Financial and Prudential Management Standard: January to March 2026

Introduction

We do targeted reviews to help providers understand their financial and prudential responsibilities. These reviews help us identify risks and improve provider compliance.

This review was on the Financial and Prudential Management Standard. It was our first opportunity since the start of the Aged Care Act 2024 to assess if providers are complying with the new Aged Care Financial and Prudential Standards 2025.

Background

Providers must:

apply and maintain a written financial and prudential management system
regularly review and improve their financial and prudential management system.

Between January and March 2026, we worked with 69 providers to review if they were complying with the Financial and Prudential Management Standard.

Our findings

When we started the review, of the 69 providers we worked with:

49 met the requirements of the Financial and Prudential Management Standard
18 didn’t meet the requirements
2 providers withdrew as they were not available for the review.

There were some areas in which the financial and prudential management systems had the highest non-compliance. This arose when providers did not:

have a written financial and prudential management system
have a process or procedure that could recognise, record and respond to non-compliance with the system or the Standard
have a review policy or procedure to regularly assess what they could do to improve the system

Reasons for non-compliance

We found providers weren’t compliant because they:

weren’t prepared for the new legislation. Some were still reviewing policies or waiting for the governing body to approve. Some said they didn’t have enough resources or time to review the legislation were using outdated governance documents
didn’t have written documents for their processes (and didn’t know this meant they were non-compliant)
were using policy templates that didn’t meet their needs. This meant they had unclear policies that did not match their practices. For example, one provider was using a Delegation of Authority policy document, which included positions that did not exist in the organisation.

During the review, we worked with providers and supported them to address (fix) the non-compliance. Where we found high-risk issues, we made sure they fixed these before we completed the review. For example, if we found they weren’t keeping up with internal reporting or managing refundable deposits properly.

Good practices

We also found many examples of good practices that helped providers comply with their financial and prudential management obligations. Examples include providers:

training and educating staff regularly
making sure staff can access policies to help them make decisions in their daily work
having links to the Financial and Prudential Standards in governance documents so they’re easy to find
having a governance charter that includes:
- their governance principles
- board composition and roles
- how they manage financial risks
- a system of policies and procedures relating to how money is managed
having a written document with policies and processes of the financial and prudential management system
doing regular audits to check for prudential compliance
having continuous improvement plans
training their board on the new Financial and Prudential Standards.