa In progress
9 Mar 2015 1061 Mungoorbada Aboriginal Corporation 10 Sept 2015
    Austin Taylor and Stuart Reid In progress
8 Apr 2015 7573 Thamarrurr Regional Authority Aboriginal Corporation 7 Oct 2015
    Austin Taylor and Stuart Reid In progress

 

Table 11: Corporations with a special administration continuing 2014–15
Date appointed ICN Corporation |
Special administrator(s)
Date ended or due date |
Outcome
18 Dec 2013 2379 Southside Housing Aboriginal Corporation 23 Jan 2015
   

Frank Lo Pilato and
Tony Grieves

Assets transferred to another body and corporation deregistered
28 Jan 2014 3630

Bunurong Land Council (Aboriginal Corporation)

18 Jul 2014

   

Alan Eldridge

Handed back to members’ control

Case study: Restructure helps shore up corporation in the Daly River

On 8 May 2013 Nauiyu Nambiyu Inc., now Nauiyu Nambiyu Aboriginal Corporation (NNAC), transferred its registration from the Northern Territory’s Associations Act to the CATSI Act. This turned out to be a very good move for the corporation located at Nauiyu, also known as Daly River, in the Northern Territory.

Just over a year later, NNAC’s directors acknowledged a range of operational and financial problems and placed a call for help to the Registrar. On 15 September 2014 NNAC was placed under special administration.

As special administration is only available under the CATSI Act, this iconic corporation may have seen a very different outcome without access to this regulatory assistance.

The special administrators worked with the corporation’s members through a complex process to turn the corporation around.

The special administrators also needed to address misinformation and misunderstanding about the corporation within the community and with the corporation’s stakeholders. NNAC’s story is an example of how damaging a lack of transparency can be to a corporation’s reputation.

NNAC was handed back to its members at the beginning of May 2015.

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