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Appendix D: Annual financial statements

Independent Auditor's Report

Certification

Primary financial Statements

Statement of Comprehensive Income

For the period ending 30 June 2021

Notes

2021

$'000

2020

$'000

Original Budget $'000

NET COST OF SERVICES

Expenses

Employee benefits

1.1A

49,985

50,747

50,540

Suppliers

1.1B

20,881

18,864

21,156

Depreciation and amortisation

3.2A

15,910

17,172

17,441

Finance costs

1.1C

240

476

242

Write-down and impairment of other assets

1.1D

115

3,865

-

Total expenses

87,131

91,124

89,379

Own-Source Income

Own-source revenue

Revenue from contracts with customers

1.2A

357

426

200

Rental income

1.2B

1,843

1,841

1,800

Other revenue

57

173

56

Total own-source revenue

2,257

2,440

2,056

Gains

Other gains

1.2C

-

332

-

Total gains

-

332

-

Total own-source income

2,257

2,772

2,056

Net cost of services

(84,874)

(88,352)

(87,323)

Revenue from Government

1.2D

82,128

76,896

80,347

Deficit on continuing operations

(2,746)

(11,456)

(6,976)

OTHER COMPREHENSIVE INCOME

Items not subject to subsequent reclassification to net cost of services

Changes in asset revaluation reserve

3.2A

-

1,328

-

Total comprehensive loss

(2,746)

(10,128)

(6,976)

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.

Revenue from Government
The variance against revenue from government was due to additional funding provided at the Mid- Year Economic and Fiscal Outlook.


Deficit on Continuing Operations
The deficit on continuing operations was lower than budget, due to additional revenue from Government being provided at the Mid-Year Economic and Fiscal Outlook, and depreciation and amortisation for the year being lower than expected.

Statement of Financial Position

as at 30 June 2021

Notes

2021

$'000

2020

$'000

Original Budget $'000

ASSETS

Financial assets

Cash and cash equivalents

3.1A

524

559

559

Trade and other receivables

3.1A

43,232

39,868

39,899

Total financial assets

43,756

40,427

40,458

Non-financial assets1

Leasehold improvements

3.2A

54,152

66,023

54,011

Plant and equipment

3.2A

2,895

2,012

1,869

Computer software

3.2A

1,959

1,087

1,037

Other non-financial assets

3.2B

1,323

1,523

1,523

Total non-financial assets

60,329

70,645

58,440

Total assets

104,085

111,072

98,898

LIABILITIES

Payables

Suppliers

3.3A

1,120

1,346

1,346

Other payables

3.3B

902

796

796

Total payables

2,022

2,142

2,142

Interest bearing liabilities

Leases

47,659

54,765

47,148

Total interest bearing liabilities

47,659

54,765

47,148

Provisions

Employee provisions

6.1A

15,651

15,154

15,185

Total provisions

15,651

15,154

15,185

Total liabilities

65,332

72,061

64,475

Net assets

38,753

39,011

34,423

EQUITY

Contributed equity

52,337

49,849

52,237

Reserves

13,738

13,738

13,738

Accumulated deficit

(27,322)

(24,576)

(31,552)

Total equity

38,753

39,011

34,423

The above statement should be read in conjunction with the accompanying notes.

1. Right-of-use assets are included in the following line items: leasehold improvements and plant and equipment.

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 receivable is due to additional revenue from government provided at the Mid-Year Economic and Fiscal Outlook, and subsequently quarantined. Refer to Note 5.1A for further information.

Plant and Equipment
The variance against plant and equipment is due to increased investment in technology and hardware infrastructure to enhance operational efficiency.

Computer Software
The variance against computer software is the result of upgrades to the Case Management System and Website.

Accumulated Deficit
Refer to Statement of Comprehensive Income.

Statement of Changes in Equity

for the period ended 30 June 2021

2021

$'000

2020

$'000

Original Budget

$'000

CONTRIBUTED EQUITY

Opening balance

49,849

47,474

49,849

Transactions with owners

Contributions by owners

Departmental capital budget

2,488

2,375

2,388

Total transactions with owners

2,488

2,375

2,388

Closing balance as at 30 June

52,337

49,849

52,237

ACCUMULATED DEFICIT

Opening balance

(24,576)

(21,472)

(24,576)

Adjustment on initial application of AASB 16

-

8,352

-

Adjusted opening balance

(24,576)

(13,120)

(24,576)

Comprehensive income

Deficit for the period

(2,746)

(11,456)

(6,976)

Total comprehensive income

(2,746)

(11,456)

(6,976)

Closing balance as at 30 June

(27,322)

(24,576)

(31,552)

ASSET REVALUATION RESERVE

Opening balance

13,738

12,410

13,738

Comprehensive income

Other comprehensive income

-

1,328

-

Total comprehensive income

13,738

1,328

-

Closing balance as at 30 June

13,738

13,738

13,738

2021

$'000

2020

$'000

Original Budget

$'000

TOTAL EQUITY

Opening balance

39,011

38,412

39,011

Adjustment on initial application of AASB 16

-

8,352

-

Adjusted opening balance

39,011

46,764

39,011

Comprehensive income

Deficit for the period

(2,746)

(11,456)

(6,976)

Other comprehensive income

-

1,328

-

Total comprehensive income

(2,746)

(10,128)

(6,976)

Transactions with owners

Contributions by owners

Departmental capital budget

2,488

2,375

2,388

Total transactions with owners

2,488

2,375

2,388

Closing balance as at 30 June

38,753

39,011

34,423

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 Budgets (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.

Deficit for the Period
Refer to Statement of Comprehensive Income.

Cash Flow Statement

for the period ended 30 June 2021

Notes

2021

$'000

2020

$'000

Original Budget

$'000

OPERATING ACTIVITIES

Cash received

Appropriations

78,841

71,101

80,316

Sale of goods and rendering of services

2,282

2,425

2,000

Net GST received

3,092

2,371

-

Total cash received

84,215

75,897

82,316

Cash used

Employees

(49,360)

(49,622)

(50,509)

Suppliers

(24,172)

(20,513)

(21,100)

Interest payments on lease liabilities

(240)

(476)

(242)

Total cash used

(73,772)

(70,611)

(71,851)

Net cash from operating activities

10,443

5,286

10,465

INVESTING ACTIVITIES

Cash used

Purchase of leasehold improvements

(210)

(196)

(848)

Purchase of property, plant and equipment

(1,146)

(503)

(1,252)

Purchase of computer software

(1,248)

(633)

(288)

Total cash used

(2,604)

(1,332)

(2,388)

Net cash used by investing activities

(2,604)

(1,332)

(2,388)

FINANCING ACTIVITIES

Cash received

Departmental capital budget

2,488

2,375

2,388

Total cash received

2,488

2,375

2,388

Cash used

Principle payments of lease liabilities

(10,362)

(6,489)

(10,465)

Total cash used

(10,362)

(6,489)

(10,465)

Net cash used by financing activities

(7,874)

(4,114)

(8,077)

Net decrease in cash held

(35)

(160)

-

Cash and cash equivalents at the beginning of the reporting period

559

719

559

Cash and cash equivalents at the end of the reporting period

3.1A

524

559

559

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 - Suppliers
The variance against operating activities - cash used - suppliers is predominantly due to increased contractor and agency resource.


Investing Activities – Cash used – Purchase of Computer Software
The variance against computer software is the result of upgrades to the Case Management System and Website.

Administered Schedule of Comprehensive Income

for the period ended 30 June 2021

Notes

2021

$'000

2020

$'000

Original Budget

$'000

NET COST OF SERVICES

Expenses

Application refunds paid

2.1A

531

477

500

Total expenses

531

477

500

Income

Revenue

Non-taxation revenue

Application fees received

2.2A

1,325

1,141

1,078

Total non-taxation revenue

1,325

1,141

1,078

Total revenue

1,325

1,141

1,078

Total income

1,325

1,141

1,078

Net contribution by services

794

664

578

Surplus

794

664

578

Total comprehensive income

794

664

578

The above schedule should be read in conjunction with the accompanying notes.

Administered Schedule of Assets and Liabilities

as at 30 June 2021

Notes

2021

$'000

2020

$'000

Original Budget

$'000

LIABILITIES

Other liabilities

Application fees liabilities

4.2A

(124)

(270)

(270)

Total other liabilities

(124)

(270)

(270)

Total liabilities administered on behalf of Government

(124)

(270)

(270)

Net assets/(liabilities)

(124)

(270)

(270)

The above schedule should be read in conjunction with the accompanying notes.

Administered Reconciliation Schedule

for the period ended 30 June 2021

2021

$'000

2020

$'000

Original Budget

$'000

Opening assets less liabilities as at 1 July

(270)

-

(270)

Adjustment on initial application of AASB 15/AASB1058

-

(139)

-

Adjusted opening assets less liabilities at 1 July

(270)

(139)

(270)

Net (cost of)/contribution by services

Application fees income

1,325

1,141

1,078

Expenses

Payments to entities other than corporate Commonwealth entities

(531)

(477)

(500)

Special appropriations (limited)

Transfers from Official Public Accounts

592

603

500

Appropriation transfers to Official Public Account

Transfers to OPA

(1,240)

(1,398)

1,078

Closing assets less liabilities as at 30 June

(124)

(270)

(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

for the period ended 30 June 2021

2021

$'000

2020

$'000

Original Budget

$'000

OPERATING ACTIVITIES

Cash received

Application fees received

1,240

1,398

1,078

Total cash received

1,240

1,398

1,078

Cash used

Application refunds paid

(592)

(603)

(500)

Total cash used

(592)

(603)

(500)

Net cash from operating activities

648

795

578

Cash from Official Public Account

Appropriations

592

603

500

Total cash from official public account

592

603

500

Cash to Official Public Account

Appropriations

(1,240)

(1,398)

(1,078)

Total cash to official public account

(1,240)

(1,398)

(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.

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.

Applications fees received/ Appropriations
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. The variance in applications were due to higher than budgeted applications to the Commission.

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:

  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
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.

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
On 6 July 2021, in accordance with section 51 of the Public Governance, Performance and Accountability Act 2013, access to $1.881m ($1.781m operating and $0.1m capital) of the 2020-21 Appropriation previously quarantined was permanently withheld.

There were no other 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 has assessed the impact of COVID-19 pandemic on the balances included in its financial statements. The Fair Work Commission has concluded that the COVID-19 has not had a material impact on the financial statements, operations, or effectiveness of internal controls.

1. Departmental Financial Performance

This section analyses the financial performance of Fair Work Commission for the year ended 2021.

1.1 Expenses

2021

$'000

2020

$'000

1.1A: Employee benefits

Wages and salaries

39,193

39,876

Superannuation:

Defined contribution plans

4,540

4,567

Defined benefit plans

1,506

1,518

Leave and other entitlements

4,348

4,381

Separation and redundancies

224

201

Other employee expenses

174

204

Total employee benefits

49,985

50,747

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

Tribunal/member services

1,505

1,919

Information Communications Technology

4,396

4,027

Property expenses

3,424

3,554

Office expense

979

689

Contractors

9,430

7,832

Other

717

380

Total goods and services supplied or rendered

20,451

18,401

Other suppliers

Workers compensation expenses

85

88

Short term leases

20

57

Variable lease payments

325

318

Total other suppliers

430

463

Total suppliers

20,881

18,864

The Fair Work Commission has short-term lease commitments of $20,218 as at 30 June 2021.

The above lease disclosures should be read in conjunction with the accompanying notes 1.1C, 1.2B, 1.2D, 3.2 and 3.4A.

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 Fair Work Commission 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

240

476

Total finance costs

240

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

29

3

Impairment on intangible assets

86

3,862

Total write-down and impairment of other assets

115

3,865

1.2 Own-Source Revenue and Gains

2021

$'000

2020

$'000

Own-Source Revenue

1.2A: Revenue from contracts with customers

Sale of goods and rendering of services

357

426

Total revenue from contracts with customers

357

426

Disaggregation of revenue from contracts with customers

Major product / service line:

Hire of hearing rooms and video conferencing facilities

330

424

Other

27

2

357

426

Type of customer:

Commonwealth Governments

96

-

State and Territory Governments

234

424

Non-government entities

27

2

357

426

Timing of transfer of goods and services:

Point of time

357

426

357

426

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

1,843

1,841

Total rental income

1,843

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 2020-21 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

2,204

2,127

One to two years

-

2,204

Total undiscounted lease payments receivable

2,204

4,331

The above lease disclosures should be read in conjunction with the accompanying notes 1.1B, 1.1C, 1.2D, 3.2 and 3.4A.

Gains

1.2C: 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.

1.2D: Revenue from Government

Appropriations

Departmental appropriations

82,128

76,896

Total revenue from Government

82,128

76,896

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

2021

$'000

2020

$'000

2.1A: Expenses

Refund of application fees

531

477

Total expenses

531

477

2.2 Administered – Income

2021

$'000

2020

$'000

Revenue

Non-Taxation Revenue

2.2A: Fees

Application fees received

1,325

1,141

Total fees

1,325

1,141

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.

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 its 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

2021

$'000

2020

$'000

3.1A: Cash and Cash Equivalents

Cash on hand or on deposit

524

559

Total cash and cash equivalents

524

559

Accounting Policy

Cash is recognised at its nominal amount. Cash and cash equivalents include:

a) Cash on hand; and

b) demand deposits in bank accounts with an original maturity of 3 months or less that are readily convertible to known amounts of cash and subject to insignificant risk of changes in value

3.1B: Trade and Other Receivables

Goods and services receivables

Goods and services

4

59

Total goods and services receivables

4

59

Appropriations receivables

Appropriation receivable

42,841

39,554

Total appropriations receivables

42,841

39,554

Other receivables

GST receivable

387

255

Total other receivables

387

255

Total trade and other receivables (gross)

43,232

39,868

Less impairment loss allowance

-

-

Total trade and other receivables (net)

43,232

39,868

Credit terms for goods and services were within 20 days (2020: 20 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 software

$'000

Total

$'000

As at 1 July 2020

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 1 July 2020

66,023

2,012

1,087

69,122

Additions

Purchase

210

1,146

90

1,446

Internally developed

-

-

1,158

1,158

Right-of-use assets

3,079

286

-

3,365

Depreciation and amortisation

(3,366)

(486)

(290)

(4,142)

Depreciation on right-of-use assets

(11,734)

(34)

-

(11,768)

Impairments recognised in net cost of services

-

-

(86)

(86)

Other movement of right-of-use assets

(60)

-

-

(60)

Disposals

-

(29)

-

(29)

Total as at 30 June 2021

54,152

2,895

1,959

59,006

Total as at 30 June 2021 represented by

Gross book value

81,056

3,407

5,208

89,671

Accumulated depreciation, amortisation and impairment

(26,904)

(512)

(3,249)

(30,665)

Total as at 30 June 2021

54,152

2,895

1,959

59,006

Carrying amount of right-of-use assets

41,562

253

-

41,815

The above lease disclosures should be read in conjunction with the accompanying notes 1.1B, 1.1C, 1.2B, 1.2D and 3.4A.

The carrying amount of computer software included $67,998 purchased software and $1,890,612 internally generated software.


Revaluations of non-financial assets
All revaluations were conducted in accordance with the revaluation policy stated at Note 7.4. On 30 June 2020, an independent valuer conducted the revaluations.


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. Non-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 leases 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. 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:

2021

2020

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 2021. 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 (2020: 3 to 10 years).

All software assets were assessed for indications of impairment as at 30 June 2021.

2021

$'000

2020

$'000

3.2B: Other Non-Financial Assets

Prepayments

1,110

1,167

Lease receivables

213

356

Total other non-financial assets

1,323

1,523

No indicators of impairment were found for other non-financial assets.

3.3 Payables

2021

$'000

2020

$'000

3.3A: Suppliers

Trade creditors and accruals

1,120

1,346

Total suppliers

1,120

1,346

Settlement terms for suppliers are 30 days. (2020: 30 days)

3.3B: Other payables

Salaries and wages

804

642

Superannuation

96

154

Other

2

-

Total other payables

902

796

3.4 Interest bearing Liabilities

2021

$'000

2020

$'000

3.4A: Leases

Lease Liabilities

Property

46,985

54,246

Car parking

421

519

Plant and equipment

253

-

Total leases

47,659

54,765

Total cash outflow for leases for the year ended 30 June 2021 was $10,601,734 (2020: $6,964,449)

Maturity analysis – contractual undiscounted cash flows

Within 1 year

11,936

10,345

Between 1 to 5 years

27,749

30,234

More than 5 years

8,535

14,978

Total leases

48,220

55,557

The above lease disclosures should be read in conjunction with the accompanying notes 1.1B, 1.1C, 1.2B, 1.2D and 3.2.

Accounting Policy
For all new contracts entered into, the Fair Work Commission considers whether the contract is, or contains a lease. A lease is defined as ‘a contract, or part of a contract, that conveys the right to use an asset (the underlying asset) for a period of time in exchange for consideration’.

Once it has been determined that a contract is, or contains a lease, the lease liability is initially measured at the present value of the lease payments unpaid at the commencement date, discounted using the interest rate implicit in the lease, if that rate is readily determinable, or the department’s incremental borrowing rate.

Subsequent to initial measurement, the liability will be reduced for payments made and increased for interest. It is remeasured to reflect any reassessment or modification to the lease. When the lease liability is remeasured, the corresponding adjustment is reflected in the right-of-use asset or profit and loss depending on the nature of the reassessment or modification.

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 2021, there were no administered financial assets that required disclosure (2020: nil).

4.2 Administered Financial Liabilities

2021

$'000

2020

$'000

4.2A: Other liabilities:

Application fees liabilities

124

270

Total other liabilities

124

270

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 2021

Annual Appropriation'

$'000

Adjustments to appropriation2

$'000

Total Appropriation

$'000

Appropriation applied in 2021 (current and prior years)

$'000

Variance3

$'000

Departmental

Ordinary annual services

82,128

2,200

84,328

79,248

5,080

Capital Budget4

2,488

-

2,488

2,604

(116)

Total departmental

84,616

2,200

86,816

81,852

4,964

1. An amount of $1.881m ($1.781m operating and $0.1m capital) was quarantined during the 2020-21 financial year and formally reduced on the 6th of July 2021. (Refer Overview section Events after the Reporting Period). Because at balance date no formal reduction had been made, the full amount of the available appropriation including quarantined balances has been recognised.

2. PGPA Act Section 74 receipts.

3. The variance between total annual appropriation available and total appropriation applied in 2021 relates to unspent appropriations funded from current year appropriation items, or spending from both current year and prior year appropriation items.

4. 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 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

1. 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.

2. PGPA Act Section 74 receipts.

3. The variance between total annual appropriation available and total appropriation applied in 2020 relates to unspent appropriations funded from current year appropriation items.

4. 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’)

2021

$'000

2020

$'000

Departmental

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

Supply Act (No.1) 2020-21

39,667

-

Appropriation Act (No.3) 2020-21*

1,781

-

Appropriation Act (No.1) – Capital Budget 2020-21

424

-

Supply Act (No.1) – Capital Budget 2020-21

1,393

-

Appropriation Act (No.3) – Capital Budget 2020-21*

100

-

Total departmental

43,365

Notes:

* An amount of $1.881m ($1.781m operating and $0.1m capital) was quarantined during the 2020-21 financial year and formally reduced on the 6th of July 2021. (Refer Overview section Events after the Reporting Period). Because at balance date no formal reduction had been made, the full amount of the available appropriation including quarantined balances has been recognised.

5.1C: Special Appropriations (‘Recoverable GST exclusive’)

Appropriation applied

Authority

2021

$'000

2020

$'000

Public Governance, Performance and Accountability Act 2013 s.77,

Administered

(592)

(603)

Total special appropriations applied

(592)

(603)

5.1D: Disclosure by Agent in Relation to Annual and Special Appropriations (‘Recoverable GST exclusive’)

Department of Finance – to make payment to beneficiaries under the Judges Pension Scheme 2021

$’000

2021

Total Receipts

7,431

Total Payments

(7,431)

Department of Finance – to make payment to beneficiaries under the Judges Pension Scheme 2020

$’000

2020

Total Receipts

7,461

Total Payments

(7,461)

5.2 Net Cash Appropriation Arrangements

2021

$’000

2020

$’000

Total comprehensive income/(loss) – as per the Statement of Comprehensive Income

(2,746)

(11,456)

Plus: depreciation/amortisation of assets funded through appropriations (departmental capital budget funding and/or equity injection)1

4,142

5,368

Plus: depreciation right-of-use assets2

11,768

11,804

Less: lease principal repayments2

(10,362)

(6,489)

Net Cash Operating Surplus/(Deficit)3

2,802

(773)

Notes:

1. From 2010-11, the Government introduced net cash appropriation arrangements where revenue appropriations for depreciation/amortisation expenses of non-corporate Commonwealth entities and selected corporate Commonwealth entities were replaced with a separate capital budget provided through equity injections. Capital budgets are to be appropriated in the period when cash payment for capital expenditure is required.

2. The inclusion of depreciation/amortisation expenses related to ROU leased assets and the lease liability principal repayment amount reflects the impact of AASB 16 Leases, which does not directly reflect a change in appropriation arrangements.

3. The Net Cash Operating Surplus includes an amount of $1.781m which was received during the 2020-21 financial year and formally reduced on the 6th of July 2021. (Refer Overview section Events after the Reporting Period).

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

2021

$’000

2020

$’000

6.1A: Employee Provisions

Leave

15,606

15,076

Separations and redundancies

45

78

Total employee provisions

15,651

15,154

6.1B: Administered – Employee Provisions

As at 30 June 2021, there were no administered employee provisions (2020: 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 Public Sector Superannuation Scheme (PSS), or the PSS accumulation plan (PSSap), or other superannuation funds held outside the Australian Government.

The PSS is a defined benefit scheme 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 2021 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:

2021

$’000

2020

$’000

Short-term employee benefits

942

927

Post-employment benefits

31

25

Other long-term employee benefits

61

62

Total key management personnel remuneration expenses1, 2

1,034

1,013

The total numbers of key management personnel that are included in the above table are 3 (2020: 2).

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 the entity.

2. On the 6th of April 2021, the General Manager – Bernadette O’Neill was appointed as a member of the Commission. The remuneration of the Acting General Manager is disclosed in the table above from this date.

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 (2020: nil).

7. Managing Uncertainties

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 2021, there were no quantifiable contingent liabilities or assets requiring disclosure (2020: nil).

Unquantifiable Contingencies

As at 30 June 2021, there were no unquantifiable contingent liabilities or assets requiring disclosure (2020: nil).

Quantifiable Administered Contingencies

As at 30 June 2021, there were no quantifiable contingent liabilities or assets requiring disclosure (2020: nil).

Unquantifiable Administered Contingencies

As at 30 June 2021, there were no unquantifiable contingent liabilities or assets requiring disclosure (2020: nil).

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.

7.2 Financial Instruments

2021

$’000

2020

$’000

7.2A: Categories of Financial Instruments

Financial Assets

Financial Assets at amortised cost

Cash and cash equivalents

524

559

Trade and other receivables

4

59

Total financial assets at amortised cost

528

618

Total financial assets

528

618

Financial Liabilities

Financial liabilities measured at amortised cost

Trade creditors and accruals

1,120

1,346

Total financial liabilities measured at amortised cost

1,120

1,346

Total financial liabilities

1,120

1,346

Accounting Policy

Financial assets

In accordance with AASB 9 Financial Instruments, the entity classifies its financial assets in the following categories:

a) financial assets at fair value through profit or loss;

b) financial assets at fair value through other comprehensive income; and

c) 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.

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 2021, there were no administered financial instruments that required disclosure (2020: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 at the end of the reporting period

2021

$'000

2020

$'000

Non-financial assets 2

Plant and Equipment1

2,498

2,012

Leasehold Improvements1

12,582

15,745

Total Non-financial assets

15,080

17,757

1. No non-financial assets were measured at fair value on a non-recurring basis as at 30 June 2021 (2020: nil).

2. 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

As at 30 June 2021, there was no administered fair value measurement that required disclosure (2020: nil).

8. Other Information

8.1: Current/non-current distinction for assets and liabilities

8.1A: Current/non-current distinction for assets and liabilities

2021

$’000

2020

$’000

Assets expected to be recovered in:

No more than 12 months

Cash and cash equivalents

Trade and other receivables

Other non-financial assets

524

43,232

1,323

559

39,868

1,310

Total no more than 12 months

45,079

41,737

More than 12 months

Leasehold improvements

Plant and equipment

Computer software

Other non-financial assets

54,152

2,895

1,959

-

66,023

2,012

1,087

213

Total more than 12 months

59,006

69,335

Total assets

104,085

111,072

Liabilities expected to be settled in:

No more than 12 months

Suppliers

1,120

1,346

Other payables

902

796

Leases

11,758

10,107

Employee provisions

4,675

4,623

Total no more than 12 months

18,455

16,872

More than 12 months

Leases

35,901

44,658

Employee provisions

10,976

10,531

Total more than 12 months

46,877

55,189

Total liabilities

65,332

72,061

8.1B: Administered – current/non-current distinction for assets and liabilities

2021

$’000

2020

$’000

Liabilities expected to be settled in:

No more than 12 months

124

270

Total liabilities

124

270