Appendix D: Annual financial statements
Independent Auditor's Report
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 the 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
3.4 Interest bearing Liabilities
4. Assets and Liabilities Administered on Behalf of Government
4.1 Administered – Financial Assets
4.2 Administered Financial Liabilities
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 Undertainties
7.1: Contingent Assets and Liabilities
7.2 Financial Instruments
7.3: Administered – Financial Instruments
7.4 Fair Value Measurement
7.5 Administered - Fair Value Measurement
Certification
Primary financial Statements
Statement of Comprehensive Income
for the period ended 30 June 2020
Notes | 2020 $'000 | 2019 $'000 | Original Budget $'000 | |
---|---|---|---|---|
NET COST OF SERVICES | ||||
Expenses | ||||
Employee benefits | 1.1A | 50,747 | 49,280 | 48,419 |
Suppliers | 1.1B | 18,864 | 29,193 | 30,936 |
Depreciation and amortisation | 3.2A | 17,172 | 5,623 | 6,407 |
Finance costs | 1.1C | 476 | - | - |
Write-down and impairment of other assets | 1.1D | 3,865 | 62 | - |
Total expenses | 91,124 | 84,158 | 85,762 | |
Own-Source Income | ||||
Own-source revenue | ||||
Revenue from contracts with customers | 1.2A | 426 | 279 | 200 |
Rental income | 1.2B | 1,841 | 1,841 | 1,800 |
Other revenue | 1.2C | 173 | 56 | 55 |
Total own-source revenue | 2,440 | 2,176 | 2,055 | |
Gains | ||||
Other gains | 1.2D | 332 | - | - |
Total gains | 332 | - | - | |
Total own-source income | 2,772 | 2,176 | 2,055 | |
Net cost of services | (88,352) | (81,982) | (83,707) | |
Revenue from Government | 1.2E | 76,896 | 74,840 | 77,300 |
Deficit on continuing operations | (11,456) | (7,142) | (6,407) | |
OTHER COMRPEHENSIVE INCOME Items not subject to subsequent reclassification to net cost of services | ||||
Changes in asset revaluation surplus | 3.2A | 1,328 | - | - |
Total comprehensive loss | (10,128) | (7,142) | (6,407) |
The above statement should be read in conjunction with the accompanying notes.
Budget Variances Commentary
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 Comprehensive Income, they are total expenses or total revenue.
Suppliers
The variance against supplier expenses is due to the adoption of AASB 16 which resulted in a reduction in supplier costs relating to lease expenses in the current financial year. The impact of AASB 16 was not reflected in the published Portfolio Budget statements.
Depreciation and amortisation
The variance against depreciation and amortisation is due to the adoption of AASB 16 which resulted in increased depreciation charges to reflect right of use expense for leased premises. The impact of AASB 16 was not reflected in the published Portfolio Budget statements.
Finance Costs
The variance against finance costs was due to application of AASB 16 which resulted in the recognition of finance costs relating to lease liabilities which did not apply under the previous standard and were not reflected in the Portfolio Budget Statements.
Write down and impairment of other assets
During the financial year the Fair Work Commission completed a valuation of all non-financial assets to ensure that the carrying amounts of assets do not differ materially from the assets’ fair values as at the reporting date. The Fair Work Commission recognised an impairment charge of $3.862 million relating to computer software assets.
Changes in asset revaluation surplus
During the financial year the Fair Work Commission completed a valuation of all non-financial assets to ensure that the carrying amounts of assets do not differ materially from the assets’ fair values as at the reporting date. The valuation was completed by an independent valuer and resulted in a revaluation surplus of $1.328m.
Statement of Financial Position
as at 30 June 2020
Notes | 2020 $'000 | 2019 $'000 | Original Budget $'000 | |
---|---|---|---|---|
ASSETS | ||||
Financial assets | ||||
Cash and cash equivalents | 3.1A | 559 | 719 | 562 |
Trade and other receivables | 3.1B | 39,868 | 34,171 | 31,885 |
Total financial assets | 40,427 | 34,890 | 32,447 | |
Non-financial assets1 | ||||
Leasehold improvements | 3.2A | 66,023 | 18,152 | 14,564 |
Plant and equipment | 3.2A | 2,012 | 2,880 | 2,774 |
Computer software | 3.2A | 1,087 | 4,385 | 4,801 |
Other non-financial assets | 3.2B | 1,523 | 9,617 | 14,681 |
Total non-financial assets | 70,645 | 35,034 | 36,820 | |
Total assets | 111,072 | 69,924 | 69,267 | |
LIABILITIES | ||||
Payables | ||||
Suppliers | 3.3A | 1,346 | 799 | 5,054 |
Other payables | 3.3B | 796 | 16,016 | 14,114 |
Total payables | 2,142 | 16,815 | 19,168 | |
Interest bearing liabilities | ||||
Leases | 3.4A | 54,765 | - | - |
Total interest bearing liabilities | 54,765 | - | - | |
Provisions | ||||
Employee provisions | 6.1A | 15,154 | 14,608 | 13,592 |
Other provisions | - | 89 | 89 | |
Total provisions | 15,154 | 14,697 | 13,681 | |
Total liabilities | 72,061 | 31,512 | 32,849 | |
Net assets | 39,011 | 38,412 | 36,418 | |
EQUITY | ||||
Contributed equity | 49,849 | 47,474 | 50,667 | |
Reserves | 13,738 | 12,410 | 12,410 | |
Accumulated deficit | (24,576) | (21,472) | (26,659) | |
Total equity | 39,011 | 38,412 | 36,418 |
- Right-of-use assets are included in the leasehold improvements line item.
The above statement should be read in conjunction with the accompanying notes.
Budget Variances Commentary
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 Financial Position, it is total equity.
Trade and other receivables
The variance against trade and other receivables relates to a higher than expected appropriations receivables balance at 30 June 2020, as a result of lower than expected payments for capital purchases and supplier payments made during the financial year.
Leasehold Improvements
The variance against leasehold improvements is due to the recognition of right of use asset on initial application of AASB 16. The impact of AASB 16 was not reflected in the published Portfolio Budget statements.
Computer Software
During the financial year the Fair Work Commission completed a valuation of non-financial assets to ensure that the carrying amounts of assets do not differ materially from the assets’ fair values as at the reporting date. An impairment charge was recognised for computer software assets.
Other non-financial assets
The variance against other non-financial assets is due to transition to AASB 16 which resulted in a reduction in lease incentives receivable on adoption of the new standard. The impact of AASB 16 was not reflected in the published Portfolio Budget statements.
Suppliers
The variance against suppliers is due to lower than expected trade creditor and accruals balance at 30 June 2020.
Other payables
The variance against other payables is due to transition to AASB 16 which resulted in a reduction in other payables on adoption to the new standard. The impact of AASB 16 was not reflected in the published Portfolio Budget statements.
Interest Bearing Liabilities
The variance that relates to interest bearing liabilities is due to the adoption of AASB 16. The Fair Commission recognised as lease liability relating to its property leases. The impact of AASB 16 was not reflected in the published Portfolio Budget statements.
Statement of Changes in Equity
for the period ended 30 June 2020
2020 $'000 | 2019 $'000 | Original Budget $'000 | |
---|---|---|---|
CONTRIBUTED EQUITY | |||
Opening balance | 47,474 | 45,920 | 48,292 |
Transactions with owners | |||
Contributions by owners | |||
Departmental capital budget | 2,375 | 1,554 | 2,375 |
Total transactions with owners | 2,375 | 1,554 | 2,375 |
Closing balance as at 30 June | 49,849 | 47,474 | 50,667 |
ACCUMULATED DEFICIT | |||
Opening balance | (21,472) | (14,330) | (20,252) |
Adjustment on initial application of AASB 16 | 8,352 | - | - |
Adjusted opening balance | (13,120) | (14,330) | (20,252) |
Comprehensive income | |||
Deficit for the period | (11,456) | (7,142) | (6,407) |
Total comprehensive income | (11,456) | (7,142) | (6,407) |
Closing balance as at 30 June | (24,576) | (21,472) | (26,659) |
ASSET REVALUATION RESERVE | |||
Opening balance | 12,410 | 12,410 | 12,410 |
Comprehensive income | |||
Other comprehensive income | 1,328 | - | - |
Total comprehensive income | 1,328 | - | - |
Closing balance as at 30 June | 13,738 | 12,410 | 12,410 |
2020 $'000 | 2019 $'000 | Original Budget $'000 | |
---|---|---|---|
TOTAL EQUITY | |||
Opening balance | 38,412 | 44,000 | 40,450 |
Adjustment on initial application of AASB 16 | 8,352 | - | - |
Adjusted opening balance | 46,764 | 44,000 | 40,450 |
Comprehensive income | |||
Deficit for the period | (11,456) | (7,142) | (6,407) |
Other comprehensive income | 1,328 | - | - |
Total comprehensive income | (10,128) | (7,142) | (6,407) |
Transactions with owners | |||
Contributions by owners | |||
Departmental capital budget | 2,375 | 1,554 | 2,375 |
Total transactions with owners | 2,375 | 1,554 | 2,375 |
Closing balance as at 30 June | 39,011 | 38,412 | 36,418 |
The above statement should be read in conjunction with the accompanying notes.
Accounting Policy
Equity Injections
Amounts appropriated which are designated as ‘equity injections’ for a year (less any formal reductions) and Departmental Capital Budget (DCBs) are recognised directly in contributed equity in that year.
Budget Variances Commentary
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.
Adjusted opening balance
The Fair Work Commission adopted AASB 16 using the modified retrospective approach, under which the cumulative effect of initial application is recognised in retained earnings at 1 July 2019. The impact of AASB 16 was not reflected in the published Portfolio Budget statements.
Other Comprehensive Income
During the financial year the Fair Work Commission completed a valuation of all non-financial assets to ensure that the carrying amounts of assets do not differ materially from the assets’ fair values as at the reporting date. The valuation was completed by an independent valuer and resulted in a revaluation increment.
Cash Flow Statement
for the period ended 30 June 2020
Notes | 2020 $'000 | 201 $'000 | Original Budget $'000 | |
---|---|---|---|---|
OPERATING ACTIVITIES | ||||
Cash received | ||||
Appropriations | 71,101 | 72,444 | 77,269 | |
Sale of goods and rendering of services | 2,425 | 2,116 | 1,800 | |
Net GST received | 2,371 | 2,560 | 200 | |
Total cash received | 75,897 | 77,120 | 79,269 | |
Cash used | ||||
Employees | (49,622) | (48,172) | (48,388) | |
Suppliers | (20,513) | (28,964) | (30,881) | |
Interest payments on lease liabilities | (476) | - | - | |
Total cash used | (70,611) | (77,136) | (79,269) | |
Net cash from/ (used by) operating activities | 5,286 | (16) | - | |
INVESTING ACTIVITIES | ||||
Cash used | ||||
Purchase of leasehold improvements | (196) | (296) | (50) | |
Purchase of property, plant and equipment | (503) | (192) | (825) | |
Purchase of computer software | (633) | (893) | (1,500) | |
Total cash used | (1,332) | (1,381) | (2,375) | |
Net cash used by investing activities | (1,332) | (1,381) | (2,375) | |
FINANCING ACTIVITIES | ||||
Cash received | ||||
Departmental capital budget | 2,375 | 1,554 | 2,375 | |
Total cash received | 2,375 | 1,554 | 2,375 | |
Cash used | ||||
Principle payments of lease liabilities | (6,489) | - | - | |
Total cash received | (6,489) | - | - | |
Net cash from financing activities | (4,114) | 1,554 | 2,375 | |
Net increase in cash held | (160) | 157 | - | |
Cash and cash equivalents at the beginning of the reporting period | 719 | 562 | 562 | |
Cash and cash equivalents at the end of the reporting period | 3.1A | 559 | 719 | 562 |
The above statement should be read in conjunction with the accompanying notes.
Budget Variances Commentary
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.
Operating Activities – Cash used
The variance against suppliers is due to the transition to AASB 16 where lease payments have been recognised as principle repayments under financing activities in cash used.
Investing Activities – Cash used
The variance against cash used for investing activities was due to lower than expected cash outflows relating to ICT projects.
Financing Activities – Cash used
The variance against suppliers is due to transition to AASB 16 where lease payments have been recognised as principle repayments under the financing activities which under previous standard were categorised as supplier payments.
Administered Schedule of Comprehensive Income
for the period ended 30 June 2020
Notes | 2020 $'000 | 2019 $'000 | Original Budget $'000 | |
---|---|---|---|---|
NET COST OF SERVICES | ||||
Expenses | ||||
Application refunds paid | 2.1A | 477 | 463 | 500 |
Total expenses | 477 | 463 | 500 | |
Income | ||||
Revenue | ||||
Non-taxation revenue | ||||
Application fees received | 2.2A | 1,141 | 1,174 | 1,078 |
Total non-taxation revenue | 1,141 | 1,174 | 1,078 | |
Total revenue | 1,141 | 1,174 | 1,078 | |
Total income | 1,141 | 1,174 | 1,078 | |
Net contribution by services | 664 | 711 | 578 | |
Surplus | 664 | 711 | 578 |
The above schedule should be read in conjunction with the accompanying notes.
Administered Schedule of Assets and Liabilities
Notes | 2020 $’000 | 2019 $’000 | Original Budget $’000 | |
---|---|---|---|---|
LIABILITIES | ||||
Provisions | ||||
Application fees liabilities | 4.2A | (270) | - | - |
Total provisions | (270) | - | - | |
Total liabilities administered on behalf of Government | (270) | - | - | |
Net assets/(liabilities) | (270) | - | - |
The above schedule should be read in conjunction with the accompanying notes.
Budget Variances Commentary
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 administered schedule of assets and liabilities, it is administered net assets/ liabilities
Application fees liabilities
On transition to AASB 15, the Fair Work Commission has recognised a liability for application fees received that have not been substantially performed or refunded at 30 June 2020.
Administered Reconciliation Schedule
2020 $'000 | 2019 $'000 | Original Budget $'000 | |
---|---|---|---|
Opening assets less liabilities as at 1 July | - | - | - |
Adjustment on initial application of AASB 15/AASB1058 | (139) | - | - |
Adjusted opening assets less liabilities at 1 July | (139) | - | - |
Net (cost of)/contribution by services | |||
Application fees income | 1,141 | 1,174 | 1,078 |
Expenses | |||
Payments to entities other than corporate Commonwealth entities | (477) | (463) | (500) |
Special appropriations (limited) | |||
Transfers from Official Public Accounts | 603 | 463 | 500 |
Appropriation transfers to Official Public Account | |||
Transfers to OPA | (1,398) | (1,174) | 1,078 |
Closing assets less liabilities as at 30 June | (270) | - | - |
The above schedules should be read in conjunction with the accompanying notes.
Administered cash transfers to and from the official public account
Revenue collected by the Fair Work Commission for use by the Government rather than the Fair Work Commission is administered revenue. Collections are transferred to the Official Public Account (OPA) maintained by the Department of Finance. Conversely, cash is drawn from the OPA to make payments under Parliamentary appropriation on behalf of Government. These transfers to and from the OPA are adjustments to the administered cash held by the Fair Work Commission on behalf of the Government and reported as such in the schedule of administered cash flows and in the administered reconciliation schedule.
Administered Cash Flow Statement
2020 $'000 | 2019 $'000 | Original Budget $'000 | |
---|---|---|---|
OPERATING ACTIVITIES | |||
Cash received | |||
Application fees received | 1,398 | 1,174 | 1,078 |
Total cash received | 1,398 | 1,174 | 1,078 |
Cash used | |||
Application refunds paid | (603) | (463) | (500) |
Total cash used | (603) | (463) | (500) |
Net cash from operating activities | 795 | 711 | 578 |
Cash from Official Public Account | |||
Appropriations | 603 | 463 | 500 |
Total cash from official public account | 603 | 463 | 500 |
Cash to Official Public Account | |||
Appropriations | (1,398) | (1,174) | (1,078) |
Total cash to official public account | (1,398) | (1,174) | (1,078) |
Cash and cash equivalents at the end of the reporting period | - | - | - |
The above schedules should be read in conjunction with the accompanying notes.
Overview
Objectives of the Fair Work Commission
The Fair Work Commission is an Australian Government controlled entity. It is a not-for-profit entity. The objective of the Fair Work Commission is to deliver simple, fair and flexible workplace relations for employees and employers through the exercise of powers to set and vary minimum wages and modern awards, facilitate collective bargaining, approve agreements and deal with disputes.
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:
- Public Governance, Performance and Accountability (Financial Reporting) Rule 2015 (FRR); and
- 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
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 on the Fair Work Commission’s financial statements.
Standard/ Interpretation | Nature of change in accounting policy, transitional provisions, and adjustment to financial statements |
---|---|
AASB 15 Revenue from Contracts with Customers / AASB 2016-8 Amendments to Australian Accounting Standards – Australian Implementation Guidance for Not‐for‐Profit Entities and AASB 1058 Income of Not‐For‐Profit Entities | AASB 15, AASB 2016-8 and AASB 1058 became effective 1 July 2019. AASB 15 establishes a comprehensive framework for determining whether, how much and when revenue is recognised. It replaces existing revenue recognition guidance, including AASB 118 Revenue, AASB 111 Construction Contracts and Interpretation 13 Customer Loyalty Programmes. The core principle of AASB 15 is that an entity recognises revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. AASB 1058 is relevant in circumstances where AASB 15 does not apply. AASB 1058 replaces most of the not-for-profit (NFP) provisions of AASB 1004 Contributions and applies to transactions where the consideration to acquire an asset is significantly less than fair value principally to enable the entity to further its objectives, and where volunteer services are received. The details of the changes in accounting policies, transitional provisions and adjustments are disclosed below and in the relevant notes to the financial statements. |
AASB 16 Leases | AASB 16 became effective on 1 July 2019. This new standard has replaced AASB 117 Leases, Interpretation 4 Determining whether an Arrangement contains a Lease, Interpretation 115 Operating Leases—Incentives and Interpretation 127 Evaluating the Substance of Transactions Involving the Legal Form of a Lease. AASB 16 provides a single lessee accounting model, requiring the recognition of assets and liabilities for all leases, together with options to exclude leases where the lease term is 12 months or less, or where the underlying asset is of low value. AASB 16 substantially carries forward the lessor accounting in AASB 117, with the distinction between operating leases and finance leases being retained. The details of the changes in accounting policies, transitional provisions and adjustments are disclosed below and in the relevant notes to the financial statements. |
Application of AASB 15 Revenue from Contracts with Customers / AASB 1058 Income of Not‐For‐Profit Entities
The Fair Work Commission adopted AASB 15 and AASB 1058 using the modified retrospective approach, under which the cumulative effect of initial application is recognised in retained earnings at 1 July 2019. Accordingly, the comparative information presented for 2018-19 is not restated, that is, it is presented as previously reported under the various applicable AASBs and related interpretations.
Under the new income recognition model the Fair Work Commission shall first determine whether an enforceable agreement exists and whether the promises to transfer goods or services to the customer are ‘sufficiently specific’. If an enforceable agreement exists and the promises are ‘sufficiently specific’ (to a transaction or part of a transaction), the Fair Work Commission applies the general AASB 15 principles to determine the appropriate revenue recognition. If these criteria are not met, the Fair Work Commission shall consider whether AASB 1058 applies.
In relation to AASB 15, the Fair Work Commission elected to apply the new standard to all new and uncompleted contracts from the date of initial application. The Fair Work Commission is required to aggregate the effect of all of the contract modifications that occur before the date of initial application.
In terms of AASB 1058, the Fair Work Commission is required to recognise volunteer services at fair value if those services would have been purchased if not provided voluntarily, and the fair value of those services can be measured reliably.
Departmental
The Fair Work Commission’s departmental revenue is not impacted by the new standard on transition.
Administered
Application fees are payable to the Fair Work Commission at the time of lodgement of applications relating to s394, s365, s372, s773 and s789FC of the Fair Work Act 2009.
Prior to the 1st of July 2019 application fees were recognised as revenue in the Administered Schedule of Comprehensive Income upon receipt of the application fee. If the matter was closed prior to being substantially dealt with by the Fair Work Commission, application fees received were refunded to the applicant and an expense recognised in the Administered statement of Comprehensive income on the date the refund was paid.
From 1 July 2019 on transition to AASB 15, the Fair Work Commission recognises application fees received as a liability in the Administered Schedule of Assets and Liabilities. After a matter has been closed and substantially performed by the Fair Work Commission (i.e. the Fair Work Commission has fulfilled its performance obligation), revenue will be recognised in the Administered Schedule of Comprehensive Income.
Impact on transition
The impact on transition is summarised below:
Liabilities | |
Application fee liabilities | 139 |
Total liabilities | 139 |
Net liabilities | (139) |
Set out below are the amounts by which each financial statement line item is affected as at and for the year ended 30 June 2020 as a result of the adoption of AASB 15 and AASB 1058. The first column shows amounts prepared under AASB 15 and AASB 1058 and the second column shows what the amounts would have been had AASB 15 and AASB 1058 not been adopted:
AASB 15 / AASB 1058 $'000 | Previous AAS $'000 | Increase/ (decrease) $'000 | |
---|---|---|---|
Expenses | |||
Application refunds paid | 477 | 603 | (126) |
Total expenses | 477 | 603 | (126) |
Revenue | |||
Application fees received | 1,141 | 1,398 | (257) |
Total revenue | 1,141 | 1,398 | (257) |
Net contribution by services | 664 | 795 | (131) |
Liabilities | |||
Application fee liabilities | 270 | - | 270 |
Total liabilities | 270 | - | 270 |
Net liabilities | (270) | - | (270) |
Application of AASB 16 Leases
The Fair Work Commission adopted AASB 16 using the modified retrospective approach, under which the cumulative effect of initial application is recognised in retained earnings at 1 July 2019. Accordingly, the comparative information presented for 2018-19 is not restated, that is, it is presented as previously reported under AASB 117 and related interpretations.
The Fair Work Commission elected to apply the practical expedient to not reassess whether a contract is, or contains a lease at the date of initial application. Contracts entered into before the transition date that were not identified as leases under AASB 117 were not reassessed. The definition of a lease under AASB 16 was applied only to contracts entered into or changed on or after 1 July 2019.
AASB 16 provides for certain optional practical expedients, including those related to the initial adoption of the standard. The Fair Work Commission applied the following practical expedients when applying AASB 16 to leases previously classified as operating leases under AASB 117:
- Apply a single discount rate to a portfolio of leases with reasonably similar characteristics;
- Exclude initial direct costs from the measurement of right-of-use assets at the date of initial application for leases where the right-of-use asset was determined as if AASB 16 had been applied since the commencement date;
- Reliance on previous assessments on whether leases are onerous as opposed to preparing an impairment review under AASB 136 Impairment of assets as at the date of initial application; and
- Applied the exemption not to recognise right-of-use assets and liabilities for leases with less than 12 months of lease term remaining as of the date of initial application.
As a lessee, the Fair Work Commission previously classified leases as operating or finance leases based on its assessment of whether the lease transferred substantially all of the risks and rewards of ownership. Under AASB 16, the Fair Work Commission recognises right-of-use assets and lease liabilities for most leases. However, the Fair Work Commission has elected not to recognise right-of-use assets and lease liabilities for some leases of low value assets based on the value of the underlying asset when new or for short-term leases with a lease term of 12 months or less.
On adoption of AASB 16, the Fair Work Commission recognised right-of-use assets and lease liabilities in relation to leases of office space, which had previously been classified as operating leases.
The lease liabilities were measured at the present value of the remaining lease payments, discounted using the Finance’s incremental borrowing rate as at 1 July 2019. The Finance’s incremental borrowing rate is the rate at which a similar borrowing could be obtained from an independent creditor under comparable terms and conditions. The weighted-average rate applied was 0.893%.
The right-of-use assets were measured as follows:
- Office space: measured at an amount equal to the lease liability, adjusted by the amount of any prepaid or accrued lease payments.
- All other leases: the carrying value that would have resulted from AASB 16 being applied from the commencement date of the leases, subject to the practical expedients noted above.
Impact on transition
On transition to AASB 16, the Fair Work Commission recognised additional right-of-use assets and additional lease liabilities, recognising the difference in retained earnings. The impact on transition is summarised below:
Departmental | 1 July 2019 $ |
---|---|
Right-of-use assets - property, plant and equipment | 62,264,953 |
Lease liabilities | (61,699,324) |
Retained earnings | (8,352,151) |
The following table reconciles the Departmental minimum lease commitments disclosed in the Fair Work Commission's 30 June 2019 annual financial statements to the amount of lease liabilities recognised on 1 July 2019:
1 July 2019 $ | |
---|---|
Minimum operating lease commitment at 30 June 2019 | 87,733,864 |
Less: GST not included in calculating lease liabilities | (7,969,416) |
Less: short-term leases not recognised under AASB 16 | (120,484) |
Less: other adjustments to lease commitments | (15,667,326) |
Undiscounted lease payments | 63,976,638 |
Less: effect of discounting using the incremental borrowing rate as at the date of initial application | (2,277,314) |
Lease liability recognised as at 1 July 2019 | 61,699,324 |
Taxation
The Fair Work Commission is exempt from all forms of taxation except Fringe Benefits Tax (FBT) and the Goods and Services Tax (GST).
Reporting of Administered activities
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
Departmental
There were no significant events that had the potential to significantly affect the ongoing structure and financial activities of the Fair Work Commission.
Administered
There were no significant events that had the potential to significantly affect the ongoing structure and financial activities of the Fair Work Commission.
Impact of the COVID-19 Pandemic
The Fair Work Commission recorded an increase in lodgments and matters dealt with by the Commission as a result of the pandemic. Temporary provisions were added to the Fair Work Act 2009, giving the Fair Work Commission power to deal with disputes on how JobKeeper directions and agreements are implemented.
Late in the financial year the Fair Work Commission completed a valuation of all non-financial assets to ensure that the carrying amounts of assets do not differ materially from the assets’ fair values as at the reporting date. The valuation included an assessment of COVID-19 on the fair value of assets and future lease obligations, and no adjustments were made. With most staff working remotely the Commission prioritised resources to meet increase in lodgments, and consequently some projects were postponed or paused.
The COVID-19 pandemic had no material impact on the Commissions Financial position at reporting date.
1. Financial Performance
This section analyses the financial performance of Fair Work Commission for the year ended 2020.
1.1 Expenses
2020 | 2019 | |
---|---|---|
1.1A: Employee benefits | ||
Wages and salaries | 39,876 | 38,380 |
Superannuation: | ||
Defined contribution plans | 4,567 | 4,366 |
Defined benefit plans | 1,518 | 1,560 |
Leave and other entitlements | 4,381 | 4,551 |
Separation and redundancies | 201 | 155 |
Other employee expenses | 204 | 268 |
Total employee benefits | 50,747 | 49,280 |
Accounting Policy Accounting policies for employee related expenses is contained in the People and relationships section. | ||
1.1B: Suppliers | ||
Goods and services supplied or rendered | ||
Court/member services | 1,919 | 2,541 |
Information Communications Technology | 4,027 | 3,553 |
Property expenses | 3,554 | 3,424 |
Office expense | 689 | 777 |
Contractors | 7,832 | 7,786 |
Other | 380 | 413 |
Total goods and services supplied or rendered | 18,401 | 18,494 |
Goods supplied | 809 | 897 |
Services rendered | 17,592 | 17,597 |
Total goods and services supplied or rendered | 18,401 | 18,494 |
Other suppliers | ||
Workers compensation expenses | 88 | 121 |
Operating lease rentals1 | - | 10,578 |
Short term leases | 57 | - |
Variable lease payments | 318 | - |
Total other suppliers | 463 | 10,699 |
Total suppliers | 18,864 | 29,193 |
Accounting Policy Short-term leases and leases of low-value assets The Fair Work Commission has elected not to recognise right-of-use assets and lease liabilities for short-term leases of assets that have a lease term of 12 months or less and leases of low-value assets (less than $10,000). The entity recognises the lease payments associated with these leases as an expense on a straight-line basis over the lease term. | ||
1.1C: Finance costs | ||
Interest on lease liabilities | 476 | - |
Total finance costs | 476 | - |
The above lease disclosures should be read in conjunction with the accompanying notes 1.1B, 1.2B, 1.2D, 3.2 and 3.4A. | ||
Accounting Policy All borrowing costs are expensed as incurred. | ||
1.1D: Write-down and impairment of other assets | ||
Write-down of property, plant and equipment | 3 | 62 |
Impairment on intangible assets | 3,862 | - |
Total finance costs | 3,865 | 62 |
- The Fair Work Commission has applied AASB 16 using the modified retrospective approach and therefore the comparative information has not been restated and continues to be reported under AASB 117.
1.2 Own-Source Revenue and Gains
2020 | 2019 | |
---|---|---|
Own-Source Revenue 1.2A: Revenue from contracts with customers | ||
Sale of goods and rendering of services | 426 | 279 |
Total revenue from contracts with customers | 426 | 279 |
Disaggregation of revenue from contracts with customers | ||
Major product / service line: | ||
Hire of hearing rooms and video conferencing facilities424220 259 | 424 | 220 |
Other | 2 | 59 |
426 | 279 | |
Type of customer: | ||
State and Territory Governments | 424 | 220 |
Non-government entities | 2 | 59 |
426 | 279 | |
Timing of transfer of goods and services: | ||
Point of time | 426 | 279 |
426 | 279 | |
Accounting Policy Revenue is recognised when (or as) the Fair Work Commission satisfies a performance obligation by transferring a promised good or service (i.e. an asset) to a customer. An asset is transferred when (or as) the customer obtains control of that asset. The Fair Work Commission transfers control of a good or service at a point in time, therefore, satisfies the performance obligation at a point in time. The principal activities from which the Fair Work Commission generates own source revenue is the hire of hearing rooms and video conferencing facilities. The Fair Work Commission recognises revenue on a daily rate when the service is performed. The transaction price is the total amount of consideration to which the Fair Work Commission expects to be entitled in exchange for transferring promised goods or services to a customer. The consideration promised in a contract with a customer may include fixed amounts, variable amounts, or both. | ||
1.2B: Rental Income | ||
Operating lease | ||
Lease income | 1,841 | 1,841 |
Total rental income | 1,841 | 1,841 |
Operating Leases The Fair Work Commission in its capacity as lessor received rental income from subleasing part of the Sydney office during the 2019-20 financial year. The Fair Work Commission retains substantially all the risks and rewards incidental to ownership of the underlying asset. | ||
Maturity analysis of operating lease income receivables: | ||
Within 1 year | 2,127 | 2,052 |
One to two years | 2,204 | 4,331 |
Total undiscounted lease payments receivable | 4,331 | 6,383 |
The above lease disclosures should be read in conjunction with the accompanying notes 1.1B, 1.1C, 1.2D, 3.2 and 3.4A. | ||
1.2C: Other Revenue | ||
Resources received free of charge | ||
Remuneration of auditors | 57 | 56 |
COVID-19 Staff transfer | 116 | - |
Total other revenue | 173 | 56 |
Accounting Policy Resources Received Free of Charge Resources received free of charge are recognised as revenue when, and only when, a fair value can be reliably determined, and the services would have been purchased if they had not been donated. Use of those resources is recognised as an expense. Resources received free of charge are recorded as either revenue or gains depending on their nature. | ||
Gains | ||
1.2D: Other Gains | ||
Lease gain | 243 | - |
Write back of make good | 89 | - |
Total other gains | 332 | - |
The above lease disclosures should be read in conjunction with the accompanying notes 1.1B, 1.1C, 1.2B, 3.2 and 3.4A. | ||
Accounting Policy Lease gain For a lease modification, the Fair Work Commission requires to allocate the consideration in the modified contract, determine the lease term of the modified lease and remeasure the lease liability by discounting the revised lease payments using a revised discount rate. The revised discount rate is determined as the interest rate implicit in the lease for the remainder of the lease term, if that rate can be readily determined, or the lessee’s incremental borrowing rate at the effective date of the modification, if the interest rate implicit in the lease cannot be readily determined. The Fair Work Commission accounts for the remeasurement of the lease liability by: a) decreasing the carrying amount of the right-of-use asset to reflect the partial or full termination of the lease for lease modifications that decrease the scope of the lease. The lessee shall recognise in profit or loss any gain or loss relating to the partial or full termination of the lease. b) making a corresponding adjustment to the right-of-use asset for all other lease modifications. | ||
1.2E: Revenue from Government | ||
Appropriations | ||
Departmental appropriations | 76,896 | 74,840 |
Total revenue from Government | 76,896 | 74,840 |
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 Fair Work Commission 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. |
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.
2.1 Administered – Expenses
2020 $’000 | 2019 $’000 | |
---|---|---|
2.1A: Expenses | ||
Refund of application fees | (477) | (463) |
Total expenses | (477) | (463) |
2.2 Administered – Income
2020 $’000 | 2019 $’000 | |
---|---|---|
Revenue | ||
Non-Taxation Revenue | ||
2.2A: Fees | ||
Application fees received | 1,141 | 1,174 |
Total fees | 1,141 | 1,174 |
Accounting Policy Application fees are payable to the Fair Work Commission at the time of lodgement of applications relating to s394, s365, s372, s773 and s789FC of the Fair Work Act 2009. In the 2018-19 year the Fair Work Commission recognised application fee revenue at time of lodgement and receipt of the application fee. From 1 July 2019 on transition to AASB 15, the Fair Work Commission recognises application fees received as a revenue only when a matter has been substantially dealt with by a member of the Commission. (i.e. the Commission has performed it performance obligation). |
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 People and Relationships section.
3.1 Financial Assets
2020 | 2019 | |
---|---|---|
3.1A: Cash and Cash Equivalents | ||
Cash on hand or on deposit | 559 | 719 |
Total cash and cash equivalents | 559 | 719 |
Accounting Policy Cash is recognised at its nominal amount. Cash and cash equivalents include:
| ||
3.1B: Trade and Other Receivables | ||
Goods and services receivables | ||
Goods and services | 59 | 173 |
Total goods and services receivables | 59 | 173 |
Appropriations receivables | ||
Appropriation receivable | 39,554 | 33,759 |
Total appropriations receivables | 39,554 | 33,759 |
Other receivables | ||
GST receivable | 255 | 239 |
Total other receivables | 255 | 239 |
Total trade and other receivables (gross) | 39,868 | 34,171 |
Less impairment loss allowance | - | - |
Total trade and other receivables (net) | 39,868 | 34,171 |
Credit terms for goods and services were within 20 days (2019: 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. |
3.2 Non-Financial Assets
3.2A: Reconciliation of the Opening and Closing Balances of Property, Plant and Equipment and Intangibles
Leasehold Improvements $’000 | Plant and Equipment $’000 | Computer software1 $’000 | Total $’000 | |
---|---|---|---|---|
As at 1 July 2019 | ||||
Gross book value | 25,893 | 5,531 | 8,017 | 39,441 |
Accumulated amortisation and impairment | (7,741) | (2,651) | (3,632) | (14,024) |
Total as at 1 July 2019 | 18,152 | 2,880 | 4,385 | 25,417 |
Recognition of right of use asset on initial application of AASB 16 | 62,265 | - | - | 62,265 |
Adjusted total as at 1 July 2019 | 80,417 | 2,880 | 4,385 | 87,682 |
Additions | ||||
Purchase | 196 | 503 | - | 699 |
Internally developed | - | - | 633 | 633 |
Revaluations and impairments recognised in other comprehensive income | 1,172 | 156 | - | 1,328 |
Depreciation and amortisation | (3,775) | (1,524) | (69) | (5,368) |
Depreciation on right-of-use assets | (11,804) | - | - | (11,804) |
Impairments recognised in net cost of services | - | - | (3,862) | (3,862) |
Other movement of ROU | (183) | - | - | (183) |
Disposals | - | (3) | - | (3) |
Total as at 30 June 2020 | 66,023 | 2,012 | 1,087 | 69,122 |
Total as at 30 June 2020 represented by | ||||
Gross book value | 77,827 | 2,012 | 4,788 | 84,627 |
Accumulated depreciation, amortisation and impairment | (11,804) | - | (3,701) | (15,505) |
Total as at 30 June 2020 | 66,023 | 2,012 | 1,087 | 69,122 |
Carrying amount of right-of-use assets | 50,278 | - | - | 50,278 |
- The carrying amount of computer software included $3,796.38 purchased software and $1,083,307.83 internally generated software.
Revaluations and impairments recognised in other comprehensive income
On 30 June 2020, an independent valuer conducted the revaluations. All revaluations were conducted in accordance with the revaluation policy. Total revaluation surplus recognised as other comprehensive income following the revaluation was $1.328m.
Impairments recognised in net cost of services
The Fair Work Commission has previously capitalised software development expenditure for the implementation of a new Case Management system (eCase). The system did not go live during the 2019-20 financial year as expected and further development work on the eCase was paused on the 31st of May 2020. With uncertainty whether the system will be available for use and deliver probable future economic benefit to recover the carrying value, the Fair Work Commission has recognised an impairment of $3.862m.
Contractual commitments for the acquisition of property, plant, equipment and intangible assets
As at the reporting date, the Fair Work Commission has no contractual commitments for the acquisition of leasehold improvements, property, plant and equipment.
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. Lease Right of Use (ROU) Assets Leased ROU assets are capitalised at the commencement date of the lease and comprise of the initial lease liability amount, initial direct costs incurred when entering into the lease less any lease incentives received. These assets are accounted for by Commonwealth lessees as separate asset classes to corresponding assets owned outright, but included in the same column as where the corresponding underlying assets would be presented if they were owned. On initial adoption of AASB 16 the Fair Work Commission has adjusted the ROU assets at the date of initial application by the amount of any provision for onerous leases recognised immediately before the date of initial application. Following initial application, an impairment review is undertaken for any right of use lease asset that shows indicators of impairment and an impairment loss is recognised against any right of use lease asset that is impaired. Lease ROU assets continue to be measured at cost after initial recognition in Commonwealth agency, GGS and Whole of Government financial statements. | Revaluations Following initial recognition at cost, property, plant and equipment (excluding ROU assets) are carried at fair value (or an amount not materially different from 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: 2020 2019 Leasehold Improvements Lease term Lease term Plant and equipment 3 to 10 years 3 to 10 years The depreciation rates for ROU assets are based on the commencement date to the earlier of the end of the useful life of the ROU asset or the end of the lease term. Impairment All assets were assessed for impairment at 30 June 2020. 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 (2019: 3 to 10 years). All software assets were assessed for indications of impairment as at 30 June 2020. |
2020 $’000 | 2019 $’000 | |
---|---|---|
3.2B: Other Non-Financial Assets | ||
Prepayments | 1,167 | 1,878 |
Lease incentive1 | - | 7,307 |
Lease receivables | 356 | 432 |
Total other non-financial assets | 1,523 | 9,617 |
- The Fair Work Commission has applied AASB 16 using the modified retrospective approach and therefore the comparative information has not been restated and continues to be reported under AASB 117.
No indicators of impairment were found for other non-financial assets.
3.3 Payables
2020 $’000 | 2019 $’000 | |
---|---|---|
3.3A: Suppliers | ||
Trade creditors and accruals | 1,346 | 799 |
Total suppliers | 1,346 | 799 |
Settlement terms for suppliers are 30 days. | ||
3.3B: Other payables | ||
Salaries and wages | 642 | 320 |
Separations and redundancies | 154 | - |
Superannuation | - | 37 |
Lease payable1 | - | 3,549 |
Lease incentives1 | - | 12,110 |
Total other payables | 796 | 16,016 |
- The Fair Work Commission has applied AASB 16 using the modified retrospective approach and therefore the comparative information has not been restated and continues to be reported under AASB 117.
3.4 Interest bearing Liabilities
2020 $’000 | 2019 $’000 | |
---|---|---|
3.4A: Leases | ||
Lease Liabilities | ||
Property rent | 54,246 | - |
Car parking | 519 | - |
Total leases | 54,765 | - |
Total cash outflow for leases for the year ended 30 June 2020 was $6,488,722.61. | ||
Accounting Policy Refer Overview section for accounting policy on leases. |
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 2020, there were no administered financial assets that required disclosure (2019: nil).
4.2 Administered Financial Liabilities
2020 $’000 | 2019 $’000 | |
4.2A: Provisions: | ||
Application fees liabilities | 270 | - |
Total provisions | 270 | - |
Accounting Policy From 1 July 2019 on transition to AASB 15, the Fair Work Commission recognises application fees received as a liability in the Administered Schedule of Assets and Liabilities. After a matter has been closed and substantially performed by the Fair Work Commission (i.e. the Fair Work Commission has fulfilled its performance obligation), revenue will be recognised in the Administered Schedule of Comprehensive Income. |
5. Funding
This section identifies the Fair Work Commission funding structure.
5.1 Appropriations
5.1A: Annual Appropriations (‘Recoverable GST exclusive’)
Annual Appropriations for 2020
Annual Appropriation1 $'000 | Adjustments to Appropriation2 $'000 | Total Appropriation $'000 | Appropriation applied in 2020 (current and prior years) $'000 | Variance3 $'000 | |
---|---|---|---|---|---|
Departmental | |||||
Ordinary annual services | 76,896 | 2,267 | 79,163 | 72,703 | 6,460 |
Capital Budget4 | 2,375 | - | 2,375 | 1,333 | 1,042 |
Total departmental | 79,271 | 2,267 | 81,538 | 74,036 | 7,502 |
- Appropriations reduced under Appropriation Acts (Nos. 1, 3 & 5): sections 10, 11 and 12 and under Appropriation Acts (Nos. 2, 4 & 6): sections 12, 13 and 14. Departmental appropriations do not lapse at financial year-end. However, the responsible Minister may decide that part or all of a departmental appropriation is not required and request the Finance Minister to reduce that appropriation. The reduction in the appropriation is effected by the Finance Minister's determination and is disallowable by Parliament.
- PGPA Act Section 74 receipts.
- The variance between total annual appropriation available and total appropriation applied in 2020 relates to unspent appropriations funded from current year appropriation items.
- Departmental Capital Budgets are appropriated through Appropriation Acts (Nos. 1, 3 & 5). They form part of ordinary annual services and are not separately identified in the Appropriation Acts.
Annual Appropriations for 2019
Annual Appropriation1 $'000 | Adjustments to Appropriation2 $'000 | Total Appropriation $'000 | Appropriation applied in 2020 (current and prior years) $'000 | Variance3 $'000 | |
---|---|---|---|---|---|
Departmental | |||||
Ordinary annual services | 74,840 | 2,120 | 76,960 | 73,336 | 3,624 |
Capital Budget4 | 2,372 | - | 2,372 | 1,381 | 991 |
Total departmental | 77,212 | 2,120 | 79,332 | 74,717 | 4,615 |
- Appropriations reduced under Appropriation Acts (Nos. 1, 3 & 5): sections 10, 11 and 12 and under Appropriation Acts (Nos. 2, 4 & 6): sections 12, 13 and 14. Departmental appropriations do not lapse at financial year-end. However, the responsible Minister may decide that part or all of a departmental appropriation is not required and request the Finance Minister to reduce that appropriation. The reduction in the appropriation is effected by the Finance Minister's determination and is disallowable by Parliament.
- PGPA Act Section 74 receipts.
- The variance between total annual appropriation available and total appropriation applied in 2020 relates to unspent appropriations funded from current year appropriation items.
- Departmental Capital Budgets are appropriated through Appropriation Acts (Nos. 1, 3 & 5). They form part of ordinary annual services and are not separately identified in the Appropriation Acts.
5.1B: Unspent Annual Appropriations (‘Recoverable GST exclusive’)
2020 $’000 | 2019 $’000 | |
---|---|---|
Departmental | ||
Appropriation Act (No.1) 2018-19 | - | 34,478 |
Appropriation Act (No.1) 2019-20 | 7,620 | - |
Supply Act (No.1) 2019-20 | 30,460 | - |
Appropriation Act (No.1) – Capital Budget 2019-20 | 1,043 | - |
Supply Act (No.1) – Capital Budget 2019-20 | 990 | - |
Total departmental | 40,113 | 34,478 |
5.1C: Special Appropriations (‘Recoverable GST exclusive’)
Appropriation applied | ||
2020 | 2019 | |
Authority | ||
Public Governance, Performance and Accountability Act 2013 s.77, Administered | (603) | (463) |
Total special appropriations applied | (603) | (463) |
5.1D: Disclosure by Agent in Relation to Annual and Special Appropriations (‘Recoverable GST exclusive’)
Department of Finance – to make | |
---|---|
2020 | |
Total Receipts | 7,461 |
Total Payments | (7,461) |
Department of Finance – to make | |
2019 | |
Total Receipts | 7,285 |
Total Payments | (7,285) |
5.2 Net Cash Appropriation Arrangements
2020 | 20 | |
---|---|---|
Total comprehensive loss less depreciation/amortisation expenses previously funded through revenue appropriations | (773) | (1,519) |
Plus: depreciation/amortisation expenses previously funded through revenue appropriation | 5,368 | 5,623 |
Plus: depreciation right-of-use assets | 11,804 | - |
Less: principal repayments - leased assets | (6,489) | - |
Total comprehensive loss ‐ as per the Statement of Comprehensive Income | (11,456) | (7,142) |
From 2010-11, the Government introduced net cash appropriation arrangements where revenue appropriations for depreciation/amortisation expenses ceased. The Fair Work Commission now receives a separate capital budget provided through equity appropriations. Capital budgets are to be appropriated in the period when cash payment for capital expenditure is required.
The inclusion of depreciation/amortisation expenses related to ROU leased assets and the lease liability principle repayment amount reflects the cash impact on implementation of AASB 16 Leases, it does not directly reflect a change in 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
2020 $’000 | 2019 $’000 | |
---|---|---|
6.1A: Employee Provisions | ||
Leave | 15,076 | 14,608 |
Separations and redundancies | 78 | - |
Total employee provisions | 15,154 | 14,608 |
6.1B: Administered – Employee Provisions | ||
As at 30 June 2020, there were no administered employee provisions (2019: nil). | ||
Accounting Policy Liabilities for short-term employee benefits and termination benefits expected to be settled within twelve months of the end of 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 provision for annual leave, long service leave and Judges Long leave. Members of the Fair Work Commission, who were Presidential Members under the Workplace Relations Act 1996 and the President of the Fair Work Commission, accrue six months long leave after five years of service as a Presidential Member. In recognition of the nature of Presidential Members’ tenure, a provision is accrued from the first year of service. 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 the Fair Work Commission’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 has been determined by use of the Australian Government Actuary’s shorthand method using the standard Commonwealth sector probability profile. The estimate of the present value of the liability takes into account attrition rates and pay increases through promotion and inflation. Separation and Redundancy Provision is made for separation and redundancy benefit payments. The Fair Work Commission 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 The majority of staff and Members of the Fair Work Commission are members of the Commonwealth Superannuation Scheme (CSS), the Public Sector Superannuation Scheme (PSS), or 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. The Fair Work Commission 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. The Fair Work Commission accounts for the contributions as if they were contributions to defined contribution plans. The liability for superannuation recognised as at 30 June 2020 represents outstanding contributions for the final fortnight of the year. Judge’s Pension Members of the Fair Work Commission who are Presidential Members under the Workplace Relations Act 1996 and the President of the Fair Work Commission are eligible for pensions under the Judges’ Pension Scheme (JPS) pursuant to the Judges’ Pensions Act 1968. The JPS is an unfunded defined benefit scheme that is governed by the rules set out in the Act. The Fair Work Commission does not contribute towards the cost of the benefit during such Member’s term of service. Liability and expenses associated with the JPS are recorded as part of the Department of Finance financial statements. The Department of Finance has given the Fair Work Commission drawing rights for the financial year in relation to the special appropriation made under the Judges’ Pensions Act 1968. The Fair Work Commission makes pension payments directly to beneficiaries of the scheme (refer to Note 5.1D). |
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 Minster, the President and the General Manager. Key management personnel remuneration is reported in the table below:
In 2019/20 the Fair Work Commission completed a reassessment of the composition of its key management personnel. The Portfolio Minister, President and the General Manager have been found to meet the criteria based on the responsibilities of their respective positions. In the prior year the Commission included four Executive Directors as key management personnel and confirmed that although these positions make operational decisions in their area of responsibility, they do not satisfy the definition per AASB 124 Related Party Disclosures. The 2018/19 comparative key management personnel remuneration has been restated in the table below. (Before restatement comparative short term employee benefits were 1.088m, Post-Employment benefits 133k, Other long-term employee benefits 36k, and termination benefits 95k.)
The remuneration of the Portfolio Minister, the President and the General Manager are set by the Remuneration Tribunal.
2020 $’000 | 2019 $’000 | |
---|---|---|
Short-term employee benefits | 927 | 863 |
Post-employment benefits | 25 | 25 |
Other long-term employee benefits 1 | 62 | 60 |
Termination benefits | - | |
Total key management personnel remuneration expenses2 | 1,013 | 948 |
The total numbers of key management personnel that are included in the above table are 2 (2019: 2). |
- The President is eligible for a pension under the Judges’ Pension Scheme (JPS) pursuant to the Judges’ Pensions Act 1968. The Fair Work Commission does not contribute towards the cost of the JPS, which is an unfunded defined benefit scheme recorded in the Department of Finance Financial Statements. In accordance with PGPA (Financial Reporting) Rule 2015 paragraph 27 (1) the table below reflects only actual payments made by the Fair Work Commission.
- The above key management personnel remuneration excludes the remuneration and other benefits of the Portfolio Minister as they are not paid by the Fair Work Commission.
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 (2019: nil).
7. Managing Undertainties
This section analyses how the Fair Work Commission manages financial risks within its operating environment.
7.1: Contingent Assets and Liabilities
Quantifiable Contingencies
As at 30 June 2020, there were no quantifiable contingent liabilities or assets requiring disclosure (2019: nil).
Unquantifiable Contingencies
As at 30 June 2020, there were no unquantifiable contingent liabilities or assets requiring disclosure (2019: nil).
Quantifiable Administered Contingencies
As at 30 June 2020, there were no quantifiable contingent liabilities or assets requiring disclosure (2019: nil).
Unquantifiable Administered Contingencies
As at 30 June 2020, there were no unquantifiable contingent liabilities or assets requiring disclosure (2019: nil).
7.2 Financial Instruments
2020 $’000 | 2019 $’000 | |
---|---|---|
7.2A: Categories of Financial Instruments | ||
Financial Assets Financial Assets at amortised cost | ||
Cash and cash equivalents | 559 | 719 |
Trade and other receivables | 59 | 173 |
Total financial assets at amortised cost | 618 | 892 |
Total financial assets | 618 | 892 |
Financial Liabilities | ||
Financial liabilities measured at amortised cost | ||
Trade creditors and accruals | 1,346 | 799 |
Total financial liabilities measured at amortised cost | 1,346 | 799 |
Total financial liabilities | 1,346 | 799 |
Accounting Policy Financial assets With the implementation of AASB 9 Financial Instruments for the first time in 2019, the Fair Work Commission classifies its financial assets in the category of financial assets measured at amortised cost. The classification depends on both the entity's business model for managing the financial assets and 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 restated 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. 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. 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 Amortised Cost 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). |
7.3: Administered – Financial Instruments
As at 30 June 2020, there were no administered financial instruments that required disclosure (2019: nil).
7.4 Fair Value Measurement
Accounting Policy The fair value of non-financial assets has been taken to be the market value of similar assets. The agency’s assets are held for operational purposes and not held for the purposes of deriving a profit. The current use of all controlled assets is considered their highest and best use. The agency procured valuation services from Jones Lang LaSalle Public Sector Valuations Pty Ltd (JLLPSV) for the 2019-20 financial year and relied on valuation models provided by JLLPSV. JLLPSV has provided written assurance to the agency that the valuation models developed are in accordance with AASB 13. | ||
7.4A: Fair Value Measurement | ||
Fair value measurements | ||
---|---|---|
2020 $’000 | 2019 $’000 | |
Non-financial assets 2 | ||
Plant and Equipment1 | 2,012 | 2,880 |
Leasehold Improvements1 | 15,745 | 18,152 |
Total Non-financial assets | 17,757 | 21,032 |
- No non-financial assets were measured at fair value on a non-recurring basis as at 30 June 2020 (2019: nil).
- The Fair Work Commission's assets are held for operational purposes and not held for the purposes of deriving a profit. The current use of all non-financial assets is considered their highest and best use.
7.5 Administered - Fair Value Measurement
2020 $’000 | 2019 $’000 | |
As at 30 June 2020, there was no administered fair value measurement that required disclosure (2019: nil). |
8. Other Information
8.1A: Aggregate Assets and Liabilities | ||
8.1A: Aggregate Assets and Liabilities | ||
2020 $’000 | 2019 $’000 | |
Assets expected to be recovered in: | ||
No more than 12 months | 41,737 | 41,865 |
More than 12 months | 69,335 | 28,059 |
Total assets | 111,072 | 69,924 |
Liabilities expected to be settled in: | ||
No more than 12 months | 16,872 | 6,637 |
More than 12 months | 55,189 | 24,875 |
Total liabilities | 72,061 | 31,512 |
8.1B: Administered – Aggregate Assets and Liabilities | ||
2020 $’000 | 2019 $’000 | |
Liabilities expected to be settled in: | ||
No more than 12 months | 270 | - |
Total liabilities | 270 | - |
8.1: Aggregate Assets and Liabilities
8.1A: Aggregate Assets and Liabilities | ||
2020 $’000 | 2019 $’000 | |
---|---|---|
Assets expected to be recovered in: | ||
No more than 12 months | 41,737 | 41,865 |
More than 12 months | 69,335 | 28,059 |
Total assets | 111,072 | 69,924 |
Liabilities expected to be settled in: | ||
No more than 12 months | 16,872 | 6,637 |
More than 12 months | 55,189 | 24,875 |
Total liabilities | 72,061 | 31,512 |
8.1B: Administered – Aggregate Assets and Liabilities | ||
2020 $’000 | 2019 $’000 | |
Liabilities expected to be settled in: | ||
No more than 12 months | 270 | - |
Total liabilities | 270 | - |
Visit
https://www.transparency.gov.au/annual-reports/fair-work-commission/reporting-year/2019-20-13