Prudential targeted review: Disclosure Standard

On this page:

Introduction
Background
Our findings
Things to consider
Commission actions
Further information
Contact us

Introduction

We do targeted reviews to help raise provider awareness of their financial and prudential responsibilities. The reviews help us to identify risks and improve provider compliance across the aged care sector.

This targeted review focused on educating and supporting providers on the Disclosure Standard.

Background

Providers of residential and flexible aged care that hold a refundable deposit, must comply with the prudential responsibilities in the:

Aged Care Act 1997 (The Act)
Fees and Payments Principles 2014 (No 2)

Under the Disclosure Standard, providers must:

include information on compliance with the Prudential Standards in their Annual Prudential Compliance Statement (APCS) as part of their Aged Care Financial Report (ACFR)
share certain financial and prudential compliance information with older people receiving care and their representatives
give specific financial and prudential compliance information to older people considering accessing aged care and their representatives

From August to October 2024, we reviewed a sample of providers across the country to assess if they understood and met their responsibilities under the Disclosure Standard.

Our findings

Our review found that most providers didn’t meet the disclosure requirements, most commonly due to:

failing to submit their APCS correctly and on time
not having a plan for unexpected changes, like losing key personnel
key personnel that were not aware that they must share financial and prudential information with older people currently receiving or considering accessing their aged care service
issues with risk management and
a lack of strong governance.

In addition, we found issues causing non-compliance with the disclosure requirements in the following areas:

Disclosure letters and statements

Areas where providers fell short included:

failing to send out annual disclosure letters with a copy of the older person’s entry in the refundable deposit register
missing required information in annual disclosure letters, including the older person receiving care’s ID, refundable deposit payment date, applicable deductions, or monthly balances
lack of awareness of the requirement to send a disclosure statement to all older people receiving care within 7 days of signing an accommodation agreement
referencing parts of the Act incorrectly in their disclosure statements and referring the User Rights Principles instead of the Fees and Payments Principles 2014
failing to maintain a record of sending out information and documents to older people receiving care

Audits

Late APCS submissions were often due to:

not preparing adequately for an audit
delays in completing audits
delays in receiving the auditor's report due to reassessment of assets
unavailability of auditors
delays in local government audit timeframes for local government providers

Workforce recruitment, retention and training

There was a trend in providers failing to:

secure a skilled workforce to support them to comply with the disclosure requirements
manage a high turnover of staff and absenteeism
provide their finance team and auditors with sufficient resourcing
recruit new, suitable staff within necessary timeframes, particularly in remote locations
provide staff with sufficient training
develop processes and procedures to guide staff to prepare and provide annual disclosure letters to older people receiving care
develop a plan for sudden resignation of experienced senior management to prevent loss of knowledge and disruption to business operations, such as meeting disclosure responsibilities.

We provided education and guidance to help providers understand their responsibilities under the Disclosure Standard. By the end of the review, providers understood their disclosure responsibilities and had taken steps to ensure future compliance.

Things to consider

Do you have a clear and well-documented process for disclosing financial and prudential information in accordance with the Disclosure Standard?
Do you conduct an annual review of your disclosure obligations processes?
Do you plan ahead to ensure you complete your annual financial reports within four months after the end of the financial year?
Make sure you submit complete information required in your APCS.
Do you have a reliable system in place to help you monitor your compliance with your reporting obligations?
Are your disclosure letters and statements correct and accurate?
Do your disclosure letter and statement templates include all required information to meet the legislative requirements?
Are you maintaining good records of sending out the required disclosure information and documents to older people receiving care?
Do you provide older people receiving care with the required information and documents within 7 days of them signing an accommodation agreement?
When an older person considering accessing your service or their representative requests information and documents relating to fees and payment, do you:
- tell them in writing that you will provide the information and documents within 7 days?
- send the requested information in writing within 7 days?
Do you send older people, who have signed an accommodation agreement, a copy of their entry in your refundable deposit register within 4 months of the end of each financial year. Do you also include a written statement offering to supply requested information and documents within 7 days?
How do you ensure your staff are trained in reporting and can capably perform your disclosure obligations?
Does your governance framework clearly explain the roles and responsibilities of the key staff responsible for APCS reporting?
Are your staff adequately trained and fully aware of their specific responsibilities regarding APCS reporting?
Do you have contingency plans in place to continue business operations during unforeseen events, such as system failures, natural disasters, logistical challenges or the unavailability of key staff members?

Commission actions

We will provide you with guidance and education on the Disclosure Standard and Governance Standard.
We will carry out more targeted reviews on the Prudential Disclosure Standard and Governance Standard to support you.
We will use the information collected from these reviews to improve our systems that identify risk of non-compliance.