Author Archives: Joanne O'Brien

About Joanne O'Brien

An expert with years of experience in, and passion for, advising the not for profit sector in all aspects of their operations from creation, management, mergers and governance through to risk and compliance and beyond, particularly in the aged care sector.

Your Guide to the Royal Commission

The terms of reference for the Royal Commission have been released but there is still a lot of detail to come about how submissions can be made and how hearings will be conducted.  We have prepared a fact sheet about the powers of the Royal Commission and how they can be exercised.

You can access the fact sheet here.

We will continue to provide updates and suggestions as details are released.

Preparing for the Royal Commission

As we prepare for the Royal Commission into aged care, it is worth considering what providers can learn from what has occurred at the Financial Services Royal Commission.

One of the terms of reference for the Financial Services Royal Commission is “whether any conduct, practices, behaviour or business activities by financial services entities fall below community standards and expectations”. Whilst we don’t know what the terms of reference will be for aged care, it is worth considering the damage done to individual and corporate reputations, staff moral and consumer confidence by individuals from financial service providers who gave evidence and at times:

  • Appeared to lack an understanding of relevant laws & regulations;
  • Conceded that either they or others in their organisations acted in their own interests not in the interests of the people they were advising;
  • Were forced to admit they or their organisations had failed to meet community standards and expectations; and
  • In some cases had to concede failures of compliance with the law.

It was a failure to meet community expectations about the way elderly should be treated and cared for that resulted in the negative media reporting which culminated in the two 4 Corners programs. Regardless of whether the carers captured on the hidden cameras thought they were doing nothing wrong or were only undertaking their jobs as they had been told to, their behaviour appalled anyone who watched the programs.

Many of my clients have already been contacted by care recipients and/or their families advising that they will be taking their complaints “to the Royal Commission”. Whether that results in those providers having to provide evidence remains to be seen but the preparation starts now. Aside from the many legal issues that flow from the investigative powers of a Royal Commission, I am urging them to think about:

  1. how their handling of these issues, culture and model of care will be viewed by the community; and
  2. how prepared the organisation and particularly key personnel are for answering questions about their obligations as approved providers.

While we wait for the terms of reference, ensuring that your organisation can comfortably and confidently address these two issues is perhaps the best way to begin preparations.

Byron Bay 1 Day NFP Conference | 29 November 2018

I am looking forward to our second mini conference for Not for Profit Organisations in Byron Bay. The feedback from our April conference indicated that these events are of enormous value to regional organisations regardless of their size and reach.  The focus for our next conference will be innovation; what does it look like, how to drive innovation in your organisation and how to protect what you create.  This will be a another great opportunity for board/Committee members and Senior Managers to hear from industry experts and participate in interactive discussions with colleagues from other organisations and sectors.

Click on the link for details.  NFP Conference Date Claimer

New Forms for Queensland Retirement Villages – Update

It is now close to a year since the Queensland government passed amendments to the Retirement Villages Act.  Most of the reforms introduced as part of those changes are yet to come into effect creating an element of uncertainty for the industry.

A key part of the reforms are the longer awaited changes to the PID.  The proposal is to effectively replace it with the Village Comparison Document and Prospective Costs Document. Earlier this year the Department of Housing and Public Works published a time table for implementation of the new forms and it can be accessed here.

Despite the time table aiming to have the new forms implemented by October, the latest advice from the Department is that they will not be available until January 2019.

Corporate Governance – what is it?

“Corporate governance should be the next item on the agenda of every single board meeting in the country.”

That was Treasurer Scott Morrison following APRA’s scathing report on the board of Australia’s largest bank, the CBA. APRA found that there was an insular culture with inadequate oversight by the Board of emerging risk. The directors had become complacent and had insufficient oversight on management.

This is the latest in a series of reports and enquiries that have shone a light on the poor corporate governance practices of Australian boards both for profit and not for profit.   We have had:

  1. The Banking Royal Commission’s revelations about the failures of the AMP board;
  2. The enquiry into the problems on the Board of the NSW branch of the RSL that began with inappropriate payments to Directors; and
  3. The report by the Royal Commission into Institutional Responses to Child Sexual Abuse which identified the lack of accountability, particularly within hierarchical church institutions, as a contributing factor to the mistakes that were made in responding to allegations of abuse.

How does this happen when there are more Directors than ever before who have undertaken some type of formal training such as that offered by the AICD and a plethora of tools and programs for Board’s to use?

In an effort to identify the link between governance practices and performance, the AICD commissioned a review[1]of the research into this elusive connection. Amongst the key findings of the review was that:

  1. Research does not provide any conclusive links between governance practices and performance;
  2. The outcomes of research are contradictory and provide little assistance in identifying good governance practices; and
  3. There are no readily identifiable causal connections between governance practices and outcomes.

In summary, the research conducted to date does not help Boards identify governance practices that will lead to the outcomes they want. So, if the academics and experts can’t help, how does a Board, particularly a volunteer Board in the not for profit sector, go about adopting good corporate governance.

Here are my thoughts on what the problems are and how they can be addressed.

Lack of Understanding

Too often organisations purchase a governance manual or set of policies and think that is the job done.  They don’t understand how to apply those tools nor, more importantly do they understand what they are meant to achieve.

At its core, governance is about holding organisations and the people that run them to account.

It is the systems, structures and policies that control the way an organisation operates, and the mechanisms by which the organisation, and its people, can be held to account.

Integrity, transparency and accountability, risk management, culture and ethics are all important elements of good governance and can help an organisation meet its objectives.[2]

Successful organisations set high standards for themselves and are governed by a Board that is prepared to champion those standards and ensure the organisation strives for continuous improvement.

Lack of Questioning

It is essential the Directors are prepared to question and challenge each other to ensure rigour is applied to all decision making. They should also be prepared to question and challenge management.

This does not mean nit picking over minor details in reports, it requires careful consideration of the issues, thorough preparation for Board meetings and being prepared to raise the difficult issues. Not simply going along with the Chair or the CEO.

Respectful debating of issues requires a balance and can only be achieved if there is mutual respect at the Board table. Highly conflicted Boards are dysfunctional and serve no one but equally a Board on which everyone always agrees is unlikely to confront the difficult issues.

Lack of Diversity

The best decisions are made when there is a diversity of views considered.  This cannot occur if Directors all have the same gender and are about the same age, and have similar backgrounds, education and experience.

Complacency

Success can often lead to complacency with Directors thinking that as all is going well there is no need to check so carefully or question so closely. The experience at the CBA has shown that this can be a dangerous time and Directors can never rest on the laurels.  To quote the Treasurer again, “it is not a retirement job; it is a very serious job”.

Complacency can manifest itself in Directors who think they have done the course, or have the qualifications and therefore know all they need to know about their role. Being a Director is like any professional position, it requires continuous learning, keeping up to date and always being prepared to improve your skills, decision making capability and knowledge.

Auditor

Too few Boards take the opportunity to talk to the auditor and invite the auditor to address the Board and answer questions. That is a missed opportunity. The auditor can provide valuable insights into risks and has a wealth of information and knowledge about an organisation that can greatly assist Board decision making.

If you would like more information on these important issues, please contact me.

 

[1] Ford, G & Rooney, J 2016 ‘Emerging themes of corporate governance and firm performance, AICD Governance Leadership Centre

[2] Report of Royal Commission into Institutional Responses to Child Sexual Abuse Volume 16, Book 2

Aged Care Breaking News | Federal Court Orders “Asset Replacement Charge” prohibited by Aged Care Act

On Friday 6 April, the Federal Court made its formal orders after receiving submissions from Regis and the Department of Health. The Court had previously published its reasons for determining that the “Asset Replacement Charge” (ARC) charged to residents in many Regis Aged Care facilities was inconsistent with the Aged Care Act 1997 and called for submissions from both parties before making its final orders.

The final orders are that:

  1. the ARC is a charge prohibited by s 56-1(e) of the Aged Care Act 1997 (Cth); and
  2. Regis pay the Department of Health’s costs fixed at $172,000.

As previously reported, this decision confirms the Department of Health’s interpretation of the law as set out in its guidelines published on 2 September 2016; that aged care providers should not charge care recipients any fees which are unrelated to the care and services provided to those individuals.