Boards must comply with their statutory obligations under all the legislation which affects them.
Public entities are most directly affected by their establishing Acts and by other Acts including the Financial Management Act and the Audit Act. These Acts concentrate on improving standards of public administration, regulating stewardship of assets and providing for accountability by public entities.
What legislation affects a public sector entity?
There is a large body of Acts of Parliament that apply to a public entity. The entity's establishing legislation and the
Public Administration Act 2004 (
PAA), are obvious examples. Other legislation may be grouped in the following way:
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Other Acts include the:
- Equal Opportunity Act 1995
- Environment Protection Act 1979
- Fair Trading Act 1985
- State Superannuation Act 1988
- Taxation legislation both State and Commonwealth
- WorkCover and Occupational Health legislation
- Victorian Managed Insurance Authority Act 1996
- Corporations Act 2001 (Commonwealth)
- Trade Practices Act 1974 (Commonwealth)
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What is compliance?
Compliance is about ensuring that the requirements of laws, regulations, industry codes and organisational standards are met.
A compliance program is an important element in the governance of an organisation and should:
- prevent, identify and respond to breaches of laws, regulations, codes or organisational standards occurring in the organisation
- promote a culture of compliance within the organisation
- assist the organisation in being a good corporate citizen
There are two important steps to begin the compliance process:
- identify the obligations to be complied with
- develop a compliance policy. The policy should cover:
- the primary objective e.g. so the Board can be satisfied that all possible measures are being taken by the public entity and its employees to comply actively with all relevant legislation, standards and codes
- the nature of the proposed compliance program that will ensure the public entity can operate and be compliant to manage risks, identify compliance responsibilities for all positions and incorporate an appropriate, consistent approach
(See linked module on
Directors' Code of Conduct and guidance notes.)
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How do Boards ensure compliance with legislative obligations?
A Board should develop a compliance program that suits the compliance needs of the public entity.
In order to ensure compliance with statutory obligations, the Board should aim to have compliance procedures embedded in everyday operational processes, guidelines, manuals and training programs.
Sample:
compliance program approach (PDF
20.3KB)
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What happens if the Board or public entity is not compliant?
- criminal prosecution This has been known to occur where a public entity breaches occupational health and safety legislation or environment protection legislation – it can result in fines or imprisonment. Some of the accountability and stewardship legislation requires a Board to permit officers from the Office of the Ombudsman or the Auditor-General to enter public entity premises and imposes criminal penalties for obstruction. (See linked modules on Audit Act 1994 and Ombudsman Act 1973 )
- civil action for damages for breach of statutory duty. For example, Occupational Health and Safety legislation. In most cases this legislation provides for a fine or other penalty when someone fails to perform a statutory duty but the courts allow a person injured by a breach of a statutory duty to seek compensation for their injury
- adverse assessment by statutory bodies. The Ombudsman and the Auditor-General are permitted by legislation to make reports to the Parliament (the Auditor-General) and, the portfolio Minister and Governor in Council (the Ombudsman)
- additional reporting to the Minister and closer monitoring by the Department
- appointment of an administrator where legislation permits
- resignation or removal of Board members
Non-compliance also reflects poorly on Departments and Ministers.
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Self- assessment questions about compliance
- Has the Board established a system of monitoring agency compliance with:
- government policy and Board directives
- legislation?
- Are processes in place to ensure external reporting requirements are met?
- Does the agency have an effective internal and external audit program?
- Does the Board have an audit/risk/compliance committee with an external member?
- Is there full accountability for resources and processes?
Good practice tips for compliance with legislation:
- Ensure that a compliance program suited to your public entity is in place and understood.
- Integrate the public entity's compliance action plan with its business, operational and financial plans.
- Ensure staff understand their obligations and the meaning and importance of compliance in their day to day work.
- Seek briefings on obligations and compliance from public entity employees on all Acts that affect the public entity.
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