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Inquiry into aspects of ACC's Board-level governance

Auditor-General's overview

Inquiry into aspects of ACC's Board-level governance.

In April 2012, I decided to inquire into aspects of the interaction between the Accident Compensation Corporation (ACC) and one of its claimants, Bronwyn Pullar. I wanted to know whether the ACC Board had policies and procedures for managing interaction between Board members and individual claimants who might be known to them. I wanted to be sure that a claimant could not gain any advantage by approaching a Board member.

My inquiry found no evidence that Ms Pullar's approach to one of ACC's Board members affected her claim to ACC. However, the Board had no formal policy to guide Board members on communication with individual claimants, a deficiency it is rectifying. The handling of the matter depended on the long experience in governance of ACC's Chairman and Deputy Chairman, who were the two Board members concerned.

Of greater concern was ACC's failure to recognise Ms Pullar's wider allegations of illegality and fraud as risks to the organisation. I have no view as to whether there is any justification to the allegations, because that was not the subject of my inquiry. However, a public entity should always take allegations that threaten public trust in the organisation seriously. ACC is one of New Zealand's largest public entities and an important part of public services for New Zealanders.

My inquiry team concluded that ACC management and the Board members concerned failed to appreciate the risk that those allegations presented. It seems that the Board and ACC management were so focused on the appropriate separation of governance and operational matters that they did not recognise these issues as possible symptoms of systemic failure.

The events that gave rise to my inquiry occurred when the Board was relatively new and there was extensive change in senior management. Change in ACC will continue, because it will have a new Chairperson, several new Board members, and a new chief executive in the next few months. I consider that a new Board member, even if that person is an experienced director, will take two to three years to understand key actuarial and financial aspects of ACC, as well as its culture.

I asked my Deputy, Phillippa Smith, to carry out my inquiry. Because my inquiry concerned issues of practical governance, we engaged James Ogden, an experienced company director, to advise her on those matters. I am grateful to Mr Ogden for his assistance. I also thank the ACC personnel we interviewed and Ms Pullar, for their assistance with my inquiry.

Lyn Provost
Controller and Auditor-General

20 August 2012

accboardlevelgovernance.pdf

ENDS

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