Reputation Risk – Managing Sensitive Expenditure

An article by Sue Trezise, Sue-lutions Ltd.

Sensitive expenditure is any spending by an organisation that could be seen to be giving private benefit to a staff member, their family, or friends. It risks harming an organisation’s reputation and the public sector more generally regardless of how much money is spent. 

To assist public (and private) organisations to apply sound judgement when making decisions about sensitive expenditure, the Office of the Auditor General (OAG) has issued an updated good practice guide on controlling sensitive expenditure. The guide provides practical guidance on specific types of sensitive expenditure, outlines the principles for making decisions about sensitive expenditure, and emphasises the importance of senior leaders “setting the tone from the top”. The OAG considers decisions about sensitive expenditure should be made on a principles-based approach, rather than a set of rules, because it is not possible or desirable to set rules for every possible situation.

The issue of sensitive expenditure has made headlines across the Tasman this week where the Australian National Audit Office (ANAO) has revealed a lack of control of sensitive expenditure at the highest level of public office. 

In the most recently identified case, the ANAO has flagged irregularities with the payments made to high ranking officials at the Australian Securities and investment Commission (ASIC).  The chairman has stood aside from his role after it was revealed ASIC had paid more than $118,000 for him to receive personal tax advice. The deputy chair has quit after an audit raised concerns about a $70,000 housing cost payment he was given in expenses. While both officials have agreed to repay the money, the damage to the integrity of ASIC as a corporate regulator is significant. 

Of additional note for risk practitioners, the OAG also recently updated its guidance on managing of conflicts of interest (June 2020).

Link to Controlling sensitive expenditure: Guide for public organisations (Oct 2020):


Sue Trezise, Sue-lutions Ltd.

Sue Trezise has over 12 years experience providing risk expertise and advice for government and organisations on strategic, enterprise and operational risk management. An experienced facilitator, Sue assists communication between technical experts and non-technical stakeholders and makes managing risk practical and effective.