But the preliminary probe by Commissioner Richard O’Sullivan has stopped short of ordering a full, formal investigation.
According to a report by the Australian Associated Press (AAP), Mr O’Sullivan has given the organisation 12 months to comply with 17 recommendations delivered with his findings.
“The main concerns are about the governance issues and these can be rectified,” Mr O’Sullivan said.
The Gumatj Association is responsible for an estimated $4.5 million in Aboriginal mining royalties and government funds in northeast Arnhem Land each year.
The body has an 11-member board and has been chaired by Mr Yunupingu since its incorporation in 1979.
In addition to providing some local government functions, the Gumatj Association is also involved in housing, road maintenance and outstations, as well as managing the CDEP 'work for the dole' programme.
The association came under the spotlight after complaints were made by some members of Mr Yunupingu’s family in the media alleging that funds were not evenly distributed among his relatives.
The Northern Territory Police has previously ruled out conducting a criminal investigation, saying that there were no grounds to warrant such an inquiry.
The Consumer Affairs’ preliminary investigation found that the association’s assets – which include a helicopter, hovercraft, vehicles and boats – needed to be fully accounted for and justified to members.
“The costs are extremely high and ongoing, and the long-term benefit to the association is not clear,” the commission’s report said.
The report went on to say the level of transparency surrounding the association’s activities were a cause for “serious concern”.
“It is for this reason, and for the capacity of Gumatj members to be involved, that this report recommends a parallel system of voting for elected members… that is managed by the NT Electoral Office,” the report said.
In particular, Mr O’Sullivan has called for elections to be held to allow new contenders to vie for positions retained by the same people for a number of years.
“I would like to see a spill and if no new committee members put their hand up I would like to see that exposed and disclosed,” Mr O’Sullivan said.
The Gumatj Association said it welcomed the commissioner’s report and had fully cooperated with the probe.
“The Gumatj Association feels vindicated that the commissioner hasn’t proceeded with a formal investigation,” spokesman Sean Bowden reportedly said according to the AAP.
“The association has been cleared by the police and the indigenous affairs minister,” Mr Bowden added, saying “it’s already complied with the majority of the recommendations.”
The association could face fines and a possible full investigation if it fails to adopt all the recommendations within a year.