The question is, "What did

she know, when did show know it and (more importantly) what did she do about it?"
I think that might actually be three questions - all related to the same topic.
Oh yes, the Prime Minister is in hot water - again.
I had a phone call yesterday asking me to write a letter about the hot water in which the Prime Minister finds herself. I declined. The matter has to do with a "slush fund", the Australian Workers Union and a former close male friend of the Prime Minister. I do not know enough about it to comment.
I can however answer the questions.
     "What did she know?"  More than she is telling us. Part of this has to do with the fact that she was acting as a "senior lawyer" in a large law firm. Some of that will come under legal professional privilege - but not all of it. Some of it will be about covering her own back. She may not have done anything wrong but her judgment is being questioned.
     "When did she know it?" Sooner than she is telling us she knew. That also has something to do with legal professional privilege - but again it is not all of it.If she did not know she should have known because it was happening on her watch. If she did know she should have done something about it. Again her competence and judgment is being questioned.
     "What did she do about it?" What she was apparently asked to do in respect of setting up the fund - but that may not be what she should have done.
There is another question too, "Did she know enough to take any action?"
The answer to that question is an unequivocal yes. She knew enough to know she should, at very least, have shared the information with one or more of the partners in the law firm. She did not do that. It is very likely she should have reported her concerns to the police. She did not do that.
Her excuse is that "the matter was already under police investigation". That would seem all the more reason for ensuring that others were aware of what was going on.  
Oh yes and she also says it was a very long time ago. It was. For most people this would not matter but she is the Prime Minister and even some in her own party would like to see her replaced.
There is also the suggestion that she left the law firm under a cloud. There are suggestions, unconfirmed, that she was asked to leave. Those involved are not going to answer questions about that, least of all her.
Does it matter? Yes. it probably does. This is the Prime Minister people are talking about. The affair addresses issues of honesty, competence and good judgment. 
As the Senior Cat said to me after the conversation was over, "Who would want to be Prime Minister?"