Financial reporting is essential for transparency to members of registered organisations

Case Name

General Manager of Fair Work Australia v Health Services Union [2013] FCA 1306 external-icon.png 

What were the issues?

The National Office of the Health Services Union (HSU) admitted failing to prepare an operating and financial report relating to its financial year ending in June 2007. 

The General Manager of Fair Work Australia and the HSU made a joint submission on penalty and the Court accepted that a civil penalty of $22,500 should be imposed.

The HSU admitted breaches of sections 253 and 254 of the Fair Work (Registered Organisations) Act 2009.

What happened?

On 30 April 2009 the National Office of the HSU lodged an unsigned and undated committee of management statement and operating report with the Industrial Registrar relating to its financial year ending on 30 June 2007. 

The HSU’s committee of management had not passed a resolution that the financial report gave a true and fair view of the financial performance of the organisation, or made other declarations as required by the Reporting Guidelines. 

The Court accepted that the financial report and operating report were not prepared as soon as practicable after the end of the financial year, having been lodged, unsigned, about 16 months late.

The HSU admitted that the documents were non-complaint and not prepared as soon as practicable after the end of the financial year. At the relevant time the maximum penalty was $33,000 for each breach.

What can organisations learn from this?

Organisations risk significant penalties if they do not comply with their reporting obligations in a timely manner to enable their members to understand the true financial position of the organisation. 

The committee of management statement is an important part of the financial report and a committee of management must carefully consider and make a resolution about the matters required by the Reporting Guidelines.

What did the judge say?

Justice Middleton at [26] explained the significance of the legislative requirements in setting high standards of governance:  

It is important to appreciate that each of the contravened provisions are key to achieving the relevant statutory objectives, including setting standards to “encourage the efficient management of organisations and high standards of accountability to their members.

At [27], Justice Middleton also emphasised the importance of proper financial reporting for members of the organisation: 

[Sections] 253 and 254 promote transparency and accountability in the financial management of organisations. The information that is required to be provided by these provisions enables the members of an organisation to understand the true financial position of the organisation, such that members are in a position to exercise appropriate control over the management.  

What was the outcome and the penalty?

Justice Middleton imposed a penalty of $22,500 on the HSU in accordance with the joint submission of the parties.  

Court reference

VID 1128 of 2012

 

Disclaimer
This information is of a general nature only and is not legal advice. The case summaries are designed to assist in gaining an understanding of the relevant provisions of the legislation and the work of the Registered Organisations Commission.