Post balance date restatement of financial statements
The Commission's financial statements for the year ended 30 June 2020 presented here replace the
financial statements dated 21 September 2020 due to a material error in revenue recognition.
The previously issued financial statements have been withdrawn and the audit has been withdrawn.
The previous financial statements should not be utilised for any purpose.
On 1 January 2020, under a machinery of government change, certain functions relating to aged
care regulation, together with the associated staff, were transferred from the Department of Health
to the Commission.
In accordance with the provisions of Section 75 of the Public Governance, Performance and
Accountability Act 2013, the Commission received a transfer of appropriation funding from the
Department of Health to cover the operating costs of the transferred functions and, separately,
the accumulated liability for employee entitlements. Whilst the funding for the operating costs was
correctly disclosed as revenue, the funding for employee entitlements was incorrectly recognised
as an equity receipt. This liability transfer was funded from allocations so should have been recognised as revenue not equity.
These revised financial statements correct this error and also adjust the notes to the financial
statements to provide greater clarity on the Commission's appropriation funding.
Changes to the financial statements
1. Corrections have been made to the treatment of appropriations received for the transfer of employee
entitlements from the Department of Health as a result of the transfer of the aged care regulatory
functions previously performed by the Department of Health.
a) Statement of Comprehensive Income – Revenue from Government
Revenue from Government
Total comprehensive surplus / (deficit)
b) Statement of Financial Position
c) Statement of Changes In Equity
Distributions to owners (Restructuring)
Closing balance as at 30 June (Contributing Equity)
Surplus / (deficit) for the period
Closing balance as at 30 June
2. Notes associated with the sources and use of appropriation funding have been revised to provide
additional clarity on the Commission's position.
Note 10 has been updated to simplify the disclosure of appropriations and PGPA Act adjustments.
The footnotes have been updated to provide additional information regarding these adjustments.
The lapsing of the equity injection relating to Appropriation Act (No.4) 2016-17 has been removed from
Note 11 has been updated to simplify the disclosure of available appropriations by the
relevant Appropriation Act. Additional information has been provided as footnotes to clarify
Note 18 has been updated to reflect only the liability for employee provisions transferred from the
Department of Health and to exclude the amount now being treated as Revenue from Government.
Objectives of the Aged Care Quality and Safety Commission
The Aged Care Quality and Safety Commission (the Commission) is a non-corporate Commonwealth
entity established by the Australian Aged Care Quality & Safety Commission Act 2018. The Commission
is subject to the Public Governance, Performance and Accountability Act 2013 (PGPA Act).
The Commission commenced operations on 1 January 2019, bringing together the functions of the
Aged Care Quality Agency (which was abolished on 31 December 2018), the Aged Care Complaints
Commissioner and, from 1 January 2020, the aged care regulatory functions previously performed by the
Department of Health. The comparative numbers for the 2019 year are, accordingly, for a six-month
The Commission's functions are:
- approving providers of aged care services;
- promoting the provision of quality care and services by approved providers;
- ensuring compliance of aged care services with the relevant legislation;
- imposing and lifting sanctions on aged care providers;
- consumer engagement functions;
- complaints functions;
- regulatory functions including accreditation of residential aged care services;
- education functions; and
- reconsidering and reviewing decisions.
There were no events after the reporting period that would significantly affect the ongoing structure
and financial activities of the Commission.
Basis of preparation of the financial statements
The financial statements are general purpose financial statements and are required by Section 42
of the Public Governance, Performance and Accountability Act 2013.
The financial statements have been prepared in accordance with:
- Public Governance Performance and Accountability (Financial Reporting) Rule 2015 (FRR), incorporating amendments in the Public Governance, performance and Accountability (Financial Reporting) Amendments Rules 2019; and
- Australian Accounting Standards and Interpretations – Reduced Reporting Requirements issued by the Australian Accounting Standards Board (AASB) that apply for the reporting period.
The financial statements have been prepared on an accrual basis, and in accordance with the historical costs convention, except for certain assets and liabilities at fair value. Except where stated, no allowance is made for the effect of changing prices on the results or the financial position.
The financial statements are presented in Australian dollars and values.
Significant accounting estimates and judgements
Except where specifically identified and disclosed, the Commission has determined that no accounting
assumptions and estimates have a significant risk of causing a material adjustment to carrying amounts of assets and liabilities within the next accounting period.
New accounting standards
Adoption of new Australian accounting standards requirements
No new, revised, amending statements and/or interpretations that were issued prior to the sign-off
date and are applicable to the current reporting period had a material effect on the Commission's
Application of AASB 16 Leases
The Commission adopted AASB 16 using the modified retrospective approach, under which the
cumulative effect of initial application is recognised in retained earnings at 1 July 2019. Accordingly,
the comparative information presented for 2019 is not restated, that is, it is presented as previously
reported under AASB 117 and related interpretations.
The Commission elected to apply the practical expediency of not reassessing whether a contract
is, or contains a lease at the date of initial application. Contracts entered into before the transition date
that were not identified as leases under AASB 117 were not reassessed. The definition of a lease under
AASB 16 was applied only to contracts entered into or changed on or after 1 July 2019.
AASB 16 provides for certain optional practical expedients, including those related to the initial adoption of the standard. The Commission adopted the following practical expedients when applying AASB 16 to leases previously classified as operating leases under AASB 117:
- Applying a single discount rate to a portfolio of leases with reasonably similar characteristics;
- Excluding initial direct costs from the measurement of right-of-use assets at the date of initial
application for leases where the right-of-use asset was determined as if AASB 16 had been applied since the commencement date;
- Relying on previous assessments on whether leases are onerous as opposed to preparing an
impairment review under AASB 136 Impairment of assets as at the date of initial application; and
- Applying the exemption not to recognise right-of-use assets and liabilities for leases with less than 12 months of lease term remaining as of the date of initial application.
As a lessee, the Commission previously classified leases as operating or finance leases based
on its assessment of whether the lease transferred substantially all of the risks and rewards
of ownership. Under AASB 16, the Commission recognises right-of-use assets and lease liabilities for
most leases. However, the Commission has elected not to recognise right-of-use assets and lease
liabilities for some leases of low value assets based on the value of the underlying asset when new
or for short-term leases with a lease term of 12 months or less.
On adoption of AASB 16, the Commission recognised right-of-use assets and lease liabilities in relation
to leases of office space and motor vehicles that had previously been classified as operating leases.
The lease liabilities were measured at the present value of the remaining lease payments, discounted
using the Commission's incremental borrowing rate as at 1 July 2019. The Commission's incremental
borrowing rate is the rate at which a similar borrowing could be obtained from an independent creditor under comparable terms and conditions. The weighted-average rate applied was 1.0%.
The right-of-use assets were measured as follows:
a) Office space: measured at an amount equal to the lease liability, adjusted by the amount of any
prepaid or accrued lease payments.
b) All other leases: the carrying value that would have resulted from AASB 16 being applied from
the commencement date of the leases, subject to the practical expedients noted above.
Impact on transition to AASB 16
The impact on transition is summarised in note 1.
Application of AASB 15 Revenue from contracts with Customers / AASB 1058 Income for Not-For-Profit- Entities. AASB 15 Revenue from Contracts with Customers and AASB 1058 Income for Not-For-Profit Entities became effective on 1 July 2019.
AASB 15 establishes a comprehensive framework for determining whether, how much and when revenue is recognised. It replaces existing revenue recognition guidance, including AASB 118 Revenue, AASB 115 Construction Contracts, and Interpretation 13 Customer Loyalty Programmes. The core principle of AASB 15 is that an entity recognises revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods and services.
AASB 1058 is relevant in circumstances where AASB 15 does not apply. AASB 1058 replaces most of the Not-For-Profit (NFP) provisions of AASB 1004 Contributions, and applies to transactions where the
consideration to acquire an asset principally to enable the entity to further its objectives is significantly
less than its fair value, and where volunteer services are received.
Under the new income recognition model the Commission first determines whether an enforceable
agreement exists and whether the promises to transfer goods or services to the customer
are sufficiently specific.
In terms of AASB 1058, the Commission is required to recognise volunteer services at fair value if those services would have been purchased had they not been provided voluntarily, and if the fair value of those services can be measured reliably.
Impact on transition to AASB 15 and AASB 1058
The requirements of AASB 15 and AASB 1058 are consistent with the way in which the Commission
is currently, and historically, has accounted for its revenue from third parties, hence there is no impact
from the adoption of these standards.
Impact of COVID-19
The COVID-19 pandemic has impacted the Commission’s operations and required adjustments to some regulatory functions focusing additional effort where needed to monitor the wellbeing and safety of consumers. Additional resources were committed to developing alternative methodologies utilising remote computer technology. The Commission's workforce was equipped to facilitate working from home arrangements and this involved an investment in portable computer devices and cloud-supported technology. The Commission’s workforce was realigned and enhanced where needed to support the response to COVID-19, including provision of education and advice to the sector.
Notwithstanding these revised work practices the Commission was not able to complete all of the
revenue-generating audit assessments that it would have undertaken, with a number of them having
to be deferred to the next financial year.
The Commission is exempt from all forms of taxation except Fringe Benefits Tax (FBT) and the Goods and Services Tax (GST).