Last month's raids on AWU offices cast suspicion over the union, but the Victorian branch provides the public with audit reports well beyond its legal obligations – which also reveal its dwindling membership and financial troubles. By Tom Ravlic.
Federal police officers arrive at the Victorian branch of the AWU in West Melbourne on October 24.
The average punter could be forgiven for thinking that the Australian Workers' Union had something to hide when the Australian Federal Police raided its offices in Melbourne and Sydney at the request of the Registered Organisations Commission (ROC).
At the core of the raids – which were broadcast on television news thanks to an early warning given to media by a staff member in Minister for Employment Michaelia Cash's office – was a suspicion that records relating to donations given to the activist organisation GetUp! were going to be destroyed. Those documents are central to trying to determine whether the $100,000 donation given to GetUp! in two $50,000 tranches in 2005-06 had been through the appropriate decision-making processes set down in union rules. One of those two tranches was signed off by Bill Shorten, the federal opposition leader, while he was the union's secretary.
The allegations of an absence of accountability to members, which were aired during recent heated senate estimates hearings into the role of the ROC, and the involvement of political staff in passing on details about the raids, appear to contrast with what the Victorian division of the union has done to report on its finances and its internal operations to the membership.
It is rare for any association to provide its members with an extended auditors' report detailing key issues that have been examined by the audit firm engaged to both audit the financial statements and to look at the union's internal processes to ensure they are being run with appropriate checks and balances in place.
In fact, the document that forms a part of the annual report downloadable by members and other interested parties from the union's website would typically be seen only by a committee of management or a board of directors of an association. Usually, members would only see the standard audit report, which provides a reader with some indications of what the auditor saw and whether there was any reason to issue a qualified or adverse finding in the audit report.
The usual audit report, signed off by auditor Michael Shulman from Stannards Accountants and Advisors, says the financial statements are "presented fairly" in accordance with the accounting standards and the requirements of the Fair Work (Registered Organisations) Act 2009. The Victorian office of the union gets a tick from the auditor for keeping satisfactory accounting records.
But the union gives away much more information than it is compelled to.
Greater insights into the auditor's thinking are obtained by dipping into a second and more detailed audit report, freely available, which points to a decline in the number of active members in the union and an increase in other expenses that has led to a deficit of $1.1 million being reported for the 2016-17 financial year.
The auditor notes that membership revenue has slipped during the year but this represents a steady decline over a series of reporting periods for the union. Membership revenue dropped from $5.8 million in the 2015-16 financial year to $5.5 million during the 2016-17 financial year. The union reported membership revenue of $6 million in 2014-15 and $6.5 million in 2013-14.
This does not mean the union's branch in Victoria is dead in the water, however. There are sufficient resources to keep running. But it is modest. They are forecasting a profit of $5900 for the 2017-18 financial year, according to the auditor's report.
The Victorian division of the union has published the additional audit reports for at least three years. Each of those sets of financial statements contains an audit report of the standard type and the in-depth analysis provided by the audit firm. The 2014-15 financial year audit report suggested the union keep tabs on its expenditure to ensure it eliminated discretionary expenditure of no benefit to the membership and also that it avoid any financial risks that would impact on financial reserves. There has also been a consistent message about the strategies the union has in place to grow membership.
A new feature of the 2017 report, however, is a series of audit areas deemed key audit matters. A new auditing standard is now effective that requires auditors to set out areas of an entity's operations that have been closely examined, and what procedures, such as testing samples of transactions, have been followed by the auditors to determine the soundness of accounting and business processes. The areas looked at by the AWU's auditors, for example, included revenue, payroll and expenditure among others. No significant issues were noted by the audit firm.
The union is well aware of the perception of a lack of transparency and it has published the full suite of information on its finances so that members and the community see the results.
The available documents do not cover the period relating to the union's GetUp! donation. Those documents were, however, made available to the royal commission into trade unions. The union maintains they show the donations were appropriate. They have promised to release them, in full, after court proceedings.
This article was first published in the print edition of The Saturday Paper on Nov 18, 2017 as "State of the union". Subscribe here.