A land council in charge of two Northern Territory islands does not comply with federal government anti-fraud rules and does not properly register conflicts of interest, the auditor-general has found.
Tiwi Land Council has 32 members who represent the people of Melville and Bathurst islands.
It has an annual budget of about $5.6 million from a benefit account, land use rents, royalties and access permits.
In a report tabled in parliament on Wednesday, the auditor-general noted expenses had been incurred without approved purchase orders in 2021 and there were minimal structures around dealing with fraud within the organisation.
The audit made 13 recommendations including that the TLC applies its requirement for a declaration of pecuniary interests and monitors any non-compliance surrounding them.
In labelling its conflict of interest management "ineffective", the report says the council is not compliant with commonwealth fraud laws.
"There are no regular fraud risk assessments, there is a lack of fraud training for staff, and there is no mechanism for reporting of incidents of fraud or suspected fraud," the report said.
"There is no register of interests for senior employees ... and there is no management plan for declared pecuniary interests. Conflict of interest management during meetings, as recorded in minutes, is inconsistent."
The scathing report noted no incidents of fraud across the 2021-2022 period it examined, but said there had been previous issues.
"This audit did not examine potential instances of fraud, although the (Australian National Audit Office) identified instances from December 2021 where expenses were incurred without approved purchase orders," it said.
The council accepted all 13 recommendations.
"The TLC is particularly committed to member and staff training in all aspects of its governance particularly in the areas of risk management, HR process and agreement making and monitoring," the council said in response.
