Reporting Non-compliance

This page is about reporting non-compliance with the PGPA Act, rules and related instruments (finance law).

It covers what to report, when to report, and how to report.

RMG-214 Notifications of significant non-compliance with the finance law provides additional guidance and is available under Tools and templates.
 

What do I need to report?

Accountable authorities must notify their responsible Minister of any significant issue that may affect their entity. This includes significant non-compliance with the finance law.

Accountable authorities must also notify the Finance Minister of significant non-compliance with the finance law reported to their responsible Minister.
 

What is the finance law?

What is ‘significant’ non-compliance with the finance law?

The accountable authority determines what a significant non-compliance with the finance law is based on:

  • the specific circumstances
  • the operating context of the entity
  • consultation with the responsible Minister.

Accountable authorities are encouraged to consider:

  • materiality – the importance of the issue relative to the entity’s size and operations (including the value and volume of non-compliance)
  • occurrence – whether the non-compliance is ‘one-off’ or repeated
  • risk – whether the issue is likely be politically sensitive, impact the reputation, public perception, financial position of the entity or others.  
     

Examples of significant non-compliance with the finance law

Significant non-compliance with the finance law would generally include:

  • high volume, high value and/or repeated instances of non-compliance with the Commonwealth Procurement Rules or the Commonwealth Grants Rules and Guidelines
  • high volume, high value and/or repeated issues reflecting internal control shortcomings (e.g. non-compliance with internal approval requirements for arrangements and commitments)
  • serious fraudulent activity by officials (e.g. theft, accounting fraud, making or using false documents)
  • serious fraudulent activity by non-officials (e.g. independent contractors), reflecting internal control shortcomings
  • non-compliance issues that are likely to impact the entity’s financial sustainability, or likely to be of particular political or public interest.

Your entity may also be subject to additional requirements to report fraud under the Commonwealth Fraud Control Framework. For further information, refer to the Attorney-General’s website guidance: Preventing, detecting and dealing with fraud and corruption and Commonwealth Fraud Control Framework.
 

Exceptions

Accountable authorities do not have to report significant non-compliance where it:

  • involves breaches of the general duties of officials with no connection to the management of public resources
  • is inconsistent with your entity’s enabling legislation
  • is prohibited by Commonwealth law to disclose information.
     

Matters that are not ‘significant’

Not all matters will be significant enough to warrant reporting. Matters that are not reportable include:

  • low volumes of instances where grants and procurements are reported late
  • low volume and/or non-systemic instances of non-compliance with the entity’s accountable authority instructions
  • minor instances of non-compliance with the duties of officials where the matter is dealt with by management
  • unintentional credit card misuse that is identified by the relevant official and/or the entity’s system of internal control and repaid. 

Accountable authorities are encouraged to review all instances of non-compliance against the appropriateness of the entities system of internal controls.

The PGPA Rule also requires audit committees to review the appropriateness of the accountable authority’s system of internal control. Further information can be found at audit committees.
 

When do I need to report?

Accountable authorities must notify the responsible Minister of significant non-compliance as soon as practicable after becoming aware of the issue.

Accountable authorities are encouraged to notify the Finance Minister at the same time they notify the responsible minister.

What constitutes ‘as soon as practicable’ will vary with circumstances and may depend on the nature and risk associated with an instance of significant non-compliance.

For example, some significant issues require immediate notification (e.g. due to their scale or ramifications). It may be more appropriate to group other issues together and notify according to a schedule agreed with the responsible Minister.

Accountable authorities are encouraged to report suspected fraud that may be significant at an early stage, even where investigations may be ongoing (it is not necessary to report sensitive details). This supports ministers in discharging their responsibilities.
 

How do I report?

When notifying the Finance Minister and the responsible Minister, accountable authorities are encouraged to include a description of the nature of the non-compliance issue and the action taken, or proposed to be taken, to help prevent the non-compliance happening in the future.

Finance has developed a model letter to assist entities in notifying the Finance Minister of instances of significant non-compliance with the finance law. Entities can use this model to notify their responsible Minister. The model is not mandatory.

For instances of significant non-compliance affecting two or more entities each entity should report separately.

Reporting fraud

When reporting fraud to the Finance Minister, a high-level description is sufficient (sensitive details are not necessary). For example:

[Entity] has identified [number] instances of potential fraud that are currently under investigation. The investigation involves [insert brief description, e.g. possible misuse of a Commonwealth credit card over an extended period of time. The quantum of money involved is yet to be determined, however the issue may attract media attention].

Accountable authorities are not required to provide progress updates on the matter to the Finance Minister (including once the investigation has concluded). The Finance Minister may choose to follow up with the relevant entity.

Additional reporting in the annual report

Commonwealth entities’ annual reports must include a statement of any significant issues reported to the responsible Minister during the reporting period that relate to non-compliance with the finance law. The report must also include an outline of the actions taken to remedy the non-compliance.

Accountable authorities may provide additional information to update the status of investigations. For example:

XX instances of possible serious fraud were reported to the responsible Minister during the 20XX-XX reporting period. Of these, XX instances were found not to constitute fraud, XX have been referred to the Australian Federal Police, and XX are under ongoing investigation by the entity.

Accountable authorities may decide whether to provide an update on matters reported in previous reporting periods. For example:

[Entity] previously reported that it was investigating an instance of fraud in the 20XX-XX annual report. This investigation was completed in 20XX-XX and did not result in any findings of fraud.


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