Compliance investigations

Overview

The AEC has powers under s.316 of the Commonwealth Electoral Act 1918 (the Act) to undertake investigations into compliance with the disclosure obligations contained in Part XX of the Act. These investigations are initiated through the issuance of a formal notice by an authorised officer of the AEC. A formal notice requires a person to provide documents and other evidence, in writing or orally, in a manner and at a place and time specified in the notice. There are four categories of investigation under s.316:

1. Under s316 (2A) of the Act the AEC conducts investigations of a sample of annual disclosure returns lodged by political parties and associated entities.
   
   Notices can be issued under s316 (2A) to:
   • any agent or any officer of the political party, or
   • the financial controller of the associated entity or any officer of the associated entity, or
   • a prescribed person (being a person who is, or may be required to furnish a return under subsection 305A (1) (namely donors to candidates) or under (1A) in relation to the election).
   
   
2. It is mandatory under s.316(2D) for the AEC to investigate a gift or disposition of property of $25 000 or more to a registered political party or candidate.
3. Section 316(3) of the Act enables an authorised officer of the AEC to issue a notice upon any person that authorised officer reasonably believes is capable of producing documents or other things, giving evidence relating to a contravention or possible contravention of s.315, or relating to matters that are set out or required to be set in a claim under Part XX of the Act. This section allows notices to be issued on any third party. A notice may be issued under s.316(3) to support an investigation commenced under s.316 (2A). A notice under s.316(3) may be issued independently of any existing investigation and occur in circumstances where an external event may have drawn the AEC's attention to a contravention or possible contravention.
4. Section 316(3A) allows an authorised officer of the AEC to issue a notice upon a person who is, or was, at any time an officer or financial controller of an entity, for the purpose of producing documents or other things or giving evidence relating to whether an entity, is or was, at a particular time, an associated entity.

A notice may be issued more than once during the course of an investigation where an authorised officer forms a view that further documents/evidence are required. Where a party has active party units (for example, local sub-branches, and electorate committees) the AEC may issue a notice during the course of the investigation to secure the financial records of a sample of these party units. Further notices may also be issued during an on-site visit where further documents/evidence are identified as relevant and which have not yet been required to be produced under earlier notices.

In issuing these further notices, the AEC is mindful of the need to balance the conduct of an effective investigation against imposing an excessive regulatory burden on the person on whom a notice has been issued. The AEC will always carefully consider issuing of notices pursuant to s.316 during the course of an investigation.

There is a legal obligation to comply with a notice issued under s.316 of the Act. It is an offence under s.316(5A) to fail to comply with a notice under sub-section (2A), (3) or (3A) to the extent that the person is capable of complying with the notice.

Records requested

A notice issued under s.316(2A) will require production of the following documents and records:

• The full set of financial records including the general ledger and all subsidiary ledgers
• The chart of accounts
• The trial balance as at 30 June
• Statements of all bank/financial institution accounts including any investment accounts and broker accounts, for the 13 month period from 1 July to 31 July of the year following the financial year under review
• Bank reconciliation statements for each account as at 30 June of the financial year under review and 30 June of the previous year
• Audited financial statements for the financial year
• Terms and conditions of all loans outstanding as at 30 June
• A list of all gifts in kind received during the financial year, including their valuation
• The working documents used in collating the disclosure return clearly demonstrating how the disclosed total receipts, total payments, and total debt figures were derived.

The above list does not constitute an exhaustive list of the records or other evidence which may be required during an investigation.

Whenever a political party or associated entity uses computerised accounting software or otherwise maintains or possesses financial records electronically, the AEC will require those records to be provided in an appropriate electronic format.

Security over delivery of records

A notice under s.316 (2A) may recommend measures that could be undertaken for additional security. However, the measures taken to exercise security over records delivered in compliance with a s316 notice is ultimately the responsibility of the person on whom the notice is issued.

Security of financial records held by the AEC

The AEC ensures the integrity of financial information provided in compliance with disclosure obligations under Part XX of the Act and that a high level of security and confidentiality is maintained.

Investigation reports

At the conclusion of an investigation conducted under s.316, the AEC will form an opinion as to the factual issues investigated. The AEC may issue a report to the person on whom the notice was issued containing its opinion, particularly in respect of any non-compliance issues, for the purpose of assisting them to comply with Part XX of the Act. The issuing of any such report will be at the AEC's discretion and consistent with its policy to support compliance with the Act wherever it is reasonably possible to do so. At the conclusion of an investigation, the AEC may refer the factual evidence and the opinion it has formed to the Commonwealth Director of Public Prosecutions for consideration. The AEC will only take this step where it considers that the person/party/entity in question acted unreasonably in not complying with Part XX of the Act.

Section 316(3) of the Act enables the AEC to investigate contraventions or possible contraventions of offences as listed under s.315 of the Act.

• Outcomes from investigations conducted under s316(3)