Prudential compliance is one of the most technically complex areas of aged care regulation. Chapter 4 of the Aged Care Act 2024 imposes strict obligations on how providers manage refundable accommodation deposits (RADs), maintain liquidity, track permitted uses of refundable funds, and report to their governing body.
The financial consequences of getting prudential compliance wrong are severe — both in regulatory terms and in the obligation to refund deposits within legislated timeframes.
What are refundable accommodation deposits?
A refundable accommodation deposit (RAD) is a lump sum payment made by a care recipient (or their representative) as payment for accommodation in residential aged care. RADs must be refunded when the care recipient leaves the facility — within 14 days of the departure date.
Providers hold RADs as both a liability and a source of working capital. The total RAD liability across the sector runs into billions of dollars, and the ACQSC takes prudential compliance extremely seriously as a result.
Permitted use of refundable deposits
Providers cannot use RAD funds for any purpose. The Act specifies permitted uses, which include capital expenditure, debt repayment related to capital, and investment in financial products. The critical restriction is that RAD funds must not be used for operating expenses or to fund losses in the general business.
Every use of refundable funds must be documented and tracked against the permitted use categories. During assessment contacts, the ACQSC may ask providers to demonstrate how specific RAD funds were deployed and whether each use falls within the permitted categories.
Liquidity obligations
Providers must maintain sufficient liquidity to refund all RADs that could become payable within a reasonable period. This means you need to know, at any given time, how much total RAD liability you hold, how much could become payable in the short term (based on departures, deaths, and transfers), and whether your cash and liquid assets are sufficient to cover those obligations.
A liquidity dashboard that tracks your RAD liability against available liquid assets — updated in real time rather than monthly — is essential for demonstrating compliance.
Governance and reporting
The governing body must receive regular reports on the provider's prudential position. This includes total RAD holdings, liquidity ratios, permitted use compliance, and any breaches or near-misses.
The governance checklist for prudential compliance covers whether the provider has a prudential compliance policy, whether the governing body receives regular prudential reports, whether there are adequate controls over the use of refundable funds, and whether the provider can demonstrate its ability to meet refund obligations.
Documenting compliance with each governance checklist item — with dates, evidence, and responsible persons — is the standard the ACQSC expects.
How Statura Care helps
The Prudential Compliance module provides a refundable deposits register with automated calculations, a real-time liquidity dashboard showing your position against refund obligations, permitted use tracking for every transaction, and a governance checklist that maps to ACQSC expectations. The module integrates with the Responsible Persons module for governance reporting and with Agreements & Consent for accommodation pricing transparency.
Prudential compliance is one of 35 modules in Statura Care's aged care compliance software — built specifically for the obligations in the Aged Care Act 2024.