Prudential targeted review: governance responsibilities

Insights report

Introduction

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

This targeted review focused on educating and supporting providers to meet their governance responsibilities and obligations.

Background

Providers of residential and flexible aged care must comply with governance responsibilities in the:

Aged Care Act 1997 (Aged Care Act)
Fees and Payments Principles 2014 (No 2)
Aged Care Quality Standards.

From 1 November 2025, providers will need to comply with governance responsibilities as outlined in the new Aged Care Act 2024 (new Aged Care Act), the Aged Care Financial and Prudential Standards 2025, Aged Care Rules 2025 and the strengthened Quality Standards.

From January to April 2025, we reviewed 30 providers across Australia. We checked if they understood and complied with their governance responsibilities.

Our findings

Overall, most providers were compliant. However, we found that sometimes providers didn’t:

have appropriate processes to inform us of changes to key personnel
record changes to key personnel in the Government Provider Management System
regularly review their governance policy
have a documented governance system to manage and refund refundable deposits
have a consumer advisory body that met the requirements
have a quality care advisory body that met the requirements.

We worked with providers to fix these issues. Those who were not compliant took steps right away to meet their governance responsibilities. By the end of the review, providers understood their responsibilities and changes to come with the strengthened Quality Standards, and the new Financial and Prudential Standards.

Things to consider

Governance

Do you have a governing body, consumer advisory board and quality care advisory board? Do they meet membership requirements?
Does your governing body promote a culture of safe, inclusive and quality care and services?
Do you have a system to notify us of changes in suitability of key personnel?
Do you have a system to manage refundable deposits?
Do you report to your board monthly about deposits you have refunded?
Do you have a written investment strategy?
Do you have a clinical governance framework?
Do you have governance systems for:
- information management
- continuous improvement
- financial governance
- workforce governance
- regulatory compliance
- feedback and complaints?
Do you have a documented financial and prudential governance framework that you regularly review?
Do you regularly assess how effective your existing risk controls are?
Do you regularly identify, assess and evaluate your compliance risks?

Staff

Do you regularly train your staff on changes to legislation and procedures?
Do your staff have the right qualifications, skills and experience?
Are you preparing your staff for changes that will happen with the new Aged Care Act?
Do your staff understand their roles and responsibilities?
Can your staff easily find and understand your policies?

Oversight

Do you use internal and external audits to find gaps in your processes?
Do you use the right software systems and human checks to manage your process of refunding refundable deposits?
Do you regularly review and improve your systems, processes and documentation?

Older persons

Do you inform older people and their representatives about your prudential responsibilities?
Do you provide clear, easy-to-understand information on refunding refundable deposits?
Do you involve older people and their representatives in developing, delivering and evaluating care and services?

Commission actions

We’ll keep guiding and educating you on your governance responsibilities
We’ll notify you of changes that will happen when the new Aged Care Act and the new Financial and Prudential Standards come into effect on 1 November 2025.
We may do more targeted reviews on prudential or governance responsibilities in future.
We’ll use the information we collect to improve the way we identify risks.