RSL QLD commits to rectifying serious failures

RSL QLD commits to rectifying serious failures​

The ACNC has issued a direction to RSL Queensland after an investigation into the charity uncovered serious governance failures.

The direction – a formal enforcement – sets out the commission’s findings, actions RSL Queensland must take, and possible regulatory action if the breaches are not addressed.

Dr Johns said that the direction required the charity to address several serious issues.

The commission found that RSL Queensland did not take reasonable steps to ensure that its directors managed charitable funds in a responsible manner.  A long-established practice, RSL Queensland made monthly payments to its directors to cover ‘out of pocket’ expenses.  However, the charity did not have appropriate policies, guidelines and agreements to govern the payments.

RSL Queensland was unable to demonstrate to the ACNC how charitable funds of more than $400,000 over the period of the investigation were expended.

The charity failed to take reasonable steps to ensure that its directors identified and mitigated the financial risk of attracting a taxation liability due to the type and treatment of entitlements provided to its Directors.  RSL Queensland failed to have appropriate controls in place, such as tailored financial systems, policies and procedures to manage responsibly its taxation obligations.

Commissioner Johns said: ‘Our investigation found RSL Queensland has breached governance standard 5.  This standard requires charities to take reasonable steps to make sure that the following duties apply to responsible persons and that they follow them.  The duties can be summarised as:

  • To act with reasonable care and diligence
  • To act honestly and fairly in the best interests of the charity and for its charitable purposes
  • Not to misuse their position or information they gain as a responsible person
  • To disclose conflicts of interest
  • To ensure that the financial affairs of the charity are managed responsibly, and
  • Not to allow the charity to operate while it is insolvent.

‘The investigation also found that the charity has not met financial and operational record-keeping obligations.’

The commission found that RSL Queensland had breached:

  • Financial record-keeping obligations by failing to retain financial records pertaining to the majority of transactions covered by payments to directors for ‘out of pocket’ expenses, for example, receipts and a robust acquittal process, and
  • Operational record-keeping obligations by failing to retain records of directors’ operational use of RSL Queensland vehicles, for example, log books.

Commissioner Johns confirmed that the ACNC and RSL Queensland have been working together over the past year to improve governance.

‘In late 2017, RSL Queensland developed a governance plan in response to the ACNC’s concerns.  This was a step in the right direction, however we are concerned about the lack of progress in implementing key aspects of the […] plan,’ he said.

‘To their credit, RSL Queensland have unanimously accepted the terms of the direction and have committed to implementing the reforms.  This includes engaging a governance expert to oversee the implementation of a Good Governance Guide, as set out under the charity’s governance plan, and to conduct a review of the board’s performance and effectiveness.’

‘There is a great deal of work to be done to ensure that RSL Queensland can resolve these significant governance issues.  However, I am encouraged by RSL Queensland’s response to this Direction, and I am hopeful that we can continue to work with them to improve and strengthen the charity’s governance.’

RSL Queensland CEO Luke Traini said that the charity had been modernising and transforming its services but noted that there was still work to be done.

Mr Traini said: ‘Over the past year, we have worked closely with the ACNC to improve and upgrade the board’s governance and compliance policies and we remain committed to building a strong, transparent organisation.

‘The actions contained in the ACNC’s direction will be implemented as soon as possible, and the RSL Queensland board is currently revising its constitution to pave the way for a skills-based board.’

The ACNC will monitor RSL Queensland’s progress over the next 12-months.