Chapter Four: Financial Statements
Independent Auditor's Report
Statement by the Accountable Authority and Chief Financial Officer
In our opinion, the attached financial statements for the year ended 30 June 2019 comply with subsection 42(2) of the Public Governance, Performance and Accountability Act 2013 (PGPA Act), and are based on properly maintained financial records as per subsection 41(2) of the PGPA Act.
In our opinion, at the date of this statement, there are reasonable grounds to believe that Comcare will be able to pay its debts as and when they fall due.
Primary Financial Statements
Statement of Comprehensive Income
for the period ended 30 June 2019 |
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2019 |
2018 Restated |
2019 Original Budget |
|||
Notes |
$'000 |
$'000 |
$'000 |
||
NET COST OF SERVICES |
|||||
Expenses |
|||||
Employee benefits |
67,686 |
68,801 |
69,023 |
||
Suppliers |
30,274 |
29,312 |
33,536 |
||
Depreciation and amortisation |
4,641 |
4,160 |
5,041 |
||
Finance costs |
2,225 |
51 |
- |
||
Write-downs and impairment of assets |
50 |
560 |
- |
||
Workers' compensation claims expense |
209,924 |
232,700 |
246,134 |
||
Common law asbestos-related disease claim expense |
24,423 |
22,453 |
29,309 |
||
Total expenses |
339,223 |
358,037 |
383,043 |
||
Own-Source Income |
|||||
Own-source revenue |
|||||
Sale of goods and rendering of services |
22,770 |
22,902 |
23,500 |
||
Fees and fines |
15,979 |
15,717 |
15,954 |
||
Workers' compensation premiums |
242,310 |
285,183 |
277,430 |
||
Interest |
31,350 |
28,991 |
30,048 |
||
Other revenue |
1,454 |
800 |
- |
||
Total own-source revenue |
313,863 |
353,593 |
346,932 |
||
Gains |
|||||
Gains from movement in workers' compensation claims provision |
107,807 |
242,700 |
21,766 |
||
Gains (Losses) from movement in common law asbestos-related disease claims provision |
(26,124) |
59,164 |
1 |
19,600 |
|
Gains (Losses) from sale of assets |
(7) |
132 |
- |
||
Total gains |
81,676 |
301,996 |
41,366 |
||
Total own-source income |
395,539 |
655,589 |
388,298 |
||
Net contribution by services |
56,316 |
297,552 |
5,255 |
||
Revenue from Government |
60,287 |
56,838 |
66,526 |
||
Available funding from movement in claims provision |
(117,012) |
(346,736) |
1 |
(71,780) |
|
Surplus (Deficit) on continuing operations |
(409) |
7,654 |
- |
||
1 Restatement of comparative amounts due to prior period misstatement. Additional details are provided in the Restatement of Prior Period Comparatives Financial Statements Note and also in notes 1.2F and 1.2H. |
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OTHER COMPREHENSIVE INCOME |
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Items not subject to subsequent reclassification to net cost of services |
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Changes in asset revaluation reserve |
447 |
30 |
- |
||
Total other comprehensive income |
447 |
30 |
- |
||
Total comprehensive income |
38 |
7,684 |
- |
||
The above statement should be read in conjunction with the accompanying notes. |
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Budget variances commentary |
Note ref. |
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Workers’ compensation premiums were lower than budget due to charges in the final 2018–19 premium calculations, a part-year refund to the self insurance licensees following their exit from Comcare’s premium scheme and other payroll adjustments. |
1.2C |
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Workers’ compensation claims expense was lower than budget due to lower premium benefit payments ($35.3m) and lower pre-premium benefit payments ($0.9m). |
1.1E |
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Common law asbestos-related claims expense was lower than budget due to lower benefit payments ($4.9m). |
1.1F |
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Gains from the movement in workers’ compensation claims provision were higher than budget due to: . a reduction of $111.5m in the premium claims provision, as valued by Comcare’s independent actuary (a favourable movement of $116.7m compared to budget), offset by . an increase in the pre-premium claims provision of $3.7m (an unfavourable movement of $30.7m compared to budget). |
1.2E |
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Gains from the movement in common law asbestos-related disease claims provision were less than budget due to an increase of $26.1m in the claims provision, as valued by Comcare’s independent actuary (an unfavourable movement of $45.7m compared to budget). |
1.2F |
Statement of Financial Position
as at 30 June 2019 |
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2019 |
2018 Restated |
2019 Original Budget |
|||
Notes |
$'000 |
$'000 |
$'000 |
||
ASSETS |
|||||
Financial assets |
|||||
Cash and cash equivalents |
1,005,088 |
1,028,241 |
1,041,281 |
||
Trade and other receivables |
2,330,932 |
2,448,165 |
1 |
2,567,065 |
|
Other financial assets |
10,072 |
11,833 |
7,643 |
||
Total financial assets |
3,346,092 |
3,488,239 |
3,615,989 |
||
Non-financial assets |
|||||
Property, plant and equipment |
12,036 |
13,422 |
11,292 |
||
Computer software |
6,458 |
4,208 |
12,315 |
||
Other non-financial assets |
1,678 |
1,463 |
1,445 |
||
Total non-financial assets |
20,172 |
19,093 |
25,052 |
||
Total assets |
3,366,264 |
3,507,332 |
3,641,041 |
||
LIABILITIES |
|||||
Payables |
|||||
Suppliers |
353,123 |
2,120 |
6,210 |
||
Workers' compensation claims payable |
1,696 |
3,415 |
- |
||
Other payables |
5,199 |
6,358 |
16,765 |
||
Total payables |
360,018 |
11,893 |
22,975 |
||
Provisions |
|||||
Employee provisions |
17,943 |
16,628 |
19,447 |
||
Workers' compensation claims |
2,025,942 |
2,550,200 |
2,648,913 |
||
Common law asbestos-related disease claims |
936,880 |
903,179 |
1 |
931,980 |
|
Other provisions |
2,501 |
2,490 |
2,468 |
||
Total provisions |
2,983,266 |
3,472,497 |
3,602,808 |
||
Total liabilities |
3,343,284 |
3,484,390 |
3,625,783 |
||
Net assets |
22,980 |
22,942 |
15,258 |
||
EQUITY |
|||||
Contributed equity |
7,717 |
7,717 |
7,717 |
||
Reserves |
4,141 |
3,961 |
4,142 |
||
Retained surplus |
11,122 |
11,264 |
3,399 |
||
Total equity |
22,980 |
22,942 |
15,258 |
||
The above statement should be read in conjunction with the accompanying notes. |
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1 Restatement of comparative amounts due to prior period misstatement. Additional details are provided in the Restatement of Prior Period Comparatives Financial Statements Note and also in notes 21.B, 2.4B and 2.4G. |
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Budget variances commentary |
Note ref. |
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Cash and cash equivalents were $36.2m less than budget, mainly due to partial payments being made towards the exit liabilities owed to the self insurance licensees following their exit from Comcare’s premium scheme, lower workers’ compensation premiums, offset by lower workers’ compensation claims and common law asbestos-related claims and lower employee benefit and supplier costs. |
2.1A |
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Computer software assets were $5.8m less than budget due to delays in asset purchases. |
2.2A |
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Supplier payables were higher than budget as the balance includes the remaining exit liabilities owing to the self insurance licensees following their exit from Comcare’s premium scheme in 2018–19. |
2.3A |
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Workers’ compensation claims payable were less than budget due to transfer to Supplier payables to reflect the remaining exit liability owing to the self insurance licensees at 30 June 2019 and reductions due to favourable year-end valuations. |
2.4A, D, E, F |
Statement of Changes in Equity
for the period ended 30 June 2019 |
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Retained surplus / |
Asset revaluation surplus |
Contributed equity |
Total equity |
||||||||||||
2019 |
2018 |
2019 Original Budget |
2019 |
2018 |
2019 Original Budget |
2019 |
2018 |
2019 Original Budget |
2019 |
2018 |
2019 Original Budget |
||||
$’000 |
$’000 |
$'000 |
$’000 |
$’000 |
$'000 |
$’000 |
$’000 |
$'000 |
$’000 |
$’000 |
$'000 |
||||
Opening balance carried forward from the previous period |
11,264 |
3,399 |
3,399 |
3,961 |
4,142 |
4,142 |
7,717 |
7,717 |
7,717 |
22,942 |
15,258 |
15,258 |
|||
Comprehensive income |
|||||||||||||||
Surplus for the period |
(409) |
7,865 |
- |
- |
- |
- |
- |
- |
- |
(409) |
7,865 |
- |
|||
Revaluation adjustment |
267 |
- |
- |
180 |
(181) |
- |
- |
- |
- |
447 |
(181) |
- |
|||
Total comprehensive |
(142) |
7,865 |
- |
180 |
(181) |
- |
- |
- |
- |
38 |
7,683 |
- |
|||
Closing balance |
11,122 |
11,264 |
3,399 |
4,141 |
3,961 |
4,142 |
7,717 |
7,717 |
7,717 |
22,980 |
22,942 |
15,258 |
|||
The above statement should be read in conjunction with the accompanying notes. |
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Budget variance commentary |
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Comcare’s equity is higher than budget due to the net surplus from operations in 2017–-18. |
Cash Flow Statement
for the period ended 30 June 2019 |
||||
2019 |
2018 |
2019 Original Budget |
||
Notes |
$'000 |
$'000 |
$'000 |
|
OPERATING ACTIVITIES |
||||
Cash received |
||||
Sales of goods and rendering of services |
39,116 |
35,222 |
39,455 |
|
Receipts from Government |
66,072 |
61,429 |
66,525 |
|
Interest |
33,343 |
26,221 |
30,048 |
|
Workers' compensation premiums |
A1 |
241,931 |
279,528 |
285,615 |
GST received from customers |
23,348 |
28,421 |
31,688 |
|
Other |
1,310 |
800 |
- |
|
Total cash received |
405,120 |
431,621 |
453,331 |
|
Cash used |
||||
Employees |
66,332 |
68,174 |
67,640 |
|
GST paid to suppliers |
6,977 |
7,206 |
7,438 |
|
Net GST paid |
16,579 |
19,597 |
24,251 |
|
Suppliers |
31,115 |
30,626 |
33,536 |
|
Workers' compensation claims |
A2 |
277,873 |
230,614 |
250,016 |
Common law asbestos-related disease claims |
A3 |
24,423 |
22,453 |
29,309 |
Total cash used |
423,299 |
378,670 |
412,190 |
|
Net cash from/(used by) operating activities |
3.1 |
(18,179) |
52,951 |
41,141 |
INVESTING ACTIVITIES |
||||
Cash received |
||||
Proceeds from sales of property, plant and equipment |
3 |
139 |
- |
|
Total cash received |
3 |
139 |
- |
|
Cash used |
||||
Purchase of property, plant and equipment |
A4 |
4,977 |
4,628 |
7,087 |
Total cash used |
4,977 |
4,628 |
7,087 |
|
Net cash from/(used by) investing activities |
(4,974) |
(4,489) |
(7,087) |
|
Net (decrease)/increase in cash held |
(23,153) |
48,462 |
34,054 |
|
Cash and cash equivalents at the beginning of the reporting period |
1,028,241 |
979,779 |
1,007,227 |
|
Cash and cash equivalents at the end of the reporting period |
2.1A |
1,005,088 |
1,028,241 |
1,041,281 |
The above statement should be read in conjunction with the accompanying notes. |
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Budget variance commentary |
Note ref. |
|||
Workers' compensation premiums were lower due to lower charges in the final 2018–19 premiums, a part year refund to the self insurance licensees following their exit from Comcare's premium scheme and other payroll adjustments. |
A1 |
|||
Workers compensation claim payments were higher than budget due to payments made to the self insurance licensees upon their exit from Comcare's premium scheme, offset by lower premium and pre-premium benefit payments. |
A2 |
|||
Common law asbestos-related disease claims were less than budget due to lower benefit benefit payments. |
A3 |
|||
Purchase of property, plant and equipment was less than budget due to delays in asset purchases during the year. |
A4 |
Restatement of Prior Period Comparatives
for the period ended 30 June 2019 |
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The effect of the change in 2017–18 is summarised in the table below: |
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Restated |
Reported |
|||
2018 |
Adjustment |
2018 |
||
Notes |
$'000 |
$'000 |
$'000 |
|
STATEMENT OF COMPREHENSIVE INCOME |
||||
Gains |
||||
Gains from movement in workers' compensation claims provision |
242,700 |
- |
242,700 |
|
Gains (Losses) from movement in common law asbestos-related disease claims provision |
59,164 |
(36,036) |
95,200 |
|
Gains (Losses) from sale of assets |
132 |
- |
132 |
|
Total gains |
301,996 |
(36,036) |
338,032 |
|
Total own-source income |
655,589 |
(36,036) |
691,625 |
|
Net contribution by services |
297,552 |
(36,036) |
333,588 |
|
Reversal of write-downs and impairments |
56,838 |
- |
56,838 |
|
Available funding from movement in claims provision |
(346,736) |
36,036 |
(382,772) |
|
Surplus (Deficit) on continuing operations |
7,654 |
- |
7,654 |
|
STATEMENT OF FINANCIAL POSITION |
||||
Financial Assets |
||||
Trade and other receivables |
2,448,165 |
40,919 |
2,407,246 |
|
Total financial assets |
2,448,165 |
40,919 |
2,407,246 |
|
Total assets |
3,507,332 |
40,919 |
3,466,413 |
|
Provisions |
||||
Common law asbestos-related disease claims |
903,179 |
40,919 |
862,260 |
|
Total provisions |
903,179 |
40,919 |
862,260 |
|
Total liabilities |
3,484,390 |
40,919 |
3,443,471 |
|
Net assets |
22,942 |
- |
22,942 |
|
Total equity |
22,942 |
- |
22,942 |
|
Comcare adjusted the comparative balances following the identification of a misstatement in the 2017–18 provision for common law asbestos-related disease claims and third party claims recoveries receivables. It was identified that the 30 June 2018 actuarial valuation inadvertently applied economic assumptions which understated the independent valuation. |
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The restatement required an increase to the Provision for Common law asbestos-related claims ($40.9m), and third party claims recoveries receivable ($4.9m), offset by a corresponding increase to Appropriations receivable (increase of $36.0m). |
Overview
Objectives of Comcare |
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Comcare is the national workers' compensation and work health and safety authority. We are committed to supporting participation and productivity through healthy and safe workplaces that minimise the impact of harm. Comcare is structured to meet the following outcomes: |
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Outcome 1: |
Support participation and productivity through healthy and safe workplaces that minimise the impact of harm in workplaces covered by Comcare. |
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Program component 1.1 |
Work Health, Safety and Rehabilitation Regulation |
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Program component 1.2 |
Comcare Workers' Compensation Scheme Management |
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Program component 1.3 |
SRCC and Seacare Authority Support |
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Program component 1.4 |
Premium Claims |
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Program component 1.5 |
Pre-premium Claims |
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Program component 1.6 |
Asbestos Claims |
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The Basis of Preparation |
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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: |
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a) |
Public Governance, Performance and Accountability (Financial Reporting) Rule 2015 |
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b) |
Australian Accounting Standards and Interpretations issued by the Australian Accounting Standards Board (AASB) that apply for the reporting period. |
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The financial statements have been prepared on an accrual basis and in accordance with the historical cost 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. |
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New Australian Accounting Standards |
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Adoption of New Australian Accounting Standard Requirements |
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No accounting standard has been adopted earlier than the application date as stated in the standard. |
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Standard/ Interpretation |
Application date |
Nature of impending change/s in accounting policy and likely impact on initial application |
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AASB 9 Financial Instruments (December 2014) |
1 January 2018 |
The new standard AASB 9 includes revised guidance on the classification and measurement of financial assets, including a new expected credit loss model for calculating impairment, and supplements the new general hedge accounting requirements previously published. The AASB 9 replaces AASB 39 and all previous versions of AASB 9 (issued in December 2009 – as amended) and AASB 9 (issued in December 2010 – as amended). |
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Future Australian Accounting Standard Requirements |
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The following new standards, revised standards, interpretations and amending standards were issued by the AASB prior to the signing of the statement by the accountable authority and chief financial officer, which are expected to have a financial impact on Comcare's financial statements for future reporting periods : |
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Standard/ Interpretation |
Application date for Comcare1 |
Nature of impending change/s in accounting policy and likely impact on initial application |
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AASB 15 Revenue from Contracts with Customers AASB 2014-5 Amendments to Australian Accounting Standards arising from AASB 15 AASB 2015-8 Amendments to Australian Accounting Standards – Effective Date of AASB 15 AASB 2016-3 Amendments to Australian Accounting Standards – Clarifications to AASB 15 |
1 January 2019 |
AASB 15 contains a single model that applies to contracts with customers and two approaches to recognising revenue: at a point in time or over time. The model features a contract-based five-step analysis of transactions to determine whether, how much and when revenue is recognised. The compiled AASB 15 does not apply mandatorily to not-for-profit entities. However, earlier application is permitted for annual reporting periods beginning before 1 January 2019. |
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Standard/ Interpretation |
Application date |
Nature of impending change/s in accounting policy and likely impact on initial application |
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AASB 16 Leases |
1 January 2019 |
AASB 16 removes the classification of leases as either operating leases or finance leases – for the lessee – effectively treating all leases as finance leases. AASB 16 requires a lessee to recognise assets and liabilities for all leases with a term of more than 12 months, unless the underlying asset is of low value. A lessee is required to recognise a right-of-use asset representing its right to use the underlying leased asset and a lease liability representing its obligations to make lease payments. AASB 16 requires enhanced disclosures for both lessees and lessors to improve information disclosed about an entity’s exposure to leases. Comcare currently holds $21.1m in operating leases as at 30 June 2019. The quantitative impact on how this will affect Comcare's statement of financial position has not yet been formally determined. |
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AASB 17 Insurance Contracts |
1 January 2021 |
AASB 17 is the first truly international accounting standard for insurance. It will replace the three standards: AASB 4 Definition of Insurance, AASB 1023 General Insurance and AASB 1038 Life Insurance (AASB 1038). |
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AASB 1058 Income of Not-for-Profit Entities AASB 2016-8 Amendments to Australian Accounting Standards – Australian Implementation Guidance for Not-for-Profit Entities |
1 January 2019 |
AASB 1058 replaces the income recognition requirements relating to private sector not-for-profit (NFP) entities, as well as the majority of income recognition requirements relating to public sector NFP entities previously reflected in AASB 1004 Contributions. |
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1 The entity's expected initial application date is when the accounting standard becomes operative at the beginning of Comcare's reporting period. |
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All other new, revised, amending standards and/or interpretations that were issued prior to the sign-off date and are applicable to future reporting period(s) are not expected to have a future material impact on Comcare's financial statements. |
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Taxation |
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Comcare is exempt from all forms of taxation except Fringe Benefits Tax and the Goods and Services Tax. |
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Significant accounting judgements and estimates |
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Comcare's compensation schemes exhibit many of the characteristics of an insurance business. Comcare's statutory relationship with its customers and the Commonwealth is not of the nature of an insurance contract as defined under AASB 1023 General Insurance Contracts. Comcare regards the application of AASB 137 Provisions, Contingent Liabilities and Contingent Assets in the valuation of its claims provisions as more appropriate. The valuation of workers’ compensation claims liabilities was undertaken as at 30 June 2019 by independent consulting actuaries, Taylor Fry Pty Ltd (Taylor Fry). The valuation of common law asbestos-related disease claims liabilities was undertaken as at 30 June 2019 by independent consulting actuaries, PricewaterhouseCoopers Consulting (Australia) Pty Ltd (PwC). The provisions represent an estimate of the present value of future payments in respect of claims for events occurring before 30 June 2019 with a 75 per cent probability of sufficiency. The estimated cost of claims includes direct expenses to be incurred in settling claims. Expected value of recoveries from third parties is included in Trade and Other Receivables. |
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Comcare takes all reasonable steps to ensure that it has appropriate information regarding its claims exposures. However, given the uncertainty in establishing the claims provisions, it is likely that the final outcome will prove to be different from the original liability established. Many sources of uncertainty exist when estimating a “long tail” provision. There are some general sources of uncertainty and these arise from: . the actuarial models and methods which may not exactly match the underlying claims process . past claim fluctuations which may create uncertainty in selecting model parameters . unavailable data or undetected errors in data which may result in inappropriate parameters being selected . future economic and environmental conditions which may be different to those assumed . future claim fluctuations, resulting in uncertainty of the projected liability, even if the model and its parameters were perfect. |
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Principles of accounting for workers' compensation claims |
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Comcare manages workers' compensation claims for Commonwealth employees and some employees of the ACT Government under the Safety, Rehabilitation and Compensation Act 1988 (SRC Act). Workers' compensation claims for work related injuries and illness sustained on or after 1 July 1989 are referred to as 'premium claims' or 'premium business'. Workers' compensation claims for work related injuries sustained by Commonwealth employees prior to that date are referred to as 'pre-premium claims' or 'pre-premium business'. |
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For premium claims, premiums are received from employers covered under the SRC Act. They are calculated using a system and methodology developed by an independent actuary and are intended to fully cover all liabilities incurred over the life of these claims. |
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All premiums are charged up front for the full financial year. There are no unearned premiums or deferred acquisition costs at the end of the financial year. Changes to premiums arising from wage and salary adjustments are recognised in the year they become payable or receivable. |
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Pre-premium claims are funded by parliamentary special appropriations on an emerging cost basis. |
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In accordance with section 128A of the SRC Act, Comcare’s liability under the SRC Act in respect of any injury, loss or damage suffered before 1 July 1989 by an employee of a Commonwealth authority listed in section 128A(4) must be discharged by the authority. |
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Claims provisions |
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The valuation of workers’ compensation claims liabilities was undertaken as at 30 June 2019 by independent consulting actuaries, Taylor Fry. The valuation of common law asbestos-related disease claims liabilities was undertaken as at 30 June 2019 by independent consulting actuaries, PwC. The liability for workers’ compensation claims (both premium and pre-premium) and common law asbestos-related disease claims are determined in accordance with the requirements of AASB 137 Provisions, Contingent Liabilities and Contingent Assets. Provisions for claims are recognised when: . Comcare has a present legal or constructive obligation as a result of past events . it is probable that an outflow of resources will be required to settle the obligation . the amount has been reliably estimated. |
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Where there are a number of similar obligations for each claim type, the likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a whole. A provision is recognised even if the likelihood of an outflow with respect to any one item included in the same claim type may be small. The expected future payments are discounted to present value using a risk free rate. The expected future payments include claims reported but not yet paid, claims incurred but not reported and anticipated claims handling costs. Claims handling costs can either be associated directly with individual claims, such as legal and other professional fees, or associated indirectly with individual claims, such as claims administration costs. |
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Workers' compensation claims provisions |
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There are specific sources of uncertainty arising from the nature of the schemes and the data. Allowance is made, however, for changes or uncertainties which may create distortions in the underlying statistics or which might cause the future cost of claims to increase or decrease when compared with past cost of claims including: . trends in long-term weekly income replacement benefit and medical cost continuance rates . the longer lag times between injury and claim relative to other workers’ compensation schemes . movements in industry benchmarks . changes in service delivery which might accelerate or slow down the development and/or recording of paid or incurred claims, compared with the statistics from previous periods . changes in the legal environment . medical and technological developments. |
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The injury profile within the schemes creates dynamic expenditure patterns. Typically injuries can be of an immediate and short-term duration as well as those which are more permanent resulting in long-term entitlements. Historically, the expenditure trend does concentrate earlier (the discounted mean term of the liabilities is approximately eight years). However, the provisions have a long tail element where payments are expected to be made for the next 50 or more years. |
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For the purpose of estimating the workers’ compensation provisions Taylor Fry considers the varying types of benefits. These include the following: . incapacity payments, split between short-term and long-term payments . medical and rehabilitation expenses . legal expenses . other, including permanent impairment, non-economic loss payments, death, common law and other payments. |
||||||||
In calculating the estimated cost of future workers’ compensation claims, Taylor Fry uses a variety of estimation techniques, generally based on statistical analysis of historical experience, which assumes that the development pattern of the current and future claims will be consistent with past experience. The sensitivity analysis shown below attempts to quantify some of the significant uncertainty around the valuation estimates. It is not intended to be comprehensive and uncertainty remains in other areas. It shows that, notwithstanding the substantial downward adjustment in the liability as a result of changes in the assumptions for valuations, the risk of over or underestimating the liability remains. At the same time, these results show there is still room for further decline in expenditure under assumptions that would not be unreasonable given recent experience. Details of the specific assumptions used in deriving the claims liabilities at year end are detailed in Notes 2.4D-G. |
||||||||
Premium business |
||||||||
The value of the provision for premium claims liability has reduced by $528m in 2018-19 ($230m reduction in 2017–18). |
||||||||
Changes to premium claims liability |
$m |
|||||||
Opening balance of gross liability as at 1 July 2018 |
2,199 |
|||||||
Reduction in liability due to commencement of self insurance licensees |
(432) |
|||||||
Roll forward adjustment to 30 June 2019 |
7 |
|||||||
Projected gross liability as at 30 June 2019 |
1,774 |
|||||||
Changes in economic assumptions |
140 |
|||||||
Number of active incapacity and/or medical claims less than forecast |
(74) |
|||||||
Number of new claimants receiving incapacity and/or medical payments |
(42) |
|||||||
Changes to shorter-term continuance rates |
(51) |
|||||||
Continuance rates at longer durations since injury, including the impact of retirement |
(103) |
|||||||
Claims administration expenses |
6 |
|||||||
Reductions in the assumed average quarterly payments |
(4) |
|||||||
Other |
25 |
|||||||
Closing balance of gross liability as at 30 June 2019 |
1,671 |
|||||||
Commonwealth latent mental disease claims |
||||||||
Comcare carried out analysis of data in relation to latent mental disease claims and has recognised a separate provision for liability arising from constructive obligations existing before the date of injury, but after the date of exposure to the cause of injury. This accounting practice recognises the liability before Comcare's legal obligation to provide compensation under the SRC Act. The additional liability cannot be funded from premiums until the year in which the resulting injuries occur. |
||||||||
Premium business sensitivity analysis |
||||||||
As the workers’ compensation provisions are subject to a variety of assumptions, it is considered prudent to disclose what the sensitivities of the significant assumptions could be. In its report, Taylor Fry has provided the following information regarding areas of uncertainty and key risks. |
||||||||
Longer-term continuance rates |
||||||||
The valuation estimate is extremely sensitive to the assumed longer-term continuance rates (for claims of 12.5 or more years since injury). Past longer-term continuance rates have shown considerable variability from year to year and estimates of future longer-term continuance rates are highly uncertain. If continuance rates for incapacity and medical payments were to reach levels 0.5 per cent and 0.7 per cent higher respectively than those assumed for this valuation – a plausible increase given historical variability in these rates – the central estimate of the liability would increase by around $133m. However, if experience were to move in the opposite direction by the same amount, then the liability would decrease by around $98m. |
||||||||
Shorter-term continuance rates |
||||||||
The liability estimate is highly sensitive to forecast short term continuance rates (for incapacity payments of less than 12.5 years since injury and medical payments less than 15 years since injury). In the past there has been considerable quarterly variation in short term continuance rates, increasing the uncertainty of estimates. If short term continuance rates on both incapacity and medical payments were to reach levels 1 per cent higher than forecast, then the central estimate of liability would increase by around $172m. However, if experience was 1 per cent lower than forecast, the central estimate of liability would decrease by $133m. Both these scenarios can be considered moderate variations in continuance rate assumptions given the historical variability in continuance rates. |
||||||||
Unit administration expenses remain at 2015–16 level |
||||||||
Administration expenses per service unit increased during 2015–16 due to fewer open claims, fewer claims reports and external claims management trials, but then reduced again during 2016–17 due to increased reconsiderations and appeals. A future cost per weighted service unit equal to the average cost per weighted service unit over the 2016–17 and 2017–18 injury years has been assumed. If the cost per weighted service unit were to revert to the increased level experienced during 2015–16, then the liability estimate would increase by $37m. This uncertainty is particularly acute because the commencement of self insurance licensees and corresponding exit from the Insured Scheme may leave excess claims management capacity. |
||||||||
The illustrative alternative valuation assumptions considered in the analysis are intended to provide some indication as to the relative sensitivity of the estimate to changes in some of the assumptions used. The range of the values considered in this analysis should not be considered as necessarily presenting a "reasonable" range of possible outcomes. It should also be noted that the analysis considers the impact of changes in each factor in isolation. In reality, several factors might vary at the same time. Hence the combined effect of several variations from the assumptions could be significantly greater than the variation indicated for each factor in isolation. No reliance should be placed on this analysis in regards to the level of uncertainty in the estimates. This has been modelled and quantified separately by Taylor Fry in arriving at a provision for premium and pre-premium claims liabilities. A 13 per cent risk margin has been applied to the central estimate for premium claims liabilities and 16.5 per cent for pre-premium claims liabilities, which gives an intended 75 per cent probability of sufficiency. |
||||||||
Economic assumptions |
||||||||
This provision is sensitive to interest rate assumption changes as Taylor Fry calculates the future cash flows and then discounts these future values to the present value using the discount rate. The level of the discount rate, while not affecting the projected future cash flows themselves, will alter the present value assigned to those cash flows, and hence the estimate of the liability. Using a discount rate 1 per cent higher would decrease the central estimate of the liability by $105m while a discount rate 1 per cent lower would increase the liability by $122m. |
||||||||
Common law asbestos-related disease claims |
||||||||
The estimated cost of asbestos-related disease claims is by its nature highly uncertain. In projecting future events which may not occur for 40 to 50 years the actuary is extrapolating disease incidence numbers many years beyond the data from which the projection models have been calibrated. Further, in projecting the future cost of compensation in a common law system the actuary needs to consider the potential for the claims and litigation environment to change. |
||||||||
The outlook for future compensation costs for asbestos litigation in general and for Comcare’s liabilities in particular contains a great number of uncertainties in relation to factors such as: |
||||||||
. the number of diagnosed incidences of asbestos-related diseases . the proportion of cases being compensated . medical diagnostic and treatment improvements . the litigation environment, including legal precedents and court procedures . the cost per claim and the contribution from co-defendants. |
||||||||
Sensitivity analysis performed by PwC indicates that the net central estimate liability, including expenses, may vary by approximately -$102m to +$140m (i.e. -18 per cent to +24 per cent) as a result of some plausible changes in the valuation basis. This illustrates the uncertainty inherent in the projections. It is possible that a number of these changes could occur simultaneously, resulting in even larger changes. Each of the scenarios in the sensitivity analysis lies within the selected risk margin (which is 40 per cent of the central estimate). |
||||||||
Disclosure of funding for Comcare |
||||||||
Premium Business |
||||||||
Premium business refers to workers’ compensation claims resulting from injuries that have occurred since 1 July 1989. |
||||||||
In accordance with section 97A of the SRC Act, Comcare calculates premiums to be charged for each financial year based on the expected costs for claims when the date of injury, as defined in the SRC Act, is in that year. The calculation of the Comcare premium pool takes into account actual and notional interest expected to be earned on the premium funds collected. |
||||||||
Prior to being repealed (effective 1 July 2002), subsection 90A of the SRC Act required that premiums collected by Comcare be paid to the Australian Government. These funds will be returned to Comcare through parliamentary appropriations as required for payment of claims relating to incidents occurring after 1 July 1989. As at 30 June 2019 the notional balance of these funds was $1,587.3m (2018: $1,565.1m). This appropriation is only payable to Comcare after it has exhausted all of its retained funds. Premiums received from 1 July 2002 are retained by Comcare. |
||||||||
The funds held with the Australian Government earned notional interest of $22.1m in 2018–19 (2018: $23.5m) calculated as part of the requirements of Section 90C of the SRC Act. This interest was added to the balance of the notional reserve as at 30 June 2019. The interest rate in calculated under the determination made by the Finance Minister made under Section S90C(3). |
||||||||
Independent actuarial assessment has established that the actuarial liability for the premium business claims as at 30 June 2019 is $1,671.2m (2018: $2,199.2m). |
||||||||
The following table summarises the sources of funds available to Comcare to settle the outstanding claims for the premium business. |
||||||||
2019 |
2018 |
|||||||
Note |
$'000 |
$'000 |
||||||
Net premiums held in the Commonwealth Consolidated Revenue Fund |
1,587,257 |
1,565,126 |
||||||
Cash and cash equivalents |
599,421 |
979,243 |
||||||
Actuary assessed third party recoveries |
6,000 |
7,300 |
||||||
Actuary assessed gross outstanding liability for payment of premium relate claims* |
2.4D |
(1,671,200) |
(2,199,200) |
|||||
Funding of claims liabilities |
521,478 |
352,469 |
||||||
* Excludes $11.3m for additional latent mental disease claims where the date of injury as defined in the SRC Act is after balance date. Refer to Note 2.4E for Commonwealth latent mental disease claims provision. |
||||||||
Pre-premium business |
||||||||
Workers’ compensation claims resulting from injuries that occurred prior to 1 July 1989 are referred to as ‘pre-premium’ claims. Expenses associated with these claims are funded from Australian Government special appropriations. Independent actuarial assessment has established that the outstanding liability for these claims as at 30 June 2019 is $343.4m (2018: $339.7m). The following table summarises the sources of funds available to Comcare to settle the outstanding claims for the pre-premium business. |
||||||||
2019 |
2018 |
|||||||
Note |
$'000 |
$'000 |
||||||
Special appropriation receivable |
357,895 |
353,666 |
||||||
Cash and cash equivalents |
(14,453) |
(13,966) |
||||||
Actuary assessed gross outstanding liability for payment of pre-premium related claims |
2.4F |
(343,442) |
(339,700) |
|||||
Surplus funds in excess of claims liabilities |
- |
- |
||||||
Asbestos-related disease business |
||||||||
Comcare is also responsible for the management of asbestos-related personal injury common law disease claims against the Commonwealth. Expenses associated with these claims are funded from Australian Government special appropriations. Independent actuarial assessment has established that the outstanding liability for these claims as at 30 June 2019 is $936.9m (2018: $903.2m, restated). The following table summarises the sources of funds available to Comcare to settle the outstanding claims for the asbestos-related disease business. |
||||||||
2019 |
2018 |
|||||||
Restated |
||||||||
Note |
$'000 |
$'0001 |
||||||
Special appropriation receivable |
757,068 |
737,216 |
||||||
Cash and cash equivalents |
52,972 |
46,700 |
||||||
Actuary assessed third party recoveries |
126,840 |
119,263 |
||||||
Actuary assessed gross outstanding liability for payment of asbestos-related claims |
2.4G |
(936,880) |
(903,179) |
|||||
Surplus funds in excess of claims liabilities |
- |
- |
||||||
1 Restatement of comparative amounts due to prior period misstatement. Additional details are provided in the Restatement of Prior Period Comparatives Financial Statements Note and also in notes 1.2F, 1.2H, 21.B, 2.4B and 2.4G. |
Notes to the Financial Statements
Departmental Financial Performance
This section analyses the financial performance of Comcare for the year ended 30 June 2019
Note 1.1: Expenses
2019 $'000 |
2018 $'000 |
|||
1.1A |
Employee benefits |
|||
Wages and salaries |
49,613 |
51,784 |
||
Superannuation |
||||
Defined contribution plans |
6,443 |
6,456 |
||
Defined benefit plans |
2,996 |
3,147 |
||
Leave and other entitlements |
7,119 |
6,183 |
||
Separation and redundancies |
699 |
592 |
||
Other |
816 |
639 |
||
Total employee benefits |
67,686 |
68,801 |
||
Accounting policy |
||||
Accounting policies for employee related expenses are contained in the People and Relationships section. |
||||
1.1B |
Suppliers |
|||
Goods and services supplied or rendered |
||||
Consultants |
1,213 |
1,029 |
||
Legal expenses |
2,804 |
2,265 |
||
Contractors |
2,709 |
3,374 |
||
Assurance services |
1,292 |
1,435 |
||
Fees for Professional Services |
1,772 |
1,450 |
||
External claims services |
2,517 |
2,945 |
||
Education and conference delivery |
626 |
227 |
||
Information communication technology |
4,938 |
4,609 |
||
Property services |
1,444 |
1,122 |
||
Travel |
1,529 |
1,661 |
||
Other |
3,480 |
3,224 |
||
Total goods and services supplied or rendered |
24,324 |
23,341 |
||
Goods supplied |
617 |
682 |
||
Services rendered |
23,707 |
22,659 |
||
Total goods and services supplied or rendered |
24,324 |
23,341 |
||
Other suppliers |
||||
Operating lease rentals in connection with: |
||||
Minimum lease payments |
5,950 |
5,971 |
||
Total other suppliers |
5,950 |
5,971 |
||
Total suppliers |
30,274 |
29,312 |
||
Leasing commitments |
||||
Comcare, in its capacity as lessee, currently has nine agreements. Eight lease agreements are for office accommodation with lease payments subject to regular increases in accordance with rent reviews and pre-determined percentage increases. The final lease agreement relates to motor vehicles provided for investigations. |
||||
The remaining period of the lease agreements are between three months to three years with an option to renew subject to negotiation of lease. All leases are effectively non-cancellable. |
||||
Commitments for minimum lease payments in relation to non-cancellable operating leases are payable as follows: |
||||
Within 1 year |
7,904 |
7,437 |
||
Between 1 to 5 years |
13,240 |
18,296 |
||
Total operating lease commitments |
21,144 |
25,733 |
||
Accounting policy |
||||
The AASB has introduced AASB 16 Leases, removing the distinction between operating and finance lease for lessees and requiring the recognition of a right-of-use (ROU) asset and lease liability on the balance sheet for most leasing arrangements. |
||||
The initial application of the AASB 16 is for the 2019–20 financial year. Comcare currently holds $21.1m in operating leases as at 30 June 2019. The quantitative impact on how this will affect Comcare's statement of financial position has not yet been formally determined. There is no requirement for re-assessment of lease contracts from previous years under the modified model proposed by the Department of Finance. The requirements of AASB 16 Leases are to be applied to the leases of Comcare’s for the financial year beginning 1 July 2019. |
||||
2019 |
2018 |
|||
$'000 |
$'000 |
|||
1.1C |
Finance costs |
|||
Unwinding of discount |
52 |
51 |
||
Interest expense |
2,173 |
- |
||
Total finance costs |
2,225 |
51 |
||
Accounting policy |
||||
All borrowing costs are expensed as incurred. |
||||
1.1D |
Write-downs and impairment of assets |
|||
Impairment on intangible assets |
- |
560 |
||
Revaluation decrements |
50 |
- |
||
Total write-downs and impairment of assets |
50 |
560 |
||
1.1E |
Workers' compensation claims expense |
|||
Workers' compensation claims expenses paid and payable (net) |
209,924 |
232,700 |
||
Total workers' compensation claims expense |
209,924 |
232,700 |
||
2019 |
2018 |
|||
$'000 |
$'000 |
|||
Premium claims expense |
||||
Incapacity |
113,672 |
128,993 |
||
Legal including common law |
23,844 |
18,069 |
||
Medical, travel and other |
51,091 |
65,846 |
||
188,607 |
212,908 |
|||
(Less): Recoveries from third parties |
(1,497) |
(2,167) |
||
Total premium claims expense |
187,110 |
210,741 |
||
Pre-premium claims expense |
||||
Incapacity |
7,825 |
9,432 |
||
Legal, including common law |
1,595 |
1,108 |
||
Medical, travel and other |
13,394 |
11,419 |
||
Total pre-premium claims expense |
22,814 |
21,959 |
||
1.1F |
Common law asbestos-related disease claims expense |
|||
Common law asbestos-related disease claim payments |
24,423 |
22,453 |
||
Total common law asbestos-related disease claims expense |
24,423 |
22,453 |
Note 1.2: Own-Source Revenue and Gains
Own-source revenue |
||||
1.2A |
Sale of goods and rendering of services |
|||
Rendering of services |
22,770 |
22,902 |
||
Total sale of goods and rendering of services |
22,770 |
22,902 |
||
A Memorandum of Understanding (MOU) with the Seacare Authority was established covering the administrative and operational responsibilities and relationship between the parties with the regards to the provision of services. The existing MOU is currently under reconsideration with the Seacare Authority. |
||||
Accounting policy |
||||
Revenue from the sale of goods is recognised when: . the risks and rewards of ownership have been transferred to the buyer . Comcare retains no managerial involvement nor effective control over the goods. The stage of completion on contracts at the reporting date is determined by reference to the proportion that costs incurred to date bear to the estimated total costs of the transaction. Receivables for goods and services, which have 30 day terms, are recognised at the nominal amounts due less any impairment allowance. Collectability of debts is reviewed as at the end of the reporting period. Allowances are made when collectability of the debt is no longer probable. |
||||
2019 |
2018 |
|||
$'000 |
$'000 |
|||
1.2B |
Fees and fines |
|||
Licence fees |
15,979 |
15,717 |
||
Total fees and fines |
15,979 |
15,717 |
||
1.2C |
Workers' compensation premiums |
|||
Related entities |
197,222 |
217,884 |
||
External entities |
45,088 |
67,299 |
||
Total workers' compensation premiums |
242,310 |
285,183 |
||
1.2D |
Interest |
|||
Interest |
31,350 |
28,991 |
||
Total interest |
31,350 |
28,991 |
||
Accounting policy |
||||
Interest revenue is recognised using the effective interest method. |
||||
2019 |
2018 |
|||
$'000 |
$'000 |
|||
1.2E |
Gains from movement in workers' compensation claims provision |
|||
Gains from movement in workers' compensation claims provision |
107,807 |
242,700 |
||
Total gains from movement in workers' compensation claims provision |
107,807 |
242,700 |
||
Gains from movement in premium claims provision |
||||
Movements during reporting period: |
||||
Premium claims provision |
112,849 |
229,900 |
||
Recoveries receivable |
(1,300) |
(1,100) |
||
Total gains from movement in premium claims expense |
111,549 |
228,800 |
||
Gains from movement in Commonwealth latent mental disease claims provision |
||||
Movements during reporting period: |
||||
Commonwealth latent mental disease claims provision |
- |
5,700 |
||
Total gains from movement in Commonwealth latent mental disease claims provision |
- |
5,700 |
||
Gains from movement in pre-premium claims provision |
||||
Movements during reporting period: |
||||
Pre-premium claims provision |
(3,742) |
8,200 |
||
Total gains/(losses) from movement in pre-premium |
(3,742) |
8,200 |
||
2018 |
||||
2019 |
Restated |
|||
$'000 |
$'000 |
|||
1.2F |
Gains (Losses) from movement in common law asbestos-related disease claims provision |
|||
Movements during reporting period: |
||||
Asbestos claims provision |
(33,701) |
66,741 |
||
Recoveries receivable |
7,577 |
(7,577) |
||
Total gains (losses) from movement in common law asbestos-related disease claims provision |
(26,124) |
59,164 |
||
1.2G |
Revenue from Government |
|||
Attorney-General's Department |
||||
Corporate Commonwealth entity payment item |
5,989 |
6,020 |
||
Grants from portfolio department |
54,298 |
50,818 |
||
Total revenue from Government |
60,287 |
56,838 |
||
1.2H |
Available funding from movement in claims provision |
|||
Available funding from movement in claims provisions |
(117,012) |
(346,736) |
||
Total available funding from movement in |
||||
claims provision |
(117,012) |
(346,736) |
||
Accounting policy |
||||
Revenue from Government Amounts appropriated for departmental appropriations for the year (adjusted for any formal additions and reductions) are recognised as Revenue from Government when the entity gains control of the appropriation, except for certain amounts that relate to activities that are reciprocal in nature, in which case revenue is recognised only when it has been earned. Appropriations receivable are recognised at their nominal amounts. Funding received or receivable from non-corporate Commonwealth entities (appropriated to the non-corporate Commonwealth entity as a corporate Commonwealth entity payment item for payment to this entity) is recognised as Revenue from Government by the corporate Commonwealth entity unless the funding is in the nature of an equity injection or a loan. |
Departmental Financial Position
This section analyses Comcare's assets used to conduct its operations and the operating liabilities incurred as a result. Employee related information is disclosed in the People and Relationships section.
Note 2.1: Financial Assets
2019 |
2018 |
|||
$'000 |
$'000 |
|||
2.1A |
Cash and cash equivalents |
|||
Cash at bank and on hand |
1,777 |
3,241 |
||
Deposits at call |
23,311 |
20,000 |
||
Term deposits |
980,000 |
1,005,000 |
||
Total cash and cash equivalents |
1,005,088 |
1,028,241 |
||
The closing balance of Cash and cash equivalents does not include amounts held in trust: $1,743K in 2019 and $1,724K in 2018). See note 6.1 Assets Held in Trust for more information. |
||||
Accounting policy |
||||
Cash is recognised at its nominal amount. Cash and cash equivalents include cash on hand and demand deposits in bank accounts with an original maturity of three months or less that are readily convertible to known amounts of cash and subject to insignificant risk of changes in value. |
||||
2018 |
||||
2019 |
Restated |
|||
$'000 |
$'000 |
|||
2.1B |
Trade and other receivables |
|||
Goods and services receivable |
||||
Goods and services |
953 |
1,191 |
||
Total goods and services receivable |
953 |
1,191 |
||
Appropriations receivable |
||||
For existing programs* |
2,192,041 |
2,314,838 |
||
Total appropriations receivable |
2,192,041 |
2,314,838 |
||
Other receivables |
||||
Third party claims recoveries receivable - workers' compensation claims |
6,000 |
7,300 |
||
Third party claims recoveries receivable - common law asbestos-related claims |
126,840 |
119,263 |
||
Claims recoveries |
7,101 |
7,254 |
||
GST receivable from the Australian Taxation Office |
722 |
590 |
||
Other |
33 |
- |
||
Total other receivables |
140,696 |
134,407 |
||
Total trade and other receivables (gross) |
2,333,690 |
2,450,436 |
||
Less impairment allowance account |
||||
Claims recoveries |
(2,758) |
(2,271) |
||
Total impairment allowance account |
(2,758) |
(2,271) |
||
Total trade and other receivables (net) |
2,330,932 |
2,448,165 |
||
* The value disclosed is the combined value of the pre-premium special appropriation receivable, asbestos-related disease special appropriation receivable and net premiums held in the Commonwealth Consolidated Revenue Fund as identified in the Overview. |
||||
2018 |
||||
2019 |
Restated |
|||
$'000 |
$'000 |
|||
Trade and other receivables (net) |
||||
expected to be recovered: |
||||
No more than 12 months |
51,469 |
58,115 |
||
More than 12 months |
2,279,463 |
2,390,050 |
||
Total trade and other receivables (net) |
2,330,932 |
2,448,165 |
||
Credit terms for goods and services were within 30 days (2018: 30 days) |
||||
Accounting policy |
||||
Financial assets Trade receivables, loans and other receivables that are held for the purpose of collecting the contractual cash flows where the cash flows are solely payments of principal and interest, that are not provided at below-market interest rates, are subsequently measured at amortised cost using the effective interest method adjusted for any loss allowance. |
||||
Reconciliation of impairment allowance |
||||
Goods and services |
Other receivables |
Total |
||
$'000 |
$'000 |
$'000 |
||
Movements in relation to 2019 |
||||
As at 1 July 2018 |
- |
2,271 |
2,271 |
|
Amounts written off |
- |
(615) |
(615) |
|
Increase/(decrease) recognised in net cost of services |
- |
1,102 |
1,102 |
|
Total as at 30 June 2019 |
- |
2,758 |
2,758 |
|
Movements in relation to 2018 |
||||
As at 1 July 2017 |
1,019 |
1,019 |
||
Amounts written off |
(3,350) |
(3,350) |
||
Increase/(decrease) recognised in net cost of services |
- |
4,602 |
4,602 |
|
Total as at 30 June 2018 |
- |
2,271 |
2,271 |
|
Accounting policy |
||||
AASB 9 replaces the 'incurred loss' model previously used under AASB 139 with an 'expected credit loss' (ECL) model. This new impairment model applies to financial assets measured at amortised cost, contract assets and debt instruments measured at fair value through other comprehensive income. |
||||
Trade and other receivable assets at amortised cost are assessed for impairment at the end of each reporting period. The simplified approach has been adopted in measuring the impairment loss allowance at an amount equal to lifetime ELC. |
||||
2019 |
2018 |
|||
$'000 |
$'000 |
|||
2.1C |
Other financial assets |
|||
Interest accrued |
8,049 |
10,043 |
||
Other |
2,023 |
1,790 |
||
Total other financial assets |
10,072 |
11,833 |
||
Other financial assets expected to be recovered |
||||
No more than 12 months |
10,072 |
11,833 |
||
More than 12 months |
- |
- |
||
Total other financial assets |
10,072 |
11,833 |
Note 2.2: Non-Financial Assets
2.2A |
Reconciliation of the opening and closing balances of property, plant and equipment and intangibles (2019) |
|||
Other property, plant and equipment |
Computer software purchased and internally developed |
Total |
||
As at 1 July 2018 |
||||
Gross book value |
33,229 |
21,644 |
54,873 |
|
Accumulated depreciation/amortisation |
(19,807) |
(17,436) |
(37,243) |
|
Net book value 1 July 2018 |
13,422 |
4,208 |
17,630 |
|
Additions: |
||||
By purchase or internally developed |
2,237 |
2,862 |
5,099 |
|
Depreciation/amortisation expense |
(4,029) |
(612) |
(4,641) |
|
Impairment recognised in net cost of services |
(50) |
(50) |
||
Disposals: |
||||
Cost of assets disposed |
(3,107) |
(1,208) |
(4,315) |
|
Add write back of depreciation on disposals |
3,098 |
1,208 |
4,306 |
|
Net asset disposals |
(9) |
- |
(9) |
|
Revaluations: |
||||
Revaluation of assets - net value cost adjustment |
2,860 |
- |
2,860 |
|
Add write back of depreciation on revaluation of assets |
(2,395) |
- |
(2,395) |
|
Net revaluation |
465 |
- |
465 |
|
Net book value 30 June 2019 |
12,036 |
6,458 |
18,494 |
|
Net book value 30 June 2019 represented by: |
||||
Gross book value |
35,219 |
23,299 |
58,518 |
|
Accumulated depreciation/amortisation |
(23,183) |
(16,841) |
(40,024) |
|
Net book value 30 June 2019 |
12,036 |
6,458 |
18,494 |
|
Revaluations of non-financial assets |
||||
All revaluations were conducted in accordance with the revaluation policy stated below. On 30 June 2019, an independent valuer conducted the revaluation. |
||||
Reconciliation of the opening and closing balances of property, plant and equipment and intangibles (2018) |
||||
Other property, plant and equipment $'000 |
Computer software purchased and internally developed $'000 |
Total $'000 |
||
As at 1 July 2017 |
||||
Gross book value |
32,072 |
20,277 |
52,348 |
|
Accumulated depreciation/amortisation |
(18,046) |
(16,126) |
(34,172) |
|
Net book value 1 July 2017 |
14,026 |
4,150 |
18,176 |
|
Additions: |
||||
By purchase or internally developed |
2,806 |
1,367 |
4,173 |
|
Depreciation/amortisation expense |
(3,410) |
(750) |
(4,159) |
|
Impairment recognised in net cost of services |
- |
(560) |
(560) |
|
Disposals: |
||||
Cost of assets disposed |
(1,649) |
- |
(1,649) |
|
Add write back of depreciation on disposals |
1,649 |
- |
1,649 |
|
Net asset disposals |
- |
- |
- |
|
Net book value 30 June 2018 |
13,422 |
4,207 |
17,629 |
|
Net book value 30 June 2018 represented by: |
||||
Gross book value |
33,229 |
21,644 |
54,873 |
|
Accumulated depreciation/amortisation |
(19,807) |
(17,436) |
(37,243) |
|
Net book value 30 June 2018 |
13,422 |
4,207 |
17,630 |
|
Accounting policy |
||||
Acquisition of assets Assets are recorded at cost on acquisition except as stated below. The cost of acquisition includes the fair value of assets transferred in exchange and liabilities undertaken. Financial assets are initially measured at their fair value plus transaction costs where appropriate. |
||||
Assets acquired at no cost, or for nominal consideration, are initially recognised as assets and income at their fair value at the date of acquisition, unless acquired as a consequence of restructuring of administrative arrangements. In the latter case, assets are initially recognised as contributions by owners at the amounts at which they are recognised in the transferor's accounts, immediately prior to the restructuring. |
||||
Asset recognition threshold Purchases of property, plant and equipment are recognised initially at cost in the Statement of Financial Position, except for purchases costing less than $5,000, which are expensed in the year of acquisition (other than where they form part of a group of similar items which are significant in total). |
||||
The initial cost of an asset includes an estimate of the cost of dismantling and removing the item and restoring the site on which it is located. This is particularly relevant to 'make good' provisions in property leases taken up by Comcare where there exists an obligation to restore the property to its original condition. These costs are included in the value of Comcare's leasehold improvements with a corresponding provision for the 'make good' recognised. |
||||
Revaluations Following initial recognition at cost, property, plant and equipment are carried at fair value less subsequent accumulated depreciation and accumulated impairment losses. Valuations are conducted with sufficient frequency to ensure that the carrying amounts of assets did not differ materially from the assets' fair values as at the reporting date. The regularity of independent valuations depends upon the volatility of movements in market values for the relevant assets. |
||||
Revaluation adjustments are made on a class basis. Any revaluation increment is credited to equity under the heading of asset revaluation reserve except to the extent that it reversed a previous revaluation decrement of the same asset class that was previously recognised in the surplus/deficit. Revaluation decrements for a class of assets are recognised directly in the surplus/deficit except to the extent that they reverse a previous revaluation increment for that class. |
||||
Any accumulated depreciation as at the revaluation date is 30 June 2019 eliminated against the gross carrying amount of the asset and the asset restated to the revalued amount, or restated proportionately with the change in the gross carrying amount of the asset so that the carrying amount of the asset after revaluation equals its revalued amount. |
||||
Depreciation Depreciable property, plant and equipment assets are written off to their estimated residual values over their estimated useful lives to Comcare using, in all cases, the straight-line method of depreciation. |
||||
Depreciation rates (useful lives), residual value and methods are reviewed at each reporting date and necessary adjustments are recognised in the current, or current and future reporting periods, as appropriate. |
||||
Depreciation rates applying to each class of depreciable asset are based on the following useful lives: |
||||
2019 |
2018 |
|||
Office machines and equipment |
2 to 10 years |
2 to 10 years |
||
Leasehold improvements |
Lease term |
Lease term |
||
Motor vehicles |
2 to 5 years |
2 to 5 years |
||
Impairment All assets were assessed for impairment at 30 June 2019. Where indications of impairment exist, the asset’s recoverable amount is estimated and an impairment adjustment made if the asset’s recoverable amount is less than its carrying amount. |
||||
The recoverable amount of an asset is the higher of its fair value less costs of disposal and its value in use. Value in use is the present value of the future cash flows expected to be derived from the asset. Where the future economic benefit of an asset is not primarily dependent on the asset’s ability to generate future cash flows, and the asset would be replaced if Comcare were deprived of the asset, its value in use is taken to be its depreciated replacement cost. |
||||
Derecognition An item of property, plant and equipment is derecognised upon disposal or when no further future economic benefits are expected from its use or disposal. |
||||
Intangibles Comcare's intangibles comprise purchased software for internal use with an initial cost of $30,000 or more. These assets are carried at cost less accumulated amortisation and accumulated impairment losses. |
||||
Software is amortised on a straight-line basis over its anticipated useful life of between 3 to 15 years (2018: 3 to 15 years). |
||||
All software assets were assessed for indications of impairment as at 30 June 2019. |
||||
2019 |
2018 |
|||
$'000 |
$'000 |
|||
2.2B |
Other non-financial assets |
|||
Prepayments |
1,678 |
1,463 |
||
Total other non-financial assets |
1,678 |
1,463 |
||
Other non-financial assets are expected to be recovered in: |
||||
No more than 12 months |
1,664 |
1,463 |
||
More than 12 months |
14 |
- |
||
Total other non-financial assets |
1,678 |
1,463 |
||
No indicators of impairment were found for other non-financial assets. |
Note 2.3: Payables
2019 |
2018 |
|||
Notes |
$'000 |
$'000 |
||
2.3A |
Suppliers |
|||
Trade creditors and accruals |
353,123 |
2,120 |
||
Total supplier payables |
353,123 |
2,120 |
||
Suppliers expected to be settled in: |
||||
No more than 12 months |
353,123 |
2,120 |
||
Total suppliers expected to be settled |
353,123 |
2,120 |
||
Settlement is usually made within 20 days (2018: 30 days). |
||||
2.3B |
Workers' compensation claims payable |
1,696 |
3,415 |
|
Workers' compensation claims payable expected to be settled in: |
||||
No more than 12 months |
1,696 |
3,415 |
||
Total workers' compensation claims payable |
1,696 |
3,415 |
||
2.3C |
Other payables |
|||
Income in advance |
502 |
630 |
||
GST payable to ATO |
- |
75 |
||
Lease incentives |
2,009 |
2,873 |
||
Salaries and wages |
631 |
512 |
||
Superannuation |
70 |
75 |
||
Other |
1,987 |
2,193 |
||
Total other payables |
5,199 |
6,358 |
||
Other payables expected to be settled in: |
||||
No more than 12 months |
2,619 |
2,690 |
||
More than 12 months |
2,580 |
3,668 |
||
Total other payables |
5,199 |
6,358 |
Note 2.4: Provisions
2019 |
2018 |
|||
$'000 |
$'000 |
|||
2.4A |
Workers' compensation claims |
|||
Premium claims |
2.4D |
1,671,200 |
2,199,200 |
|
Commonwealth latent mental disease claims |
2.4E |
11,300 |
11,300 |
|
Pre-premium claims |
2.4F |
343,442 |
339,700 |
|
Total workers' compensation claims |
2,025,942 |
2,550,200 |
||
Workers' compensation claims provisions expected to be settled in: |
||||
No more than 12 months |
234,942 |
305,700 |
||
More than 12 months |
1,791,000 |
2,244,500 |
||
Total workers' compensation claims |
2,025,942 |
2,550,200 |
||
2018 |
||||
2019 |
Restated |
|||
$'000 |
$'000 |
|||
2.4B |
Common law asbestos-related disease claims |
936,880 |
903,179 |
|
Common law asbestos-related disease claims provisions expected to be settled in: |
||||
No more than 12 months |
55,860 |
55,112 |
||
More than 12 months |
881,020 |
848,067 |
||
Total common law asbestos-related disease claims provisions |
936,880 |
903,179 |
||
2.4C |
Other provisions |
|||
Provision for restoration obligations |
2,501 |
2,490 |
||
Total other provisions |
2,501 |
2,490 |
||
Other provisions expected to be settled in: |
||||
No more than 12 months |
227 |
58 |
||
More than 12 months |
2,274 |
2,432 |
||
Total other provisions |
2,501 |
2,490 |
||
2019 |
2018 |
|||
$'000 |
$'000 |
|||
Provision for restoration obligations reconciliation |
||||
Carrying amount 1 July |
2,490 |
2,468 |
||
Adjustment in provision as a result of revaluation |
17 |
(30) |
||
Derecognition |
(58) |
- |
||
Unwinding of discount |
52 |
52 |
||
Closing balance as at 30 June |
2,501 |
2,490 |
||
Comcare currently has eight agreements for the leasing of premises which have contract clauses with a requirement to restore the premises to their original condition at the conclusion of the lease. Comcare has made a provision to recognise this obligation. |
||||
2.4D |
Provision for premium claims |
|||
Carrying amount at 1 July |
2,199,200 |
2,429,100 |
||
(Decrease) in provisions made during the year |
(874,510) |
(88,659) |
||
Claims payments made during the year |
187,110 |
(210,741) |
||
Unwinding of discount |
33,000 |
38,300 |
||
Change in discount rate |
168,300 |
54,300 |
||
Change in inflation rate |
(41,900) |
(23,100) |
||
Closing balance at 30 June* |
1,671,200 |
2,199,200 |
||
* Refer to Overview for disclosure of the funding available to Comcare to meet this liability. The valuation of premium claims liabilities was undertaken as at 30 June 2019 by an independent firm of consulting actuaries, Taylor Fry. Taylor Fry has stated that its valuation complies with actuarial Professional Standard PS300 Actuarial reports and advice on general insurance technical liabilities. The provision for premium claims represents an actuarial assessment of the expected payments to be made in the future by Comcare in relation to workers' compensation claims incurred on or after 1 July 1989. The provision is recognised on a gross basis with an intended 75 per cent probability of sufficiency. The estimate for third party recoveries is included in trade and other receivables. Refer to Note 2.1B. The following assumptions have been made in determining the provision amount. |
||||
Economic assumptions |
2019 |
2018 |
||
Medical payments inflation |
4.5% to 4.8% |
4.48% to 4.80% |
||
Other payments inflation |
2.21% to 3.6% |
2.32% to 3.80% |
||
Discount rate |
1.15% to 5% |
1.91% to 5.50% |
||
Premium business liability assumptions |
2019 |
2018 |
||
Claim frequency |
0.61% |
0.82% |
||
Third party recoveries |
0.7% |
0.7% |
||
Claims administration expenses |
18.2% |
16.7% |
||
Average claim size |
$105,690 |
$104,411 |
||
2019 |
2018 |
|||
$'000 |
$'000 |
|||
2.4E |
Provision for Commonwealth latent mental disease claims |
|||
Carrying amount at 1 July |
11,300 |
17,000 |
||
(Decrease) in provisions made during the year |
(1,000) |
(6,200) |
||
Claims payments made during the year |
- |
- |
||
Unwinding of discount |
200 |
300 |
||
Change in discount rate |
1,100 |
400 |
||
Change in inflation rate |
(300) |
(200) |
||
Closing balance at 30 June* |
11,300 |
11,300 |
||
* Refer to Overview for disclosure of the funding available to Comcare to meet this liability. The valuation of Commonwealth latent mental disease claims liabilities was undertaken as at 30 June 2019 by an independent firm of consulting actuaries, Taylor Fry. Taylor Fry has stated that its valuation complies with actuarial Professional Standard PS300 Actuarial reports and advice on general insurance technical liabilities. |
||||
2.4F |
Provision for pre-premium claims |
|||
Carrying amount at 1 July |
339,700 |
347,900 |
||
(Decrease) in provisions made during the year |
(10,444) |
1,459 |
||
Claims payments made during the year |
(22,814) |
(21,959) |
||
Unwinding of discount |
6,300 |
5,500 |
||
Change in discount rate |
37,300 |
8,400 |
||
Change in inflation rate |
(6,600) |
(1,600) |
||
Closing balance at 30 June* |
343,442 |
339,700 |
||
* Refer to Overview for disclosure of the funding available to Comcare to meet this liability. The valuation of pre-premium claims liabilities was undertaken as at 30 June 2019 by an independent firm of consulting actuaries, Taylor Fry. Taylor Fry has stated that its valuation complies with actuarial Professional Standard PS300 Actuarial reports and advice on general insurance technical liabilities. The provision for pre-premium claims represents an actuarial assessment of the expected payments to be made in the future by Comcare in relation to workers' compensation claims incurred prior to 1 July 1989. The provision is recognised on a gross basis with an intended 75 per cent probability of sufficiency. Economic assumptions used in determining the amount of the provision for pre-premium claims liability are the same as those applied for the premium business. |
||||
2018 |
||||
2019 |
Restated |
|||
$'000 |
$'000 |
|||
2.4G |
Provision for common law asbestos-related disease claims |
|||
Carrying amount at 1 July |
903,179 |
969,920 |
||
(Decrease) in provisions made during the year |
(10,421) |
(67,583) |
||
Claims payments made during the year |
(24,423) |
(22,453) |
||
Unwinding of discount |
15,960 |
31,780 |
||
Change in discount and inflation rate |
52,585 |
(8,485) |
||
Closing balance at 30 June* |
936,880 |
903,179 |
||
* Refer to Overview for disclosure of the funding available to Comcare to meet this liability. |
||||
The valuation of common law asbestos-related disease claims liabilities was undertaken as at 30 June 2019 by an independent firm of consulting actuaries, PwC. PwC has stated that its valuation complies with actuarial Professional Standard PS30 Actuarial reports and advice on general insurance technical liabilities. The provision for common law asbestos-related disease claims represents an actuarial assessment of the expected payments to be made in the future by Comcare in relation to common law claims against the Australian Government by individuals seeking compensation as a result of direct or indirect exposure to asbestos. The provision is recognised on a gross basis with an intended 75 per cent probability of sufficiency. The estimate for third party recoveries is included in trade and other receivables. Refer to Note 2.1B. The following assumptions have been made in determining the provision amount. |
||||
Economic assumptions |
2019 |
2018 |
||
Wage inflation |
2.89% |
3.08% |
||
Superimposed inflation |
2.00% |
2.00% |
||
Discount rate |
1.64% |
2.91% |
Funding
This section identifies Comcare's funding structure.
Note 3.1: Cash Flow Reconciliation
2019 |
2018 |
||
$'000 |
$'000 |
||
Reconciliation of cash and cash equivalents as per statement of financial position and cash flow statement |
|||
Cash and cash equivalents as per |
|||
Cash flow statement |
1,005,088 |
1,028,241 |
|
Statement of financial position |
1,005,088 |
1,028,241 |
|
Difference |
- |
- |
|
Reconciliation of net cost of services to net cash from/(used by) operating activities |
|||
Net contribution by services |
56,316 |
297,552 |
|
Revenue from Government |
60,287 |
56,838 |
|
Adjustments for non-cash items |
|||
Depreciation/Amortisation |
4,641 |
4,160 |
|
Write-down and impairment of non-financial assets |
50 |
560 |
|
(Gain)/Loss on disposal of assets |
7 |
(132) |
|
Unwinding of discount |
52 |
51 |
|
Available funding from movement in claims provision |
(117,012) |
(346,736) |
|
Movements in assets and liabilities: |
|||
Assets |
|||
Decrease in net receivables |
117,277 |
363,257 |
|
(Increase)/Decrease in accrued revenues |
1,760 |
(3,416) |
|
(Increase)/Decrease in prepayments |
(215) |
(18) |
|
Liabilities |
|||
Increase/(Decrease) in payables |
348,080 |
(9,539) |
|
(Decrease) in provisions |
(489,230) |
(310,051) |
|
(Increase)/Decrease in assets payables |
(181) |
446 |
|
(Increase) in make good provision |
(11) |
(21) |
|
Net cash from/(used by) operating activities |
(18,179) |
52,951 |
People and Relationships
This section describes a range of employment and post employment benefits provided to our people and our relationship with other key people.
Note 4.1: Employee Provisions
2019 |
2018 |
||
$'000 |
$'000 |
||
Employee provisions |
|||
Leave |
17,622 |
16,510 |
|
Separation and redundancy |
321 |
118 |
|
Total employee provisions |
17,943 |
16,628 |
|
Employee provisions are expected to be settled in: |
|||
No more than 12 months |
6,572 |
6,275 |
|
More than 12 months |
11,371 |
10,353 |
|
Total employee provisions |
17,943 |
16,628 |
|
Accounting policy |
|||
Liabilities for short-term employee benefits and termination benefits expected within twelve months of the end of the reporting period are measured at their nominal amounts. Other long-term employee benefits are measured as net total of the present value of the defined benefit obligation at the end of the reporting period minus the fair value at the end of the reporting period of plan assets (if any) out of which the obligations are to be settled directly. |
|||
Leave The liability for employee benefits includes provisions for annual leave and long service leave. |
|||
The leave liabilities are calculated on the basis of employees’ remuneration at the estimated salary rates that will be applied at the time the leave is taken, including Comcare’s employer superannuation contribution rates to the extent that the leave is likely to be taken during service rather than paid out on termination. The liability for long service leave is recognised and measured at the present value of the estimated future cash flow to be made in respect of all employees at 30 June 2019. In determining the present value of the liability, attrition rates and pay increases through promotion and inflation have been taken into account. |
|||
Separation and redundancy |
|||
Provision is made for separation and redundancy benefit payments. Comcare recognises a provision for termination when it has developed a detailed formal plan for the terminations and has informed those employees affected that it will carry out the terminations. |
|||
Superannuation |
|||
Staff of Comcare are members of the Commonwealth Superannuation Scheme (CSS), the Public Sector Superannuation Scheme (PSS), the PSS accumulation plan (PSSap) or other superannuation funds held outside the Australian Government. The CSS and PSS are defined benefit schemes for the Australian Government. The PSSap is a defined contribution scheme. The liability for defined benefits is recognised in the financial statements of the Australian Government and is settled by the Australian Government in due course. This liability is reported in the Department of Finance's administered schedules and notes. Comcare makes employer contributions to the employees' defined benefit superannuation scheme at rates determined by an actuary to be sufficient to meet the current cost to the Government. Comcare accounts for the contributions as if they were contributions to defined contribution plans. The liability for superannuation recognised as at 30 June represents outstanding contributions. |
Note 4.2: Key Management Personnel Remuneration
2019 |
2018 |
||
$'000 |
$'000 |
||
Key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the entity, directly or indirectly, including any director (whether executive or otherwise) of that entity. The entity has determined the key management personnel to be the Portfolio Minister (the Minister for Industrial Relations), Chief Executive Officer and General Managers. Key management personnel remuneration is reported in the table below: |
|||
Short-term employee benefits |
1,850 |
1,891 |
|
Post-employment benefits |
277 |
291 |
|
Other long-term benefits |
54 |
177 |
|
Termination benefits |
32 |
28 |
|
Total key management personnel remuneration expenses1 |
2,213 |
2,387 |
|
The total number of key management personnel that is included in the above table is 10. (2018: 10) |
|||
1 The above key management personnel remuneration excludes the remuneration and other benefits of the Portfolio Minister. The Portfolio Minister's remuneration and other benefits are set by the Remuneration Tribunal and are not paid by Comcare. |
Note 4.3: Related Party Disclosures
Related party relationships |
|||
Comcare is an Australian Government controlled entity. Related parties to this entity are Key Management Personnel including the Portfolio Minister and Executive, and other Australian Government entities. |
|||
Transactions with related parties |
|||
Given the breadth of Government activities, related parties may transact with the government sector in the same capacity as ordinary citizens. Such transactions include the payment or refund of taxes, receipt of a Medicare rebate or higher education loans. These transactions have not been separately disclosed in this note. |
|||
The following transactions with related parties occurred during the financial year: . The entity transacts with other Australian Government controlled entities consistent with normal day-to-day business operations provided under normal terms and conditions, including the payment of workers compensation and insurance premiums. These are not considered individually significant to warrant separate disclosure as related party transactions. . Refer to Note 4.1 Employee Provisions for details on superannuation arrangements with the Commonwealth Superannuation Scheme (CSS), the Public Sector Superannuation Scheme (PSS), and the PSS accumulation plan (PSSap). |
Managing Uncertainties
Note 5.1: Contingent Assets and Liabilities
Quantifiable contingencies |
|||||
As at 30 June 2019 Comcare has no quantifiable contingencies. |
|||||
Unquantifiable contingencies |
|||||
As at 30 June 2019 Comcare was unable to identify any unquantifiable contingencies. |
|||||
Accounting Policy |
|||||
Contingent liabilities and contingent assets are not recognised in the statement of financial position but are reported in the notes. They may arise from uncertainty as to the existence of a liability or asset or represent an asset or liability in respect of which the amount cannot be reliably measured. Contingent assets are disclosed when settlement is probable but not virtually certain and contingent liabilities are disclosed when settlement is greater than remote. |
Note 5.2: Remuneration of Auditors
2019 |
2018 |
||||
$'000 |
$'000 |
||||
Financial statement audit services provided to Comcare by the Australian National Audit Office |
205,000 |
205,000 |
|||
Other services provided by KPMG |
|||||
Continuous monitoring |
30,000 |
45,000 |
|||
Annual desk top reviews |
23,000 |
20,000 |
|||
Financial viability assessment |
7,500 |
- |
|||
Total other services provided by KPMG |
60,500 |
65,000 |
|||
Note 5.3: Financial Instruments
2019 |
2018 |
||||
$'000 |
$'000 |
||||
5.3A |
Categories of financial instruments |
||||
Financial Assets under AASB 139 |
|||||
Held-to-maturity (HTM) |
|||||
Cash and cash equivalents |
- |
1,028,241 |
|||
Receivables for goods and services |
- |
1,191 |
|||
Other receivables and claims recoveries |
- |
4,983 |
|||
Other financial assets |
- |
11,833 |
|||
Held-to-maturity (HTM) |
- |
1,046,248 |
|||
Financial Assets under AASB 9 |
|||||
Financial assets at amortised cost |
|||||
Cash and cash equivalents |
1,005,088 |
- |
|||
Receivables for goods and services |
953 |
- |
|||
Other receivables and claims recoveries |
4,343 |
- |
|||
Other financial assets |
10,072 |
- |
|||
Total financial assets at amortised cost |
1,020,456 |
- |
|||
Financial liabilities |
|||||
Financial liabilities measured at amortised cost |
|||||
Trade creditors |
353,123 |
2,120 |
|||
Workers' compensation payables |
1,696 |
3,415 |
|||
Total financial liabilities measured at amortised cost |
354,819 |
5,535 |
|||
Classification of financial assets on the date of initial application of AASB 9 |
|||||
Financial assets class Note |
AASB 139 original |
AASB 9 new classification |
AASB 139 carrying amount at 1 July 2018 $'000 |
AASB 9 carrying amount at 1 July 2018 $'000 |
|
Cash and Cash Equivalents |
HTM |
Amortised Cost |
- |
1,028,241 |
|
Receivables for goods and services |
HTM |
Amortised Cost |
- |
1,191 |
|
Other receivables and claims recoveries |
HTM |
Amortised Cost |
4,983 |
||
Other financial assets |
HTM |
Amortised Cost |
- |
11,833 |
|
Total financial assets |
- |
1,046,248 |
|||
Accounting Policy |
|||||
Financial assets With the implementation of AASB 9 Financial Instruments for the first time, Comcare classifies its financial assets as loans and receivables. The classification depends on both Comcare's business model for managing the financial assets and the contractual cash flow characteristics at the time of initial recognition. Financial assets are recognised when the entity becomes a party to the contract and, as a consequence, has a legal right to receive or a legal obligation to pay cash and derecognised when the contractual rights to the cash flows from the financial asset expire or are transferred upon 'trade date'. |
|||||
Comparatives have not been reinstated on initial application. |
|||||
Financial Assets at Amortised Cost Financial assets included in this category need to meet two criteria: 1. the financial asset is held in order to collect the contractual cash flows; and 2. the cash flows are solely payments of principal and interest (SPPI) on the principal outstanding amount. Amortised cost is determined using the effective interest method. |
|||||
Effective interest method Income is recognised on an effective interest rate basis for financial assets that are recognised at amortised cost. |
|||||
Financial Assets at Fair Value Through Other Comprehensive Income (FVOCI) Financial assets measured at fair value through other comprehensive income are held with the objective of both collecting contractual cash flows and selling the financial assets and the cash flows meet the SPPI test. Financial assets at FVTPL are stated at fair value, with any resultant gain or loss recognised in profit or loss. The net gain or loss recognised in profit or loss incorporates any interest earned on the financial asset. |
|||||
Financial Assets at Fair Value Through Profit or Loss (FVTPL) Financial assets are classified as financial assets at fair value through profit or loss where the financial assets either doesn't meet the criteria of financial assets held at amortised cost or at FVOCI (i.e. mandatorily held at FVTPL) or may be designated. Any gains or losses as a result of fair value measurement or the recognition of an impairment loss allowance is recognised in other comprehensive income. |
|||||
Impairment of financial assets Financial assets are assessed for impairment at the end of each reporting period based on Expected Credit Losses, using the general approach which measures the loss allowance based on an amount equal to lifetime expected credit losses where risk has significantly increased, or an amount equal to 12-month expected credit losses if risk has not increased. The simplified approach for trade, contract and lease receivables is used. This approach always measures the loss allowance as the amount equal to the lifetime expected credit losses if risk has not increased. A write-off constitutes a derecognition event where the write-off directly reduces the gross carrying amount of the financial asset. |
|||||
Financial liabilities Financial liabilities are classified as either financial liabilities ‘at fair value through profit or loss’ or other financial liabilities. Financial liabilities are recognised and derecognised upon ‘trade date’. Financial liabilities at fair value through profit or loss Financial liabilities at 'fair value through profit or loss' are initially measured at fair value. Subsequent fair value adjustments are recognised in profit or loss. The net gain or loss recognised in profit or loss incorporates any interest paid on the financial liability. |
|||||
Financial liabilities at Amortised Cost Financial liabilities, including borrowings, are initially measured at fair value, net of transaction costs. These liabilities are subsequently measured at amortised cost using the effective interest method, with interest expense recognised on an effective interest basis. Supplier and other payables are recognised at amortised cost. Liabilities are recognised to the extent that the goods or services have been received (and irrespective of having been invoiced). |
|||||
2019 |
2018 |
||||
$'000 |
$'000 |
||||
5.3B |
Net gains or losses on financial assets |
||||
Financial assets at amortised cost |
|||||
Interest revenue |
31,350 |
28,991 |
|||
Net gains on financial assets at amortised cost |
31,350 |
28,991 |
|||
Net gains on financial assets |
31,350 |
28,991 |
|||
5.3C |
Net income and expense from financial liabilities |
||||
There was no income or expense from financial liabilities during the year (2018: Nil). |
5.3D Credit risk |
||||||||
Comcare is exposed to minimal credit risk as the majority of its receivables are cash on deposit with banks. The major exposure to credit risk is the risk that arises from the potential default by a bank. This amount is equal to the total amount of cash at bank (2019: $1,005.08m and 2018: $1,028.2m). Comcare's current Investment Policy requires all investments to be placed with a financial institution with a Standard and Poor's rating of at least BBB/Baa. To mitigate credit risk, the Investment Policy restricts investment with any single financial institution to no more than 50 per cent of the total investment portfolio. |
||||||||
As at 30 June 2019 |
Credit rating |
|||||||
AAA |
AA |
A |
A-1+ |
A-1 |
A-2 |
Not rated |
Total |
|
$'000 |
$'000 |
$'000 |
$'000 |
$'000 |
$'000 |
$'000 |
$'000 |
|
Cash and cash equivalents |
- |
- |
- |
635,088 |
270,000 |
100,000 |
- |
1,005,088 |
Receivables |
- |
- |
- |
- |
- |
- |
953 |
953 |
Other receivables |
- |
- |
- |
- |
- |
- |
4,343 |
4,343 |
Other financial assets |
- |
- |
- |
- |
- |
- |
10,072 |
10,072 |
As at 30 June 2018 |
Credit rating |
|||||||
AAA |
AA |
A |
A-1+ |
A-1 |
A-2 |
Not rated |
Total |
|
$'000 |
$'000 |
$'000 |
$'000 |
$'000 |
$'000 |
$'000 |
$'000 |
|
Cash and cash equivalents |
- |
- |
- |
673,241 |
275,000 |
80,000 |
- |
1,028,241 |
Receivables |
- |
- |
- |
- |
- |
- |
1,191 |
1,191 |
Other receivables |
- |
- |
- |
- |
- |
- |
4,983 |
4,983 |
Other financial assets |
- |
- |
- |
- |
- |
- |
11,833 |
11,833 |
Comcare holds no collateral to mitigate against credit risk. |
||||||||
2019 |
2018 $'000 |
|||||||
Maximum exposure to credit risk (excluding any collateral or credit enhancement) |
||||||||
Cash and cash equivalents |
1,005,088 |
1,028,241 |
||||||
Receivables for goods and services |
953 |
1,191 |
||||||
Other receivables and claims recoveries |
4,343 |
4,983 |
||||||
Other financial assets |
10,072 |
11,833 |
||||||
Total financial assets carried at amount not best representing maximum exposure to credit risk |
1,020,456 |
1,046,248 |
||||||
5.3E Liquidity risk |
||||||||
Comcare's financial liabilities were trade creditors, workers' compensation payables and other payables. Comcare has negligible liquidity risk as it has substantial cash holdings to meet its short term financial obligations at 30 June 2019. Under Comcare's Investment Policy, investments are managed in a manner which maximises investment return while minimising risk ensures that accessibility of funds is maintained and cash flow requirements are met. |
||||||||
Maturities for financial liabilities 2019 |
On |
Within 1 |
1 to 2 |
2 to 5 |
> 5 |
|||
demand |
year |
years |
years |
years |
Total |
|||
$'000 |
$'000 |
$'000 |
$'000 |
$'000 |
$'000 |
|||
Trade creditors |
- |
353,123 |
- |
- |
- |
353,123 |
||
Workers' compensation claims payable |
- |
1,696 |
- |
- |
- |
1,696 |
||
Total |
- |
354,819 |
- |
- |
- |
354,819 |
||
Maturities for financial liabilities 2018 |
On |
Within 1 |
1 to 2 |
2 to 5 |
> 5 |
|||
demand |
year |
years |
years |
years |
Total |
|||
$'000 |
$'000 |
$'000 |
$'000 |
$'000 |
$'000 |
|||
Trade creditors |
- |
2,120 |
- |
- |
- |
2,120 |
||
Workers' compensation claims payable |
- |
3,415 |
- |
- |
- |
3,415 |
||
Total |
- |
5,535 |
- |
- |
- |
5,535 |
||
Comcare has no derivative financial liabilities in either the current or prior years. |
||||||||
Trade creditors includes the remaining exit liabilities owing to the self insurance licensees following their exit from Comcare’s premium scheme in 2018–19. |
||||||||
5.3F Market risk |
||||||||
Currency risk |
||||||||
Comcare is not exposed to currency risk or other price risk. |
||||||||
Interest rate risk |
||||||||
Interest rate risk refers to the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The only interest bearing item on the balance sheet is 'cash and cash equivalents'. 'Cash and cash equivalents' comprises investments in both term deposit accounts and standard banking transaction accounts. Those investments held in term deposit accounts bear interest at a fixed rate and will not fluctuate with changes in market interest rates. The daily cash balance in the standard banking transaction account is stated at a nominal amount and is not subject to interest rate risk. |
Note 5.4: Fair Value Measurement
The following tables provide an analysis of assets and liabilities that are measured at fair value. The remaining assets and liabilities disclosed in the statement of financial position do not apply to the fair value hierarchy. The different levels of the fair value hierarchy are defined below. Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at measurement date. Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. Level 3: Unobservable inputs for the asset or liability. |
||||||||
5.4A Fair value measurements, valuation techniques and inputs used |
||||||||
Fair value measurement |
For Levels 2 and 3 fair value measurements |
|||||||
2019 |
2018 |
Category |
||||||
$'000 |
$'000 |
Valuation technique(s)1 |
||||||
Non-financial assets2 |
||||||||
Leasehold improvements |
7,349 |
9,359 |
Level 3 |
Cost approach |
Actual cost of replacement of similar assets. Price per square metre. |
|||
Computer and IT equipment |
4,614 |
4,011 |
Level 2 |
Market comparable |
Sale prices of comparable computer and IT equipment. |
|||
Office equipment |
3 |
- |
Level 2 |
Market comparable |
Sale prices of comparable office equipment. |
|||
Artwork |
70 |
52 |
Level 2 |
Market comparable |
Private sales of similar artwork. Professional appraisals of similar artwork. |
|||
Motor vehicle |
- |
- |
Level 2 |
Market comparable |
Sale price of comparable motor vehicles. |
|||
Total non-financial assets |
12,036 |
13,422 |
||||||
Total fair value measurements of assets in the statement of financial position |
12,036 |
13,422 |
||||||
1 Comcare engaged a professional valuer to undertake a comprehensive valuation of non-financial assets as at 30 June 2019. |
||||||||
2The highest and best use of all non-financial assets are the same as their current use. |
||||||||
5.4B Reconciliation for recurring Level 3 fair value measurements |
||||||||
Non-financial assets |
||||||||
Leasehold |
Total |
|||||||
improvements |
||||||||
2019 |
2018 |
2019 |
2018 |
|||||
$'000 |
$'000 |
$'000 |
$'000 |
|||||
As at 1 July |
9,359 |
11,343 |
9,359 |
11,343 |
||||
Total (losses) recognised in net cost of services 1 |
(2,881) |
(2,817) |
(2,881) |
(2,817) |
||||
Total gains/(losses) recognised |
||||||||
in other comprehensive income |
210 |
- |
210 |
- |
||||
Purchase |
661 |
833 |
661 |
833 |
||||
Total as at 30 June |
7,349 |
9,359 |
7,349 |
9,359 |
||||
Accounting policy |
||||||||
Any transfers between levels of the fair value hierarchy are deemed to have occurred at the end of the reporting period. |
||||||||
1 These losses are presented in the Statement of Comprehensive Income under note 2.2A. |
Other Information
Note 6.1: Assets Held in Trust
Comcare Beneficiaries Trust Account |
||||
The Beneficiaries Trust Account was established on 1 December 1988 to administer compensation benefits paid under both the Compensation (Commonwealth Government Employees) Act 1971 and the SRC Act to beneficiaries that are under a legal disability. The majority of these are children under the age of 18 who have been awarded compensation following the death of a parent under compensable circumstances. These monies are not available for other purposes of Comcare and are not recognised in the financial statements. |
||||
2019 |
2018 |
|||
$'000 |
$'000 |
|||
Cash at bank |
||||
Total amount held by Comcare at the beginning of the reporting period |
1,724 |
1,298 |
||
Add: |
Funds deposited |
554 |
||
Interest earned |
39 |
40 |
||
Available for payment |
1,763 |
1,892 |
||
Less: |
Final payouts |
20 |
168 |
|
Ad-hoc payments |
- |
- |
||
20 |
168 |
|||
Total value held by Comcare at the end of the reporting period |
1,743 |
1,724 |
||
Total cash at bank |
1,743 |
1,724 |
||
The above values are estimated at fair value at the time when acquired. |
Note 6.2: Reporting of Outcomes
Outcome 1 |
Total |
|||
2018 |
2018 |
|||
2019 |
Restated |
2019 |
Restated |
|
$'000 |
$'000 |
$'000 |
$'000 |
|
Expenses |
||||
Employee benefits |
67,686 |
68,801 |
67,686 |
68,801 |
Supplier expenses |
30,274 |
29,312 |
30,274 |
29,312 |
Depreciation and amortisation |
4,641 |
4,160 |
4,641 |
4,160 |
Finance costs |
2,225 |
51 |
2,225 |
51 |
Write-downs and impairment of assets |
50 |
560 |
50 |
560 |
Workers' compensation claims expense |
209,924 |
232,700 |
209,924 |
232,700 |
Common law asbestos-related disease claims expense |
24,423 |
22,452 |
24,423 |
22,452 |
Total expenses |
339,223 |
358,037 |
339,223 |
358,037 |
Income |
||||
Sale of goods and rendering of services |
22,770 |
22,902 |
22,770 |
22,902 |
Fees and fines |
15,979 |
15,717 |
15,979 |
15,717 |
Workers' compensation premiums |
242,310 |
285,183 |
242,310 |
285,183 |
Interest |
31,350 |
28,991 |
31,350 |
28,991 |
Other revenue |
1,454 |
800 |
1,454 |
800 |
Gains from movement in workers' compensation claims provision |
107,807 |
242,700 |
107,807 |
242,700 |
Gains from movement in common law asbestos-related disease claims provision |
(26,124) |
59,164 |
(26,124) |
59,164 |
Gains from sale of assets |
(7) |
132 |
(7) |
132 |
Revenue from Government |
60,287 |
56,838 |
60,287 |
56,838 |
Available funding from movement in claims provision |
(117,012) |
(346,735) |
(117,012) |
(346,735) |
Total income |
338,814 |
365,691 |
338,814 |
365,691 |
Assets |
||||
Cash and cash equivalents |
1,005,088 |
1,028,241 |
1,005,088 |
1,028,241 |
Trade and other receivables |
2,330,932 |
2,448,165 |
2,330,932 |
2,448,165 |
Other financial assets |
10,072 |
11,833 |
10,072 |
11,833 |
Property, plant and equipment |
12,036 |
13,422 |
12,036 |
13,422 |
Computer software |
6,458 |
4,208 |
6,458 |
4,208 |
Other non-financial assets |
1,678 |
1,463 |
1,678 |
1,463 |
Total assets |
3,366,264 |
3,507,332 |
3,366,264 |
3,507,332 |
Liabilities |
||||
Suppliers |
353,123 |
2,120 |
353,123 |
2,120 |
Workers' compensation claims payable |
1,696 |
3,415 |
1,696 |
3,415 |
Other payables |
5,199 |
6,358 |
5,199 |
6,358 |
Employee provisions |
17,943 |
16,628 |
17,943 |
16,628 |
Workers' compensation claims |
2,025,942 |
2,550,200 |
2,025,942 |
2,550,200 |
Common law asbestos-related disease claims |
936,880 |
903,179 |
936,880 |
903,179 |
Other provisions |
2,501 |
2,490 |
2,501 |
2,490 |
Total liabilities |
3,343,284 |
3,484,390 |
3,343,284 |
3,484,390 |
Comcare's program components supporting the outcome are described in the Overview. |
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https://www.transparency.gov.au/annual-reports/comcare/reporting-year/2018-2019-9