Independent Auditor's Report

Certification

​STATEMENT BY THE ACCOUNTABLE AUTHORITY AND CHIEF FINANCIAL OFFICER​

Contents

Certification

Primary financial statements

Statement of Comprehensive Income

Statement of Financial Position

Statement of Changes in Equity

Cash Flow Statement

Administered Schedule of Comprehensive Income

Administered Schedule of Assets and Liabilities

Administered Reconciliation Schedule

Administered Cash Flow Statement

Overview

Notes to the financial statements:

1. Financial Performance

1.1. Expenses

1.2. Own-Source Revenue and Gains

2. Income and Expenses Administered on Behalf of Government

2.1. Administered – Expenses

2.2. Administered – Income

3. Departmental Financial Position

3.1. Financial Assets

3.2. Non-Financial Assets

3.3. Payables

4. Assets and Liabilities Administered on Behalf of Government

4.1. Administered – Financial Assets

5. Funding

5.1. Appropriations

5.2. Net Cash Appropriation Arrangements

6. People and Relationships

6.1. Employee Provisions

6.2. Key Management Personnel Remuneration

6.3. Related Party Disclosures

7. Managing Uncertainties

7.1. Contingent Assets and Liabilities

7.2. Financial Instruments

7.3. Administered – Financial Instruments

7.4. Fair Value Measurement

8. Other Information

8.1. Aggregate Assets and Liabilities

Primary financial Statements

Statement of Comprehensive Income

for the period ended 30 June 2019

Statement of Financial Position

as at 30 June 2019

Statement of Changes in Equity

for the period ended 30 June 2019

Budget Variances Commentary Statement of Changes in Equity for Fair Work Commission Explanations have been provided for major variances. Variances are considered to be “major” based on the following criteria:   variance between budget and actual is greater than 10% at item level; and   variance is greater than 2% of the relevant categories. In the case of the Statement of Changes in Equity, it is total equity. Departmental capital budget Appropriation Act (No.1) – Capital Budget (DCB) Non‐operating 2015‐16 was repealed on the 1st of July 2018. The balance of unspent appropriations repealed was $818K. The repeal was not anticipated at preparation of budget. Accumulated deficit Refer the Statement of Comprehensive Income for associated variance commentary.

Cash Flow Statement

for the period ended 30 June 2019

Budget Variances Commentary Cash Flow Statement for Fair Work Commission Explanations have been provided for major variances. Variances are considered to be “major” based on the following criteria:   variance between budget and actual is greater than 10% at item level; and   variance is greater than 2% of the relevant categories. In the case of the Cash Flow Statement, it is total equity. Appropriations Additional funding was received during the year to support the appointment of additional members to the Commission and the Workplace Advice Service, resulting in higher cash receipts for the year. The Commission drew on unspent prior year appropriations to fund assets purchases and make payments to creditors. Net GST received The Net GST cash received was inaccurately estimated in the budget papers. Suppliers The variance in suppliers is due to timing of invoices received at the end of the financial year. Purchase of assets The Commission had lower than expected capital expenditure during the financial year. Departmental capital budget Appropriation Act (No.1) – Capital Budget (DCB) Non‐operating 2015‐16 was repealed on the 1st of July 2018. The balance of unspent appropriations repealed was $818K. The repeal was not anticipated at preparation of budget.

Administered Schedule of Comprehensive Income

for the period ended 30 June 2019

Administered Schedule of Assets and Liabilities

as at 30 June 2019

Administered Reconciliation Schedule

Administered Cash Flow Statement

for the period ended 30 June 2019

Overview

The Basis of Preparation

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:

1. Public Governance, Performance and Accountability (Financial Reporting) Rule 2015 (FRR); and
2. Australian Accounting Standards and Interpretations – Reduced Disclosure Requirements issued by the Australian Accounting Standards Board (AASB) that apply for the reporting period.

The financial statements have been prepared on an accrual basis and in accordance with the historical 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.

New Accounting Standards

Adoption of new Australian Accounting Standard Requirements

All new, revised, amending standards and/or interpretations that were issued prior to the sign-off date and are applicable to the current reporting period did not have a material effect, and are not expected to have a future material effect on the Fair Work Commission’s financial statements.

Future Australian Accounting Standard Requirements

All 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 the Fair Work Commission’s financial statements.

Taxation

The Fair Work Commission is exempt from all forms of taxation except Fringe Benefits Tax (FBT) and the Goods and Services Tax (GST).

Administered revenues, expenses, assets, liabilities and cash flows are disclosed in the administered schedules and related notes.

Except where otherwise stated, administered items are accounted for on the same basis and using the same polices as for departmental items, including the application of Australian Accounting Standards.

Events after the Reporting Period

There were no significant events that had the potential to significantly affect the ongoing structure and financial activities of the Fair Work Commission.

1. Financial Performance

This section analyses the financial performance of Fair Work Commission for the year ended 2019.

1.1 Expenses

1.2 Own-Source Revenue and Gains

2. Income and Expenses Administered on Behalf of the Government

This section analyses the activities that the Fair Work Commission does not control but administers on behalf of the Government. Unless otherwise noted, the accounting policies adopted are consistent with those applied for departmental reporting.

2.1 Administered – Expenses

2.2 Administered – Income

3. Departmental Financial Position

This section analyses the Fair Work Commission’s assets used to conduct its operations and the operating liabilities incurred as a result.

Employee related information is disclosed in the 6. People and Relationships section.

3.1 Financial Assets

3.2 Non-Financial Assets

No indicators of impairment were found for leasehold improvements, property, plant and equipment. No assets from leasehold improvements, property, plant and equipment and computer software are expected to be sold or disposed of within the next 12 months.

Over the previous 2 years, the Commission has developed a new case management system (eCase). Performance issues were encountered at initial launch in August 2018 and the Commission temporarily reverted to its previous case management system. It is anticipated that the first stage of the new system will be re-launched in the second quarter of 2019-20, with other stages to follow in the financial year. The Commission has assessed the carrying value of the asset at 30 June 2019 and is satisfied that it is not impaired.

Accounting Policy

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 were 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 $2,000, 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 lease taken up by the Fair Work Commission where there exists an obligation to restore the property to its original condition. These costs are included in the value of the Fair Work Commission'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 depended 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 reversed a previous revaluation increment for that class.

Any accumulated depreciation as at the revaluation date is eliminated against the gross carrying amount of the asset and the asset restated to the revalued amount.

Depreciation

Depreciable property, plant and equipment assets are written-off to their estimated residual values over their estimated useful lives to the Fair Work Commission using, in all cases, the straight-line method of depreciation.

Depreciation rates (useful lives), residual values 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:

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 the Fair Work Commission 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

The Fair Work Commission's intangibles comprise internally developed and purchased software for internal use. 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. The useful lives of the Fair Work Commission's software are 3 to 10 years (2018: 3 to 10 years).

All software assets were assessed for indications of impairment as at 30 June 2019.

3.3 Payables

4. Assets and Liabilities Administered on Behalf of Government

This section analyses assets used to conduct operations and the operating liabilities incurred. As a result, the Fair Work Commission does not control but administers on behalf of the Government. Unless otherwise noted, the accounting policies adopted are consistent with those applied for departmental reporting.

4.1 Administered – Financial Assets

As at 30 June 2019, there were no administered financial assets and liabilities that required disclosure (2018: nil).

5. Funding

This section identifies the Fair Work Commission funding structure.

5.1 Appropriations

5.2 Net Cash Appropriation Arrangements

6. People and Relationships

This section describes a range of employment and post-employment benefits provided to our people and our relationships with other key people.

6.1 Employee provisions

6.2 Key Management Personnel remuneration

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 Fair Work Commission has determined the key management personnel to be the Portfolio Minister, the General Manager and Senior Executive Service (SES). Key management personnel remuneration is reported in the table below:

6.3 Related Party Disclosures

Related party relationships:

The entity is an Australian Government controlled entity. Related parties to this entity are Key Management Personnel including the Portfolio Minister and Executive.

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. These transactions have not been separately disclosed in this note.

Giving consideration to relationships with related entities, and transactions entered into during the reporting period by the entity, it has been determined that there are no related party transactions to be separately disclosed (2018: nil).

7. Managing Undertainties

This section analyses how the Fair Work Commission manages financial risks within its operating environment.

7.1A: Contingent Assets and Liabilities

Quantifiable Contingencies

As at 30 June 2019, there were no quantifiable contingent liabilities or assets requiring disclosure (2018: nil).

Unquantifiable Contingencies

As at 30 June 2019, there were no unquantifiable contingent liabilities or assets requiring disclosure (2018: nil).

7.2 Financial Instruments

7.3: Administered – Financial Instruments

7.4 Fair Value Measurement

7.5 Administered – Fair Value Measurement

As at 30 June 2019, there was no administered fair value measurement that required disclosure (2018: nil).

8. Other Information

8.1: Aggregate Assets and Liabilities