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Primary financial statements

STATEMENT OF COMPREHENSIVE INCOME

for the period ended 30 June 2020

STATEMENT OF COMPREHENSIVE INCOME for the period ended 30 June 2020

Original

2020

2019

Budget

Notes

$’000

$’000

$’000

NET COST OF SERVICES

Expenses

Employee benefits

1.1A

90,482

82,908

84,869

Suppliers

1.1B

29,986

36,227

41,005

Grants

3,915

1,667

1,702

Depreciation and amortisation

3.2A

15,505

7,203

7,230

Finance costs

528

-

-

Losses from asset sales

1

-

-

Total expenses

140,417

128,005

134,806

Own-Source Income

Own-source revenue

Rental income

527

582

80

Other income

1.2A

921

986

600

Total own-source revenue

1,448

1,568

680

Gains

Other gains

-

-

-

Total gains

-

-

-

Total own-source income

1,448

1,568

680

Net cost of services

(138,969)

(126,437)

(134,126)

Revenue from Government

1.2B

134,278

119,692

126,896

Deficit on continuing operations

(4,691)

(6,745)

(7,230)

OTHER COMPREHENSIVE INCOME

Items not subject to subsequent reclassification to net cost of services

Changes in asset revaluation surplus

-

-

-

Total other comprehensive income

-

-

-

Total comprehensive loss attributable to the Australian Government

(4,691)

(6,745)

(7,230)

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

Original budget reflects the figures presented in the 2019–20 Portfolio Budget Statements (PBS).

Budget variance commentary

Statement of Comprehensive Income for the Fair Work Ombudsman and Registered Organisations Commission Entity (FWOROCE)

Employee benefits

Additional staff engaged to accommodate increased demand for FWOROCE services during the COVID-19 response.

Increased cost of leave entitlements from the impact of lower interest rates on the discounting calculation.

Lower than estimated amount of leave taken in the second half of the financial year due to COVID-19 travel restrictions also contributed to the higher employee benefits cost.

Suppliers

The variance primarily relates to the transition to AASB 16 Leases, effective 1 January 2019. The budget estimates were updated to reflect this standard in subsequent budget rounds.

Lower than planned level of engagement of contractors over the course of the financial year.

Grants

Additional grants were approved by Government as part of its response to the COVID-19 crisis. Grants were provided to employee and employer organisations to support the provision of

information to their members.

Depreciation and Finance costs

The variance primarily relates to the transition to AASB 16 Leases, effective 1 January 2019. The budget estimates were updated to reflect this standard in subsequent budget rounds.

Rental income

Higher than forecast revenue following the extension of sub-leases at the end of their initial term. Provision was not made for the extensions in the 2019–20 Budget round.

Other income

Higher than estimated revenue was received from services provided to other Government agencies and court costs awarded to the FWOROCE arising from litigations.

Revenue from Government

Additional funding provided in measures to support the Government's response to the COVID-19 response.

STATEMENT OF FINANCIAL POSITION as at 30 June 2020

Original

2020

2019

Budget

Notes

$’000

$’000

$’000

ASSETS

Financial assets

Cash and cash equivalents

3.1A

708

1,611

1,892

Trade and other receivables

3.1B

65,534

56,154

49,243

Total financial assets

66,242

57,765

51,135

Non-financial assets

Right-of-use assets

3.2

42,818

-

-

Land and buildings (leasehold improvements)

3.2

15,195

17,886

22,477

Property, plant and equipment

3.2

1,028

900

1,961

Intangibles

3.2

10,887

10,124

7,477

Prepayments

1,050

1,894

1,424

Total non-financial assets

70,978

30,804

33,339

Total assets

137,220

88,569

84,474

LIABILITIES

Payables

Suppliers

3.3A

3,285

6,729

14,049

Other payables

3.3B

1,389

8,345

600

Total payables

4,674

15,074

14,649

Interest Bearing Liabilities

Leases

3.4

43,935

-

-

Total interest bearing liabilities

43,935

-

-

Provisions

Employee provisions

6.1A

27,438

24,087

21,584

Other provisions

3.5

-

1,086

1,466

Total provisions

27,438

25,173

23,050

Total liabilities

76,047

40,247

37,699

Net assets

61,173

48,322

46,775

EQUITY

Contributed equity

117,551

110,564

117,587

Reserves

5,981

5,981

5,981

Retained earnings (accumulated deficit)

(62,359)

(68,223)

(76,793)

Total equity

61,173

48,322

46,775

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

Original Budget reflects the figures presented in the 2019–20 PBS.

Budget variance commentary

Statement of Financial Position for FWOROCE

Trade and other receivables

Lower than budgeted capital expenditure payments made during the financial year combined with higher revenue from rental and other income and below budget expenditure on contractors reduced the amount of appropriation required to be drawn to fund the payments.

Right-of-use assets, Prepayments, Suppliers, Leases and Other provisions

The variance primarily relates to the transition to AASB 16 Leases, effective 1 January 2019. The budget estimates were updated to reflect this standard in subsequent budget rounds.

Land and buildings (leasehold improvements) and Intangibles

Additional fit out expenditure provided for in the budget was not required and was utilised on the replacement and enhancement of internal systems.

Other payables

The higher value reflects the greater number of days used to calculate the salaries and wages accrual at year end.

Employee provisions

Increased balance of leave entitlements is due to the impact of lower interest rates on the discounting calculation. Lower than estimated amount of leave taken in the second half of the financial year due to COVID-19 travel restrictions also contributed to the higher employee entitlements balance.

STATEMENT OF CHANGES IN EQUITY for the period ended 30 June 2020

Original

2020

2019

Budget

Notes

$’000

$’000

$’000

CONTRIBUTED EQUITY

Opening Balance

Balance carried forward from previous period

110,564

103,667

110,564

Opening balance

110,564

103,667

110,564

Comprehensive Income

Contributions by owners

Departmental capital budget

5.1A

6,987

6,897

7,023

Total transactions with owners

6,987

6,897

7,023

Closing balance as at 30 June

117,551

110,564

117,587

ASSET REVALUATION RESERVE

Opening Balance

Balance carried forward from previous period

5,981

5,981

5,981

Opening balance

5,981

5,981

5,981

Closing balance as at 30 June

5,981

5,981

5,981

RETAINED EARNINGS

Opening Balance

Balance carried forward from previous period

(68,223)

(61,478)

(69,563)

Adjustment on initial application of AASB 16

10,555

-

-

Adjusted opening balance

(57,668)

(61,478)

(69,563)

Comprehensive Income

Surplus/(Deficit) for the period

(4,691)

(6,745)

(7,230)

Total comprehensive income

(4,691)

(6,745)

(7,230)

Closing balance as at 30 June

(62,359)

(68,223)

(76,793)

TOTAL EQUITY

Opening Balance

Balance carried forward from previous period

48,322

48,170

46,982

Adjustment on initial application of AASB 16

10,555

-

-

Opening balance

58,877

48,170

46,982

Comprehensive Income

Surplus/(Deficit) for the period

(4,691)

(6,745)

(7,230)

Total comprehensive income

(4,691)

(6,745)

(7,230)

Transactions with owners

Contributions by owners

Departmental capital budget

6,987

6,897

7,023

Total transactions with owners

6,987

6,897

7,023

Closing balance as at 30 June

61,173

48,322

46,775

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

Original Budget reflects the figures presented in the 2019–20 PBS.

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.

Restructuring of administrative arrangements

Net assets received from or relinquished to another government entity under a restructuring of administrative arrangements are adjusted at their book value directly against contributed equity.

Budget variance commentary

Statement of Changes in Equity for FWOROCE

Retained earnings

The variance primarily relates to the transition to AASB 16 Leases, effective 1 January 2019. The budget estimates were updated to reflect this standard in subsequent budget rounds.

Surplus/(Deficit) for the period

The variance primarily relates to the transition to AASB 16 Leases, effective 1 January 2019. The budget estimates were updated to reflect this standard in subsequent budget rounds.

Higher than budgeted revenues from rental and other income and additional appropriation from the COVID-19 response measure contributed to the lower deficit for the year.

CASH FLOW STATEMENT for the period ended 30 June 2020

Original

2020

2019

Budget

Notes

$’000

$’000

$’000

OPERATING ACTIVITIES

Cash received

Appropriations

125,219

117,305

124,802

Sales of goods and rendering of services

1,408

1,842

1,620

Net goods and services tax (GST) received

2,983

2,794

3,547

Other

1,845

-

1,893

Total cash received

131,455

121,941

131,862

Cash used

Employees

86,884

80,581

84,869

Suppliers

32,395

37,709

46,731

Interest payments on lease liabilities

528

-

-

Section 74 receipts transferred to Official Public Account (OPA)

4,489

4,075

-

Total cash used

124,296

122,365

131,600

Net cash from/(used by) operating activities

7,159

(424)

262

INVESTING ACTIVITIES

Cash used

Purchase of non-financial assets

5,033

4,803

7,023

Total cash used

5,033

4,803

7,023

Net cash used by investing activities

(5,033)

(4,803)

(7,023)

FINANCING ACTIVITIES

Cash received

Contributed equity

4,996

4,946

7,023

Total cash received

4,996

4,946

7,023

Cash used

Principal payments of lease liabilities

8,025

-

-

Total cash used

8,025

-

-

Net cash from/(used by) financing activities

(3,029)

4,946

7,023

Net increase/(decrease) in cash held

(903)

(281)

262

Cash and cash equivalents at the beginning of the reporting period

1,611

1,892

1,630

Cash and cash equivalents at the end of the reporting period

3.1A

708

1,611

1,892

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

Original Budget reflects the figures presented in the 2019–20 PBS.

Budget variance commentary

Cash Flow Statement for FWOROCE

Operating activities

Suppliers

The variance primarily relates to the transition to AASB 16 Leases, effective 1 January 2019. The budget estimates were updated to reflect this standard in subsequent budget rounds.

Lower than planned level of engagement of contractors over the course of the financial year.

Interest payments on lease liabilities

The variance primarily relates to the transition to AASB 16 Leases, effective 1 January 2019. The budget estimates were updated to reflect this standard in subsequent budget rounds.

Section 74 receipts

Variation from the budgeted section 74 receipts was due to receipts for reimbursements of expenditure, such as paid parental leave and leave balances of staff transferred.

These are not able to be estimated accurately at the time of producing the PBS.

Investing activities

Purchase of non-financial assets

Lower than planned expenditure on non-financial assets was due to savings made against a number of software projects and fewer than estimated projects being undertaken.

Financing activities

Contributed equity

A lower amount of funds were required to be drawn from cash reserves to fund the lower than expected non-financial asset purchases.

Principal repayment of lease liabilities

The variance primarily relates to the transition to AASB 16 Leases, effective 1 January 2019. The budget estimates were updated to reflect this standard in subsequent budget rounds.

ADMINISTERED SCHEDULE OF COMPREHENSIVE INCOME for the period ended 30 June 2020

Original

2020

2019

Budget

Notes

$’000

$’000

$’000

NET COST OF SERVICES

Expenses

Write-down and impairment of assets

2.1

3,513

988

-

Total expenses

3,513

988

-

Income

Non-taxation revenue

Sale of goods and rendering of services

-

-

2,357

Fees and fines

2.2A

7,631

4,890

2,600

Total income

7,631

4,890

4,957

Net contribution by services

4,118

3,902

4,957

Surplus

4,118

3,902

4,957

OTHER COMPREHENSIVE INCOME

Total Other Comprehensive Income

-

-

-

Total Comprehensive Income

4,118

3,902

4,957

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

Original Budget reflects the figures presented in the 2019–20 PBS.

Budget variance commentary

Administered Schedule of Comprehensive Income for FWOROCE

Write down and impairment of assets

The assessment of recoverability of the penalties awarded by the courts against employers and directors of employing entities has resulted in the impairment of the administered debtors stablished to recognise the court penalties. The amount of unrecoverable court penalties are unable to be accurately estimated when budgets are developed.

Sale of goods and rendering of services

The budget provided for receipts from services related to the establishment of a National Labour Hire Registration Scheme (Scheme). Delays in the passing of legislation to enable to establishment of the Scheme has meant those services were not able to be provided and fees were unable to be charged.

Fees and fines

The quantum of penalties handed down by the courts where FWOROCE has brought forward successful litigations are unable to be accurately estimated at the time of establishing budgets.

ADMINISTERED SCHEDULE OF ASSETS AND LIABILITIES as at 30 June 2020

Original

2020

2019

Budget

Notes

$’000

$’000

$’000

ASSETS

Financial assets

Trade and other receivables

4.1A

5,159

6,284

4,237

Other financial assets

4.1B

1,713

944

797

Total financial assets

6,872

7,228

5,034

Total assets administered on behalf of Government

6,872

7,228

5,034

LIABILITIES

Payables

Other payables

-

-

1

Total payables

-

-

1

Total liabilities administered on behalf of Government

-

-

1

Net assets

6,872

7,228

5,033

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

Original Budget reflects the figures presented in the 2019–20 PBS.

Budget variance commentary

Administered Schedule of Assets and Laibilities for FWOROCE

Trade and other receivables

The quantum of penalties handed down by the courts where FWOROCE has brought forward successful litigations are unable to be accurately estimated at the time of establishing budgets.

FWOROCE has been successful in achieving higher penalties than expected during the financial year.

Other financial assets

Penalties handed down by the courts post the end of the financial year are required to be accrued into the financial statements up to the signing date. The quantum of these penalties are unable to be accurately estimated at the time of establishing budgets. Higher penalties than anticipated have been handed down.

ADMINISTERED RECONCILIATION SCHEDULE as at 30 June 2020

2020

2019

$’000

$’000

Opening assets less liabilities as at 1 July

7,228

5,822

Net (cost of)/contribution by services

Income

7,631

4,890

Expenses

(3,513)

(988)

Transfers to/from Australian Government:

Transfers to OPA

(4,457)

(2,604)

Transfers to OPA by other agencies

(17)

108

Closing assets less liabilities as at 30 June

6,872

7,228

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

Accounting policy

Administered cash transfers to and from the OPA

Revenue collected by the agency for use by the Government rather than the agency 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 agency 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 2020

2020

2019

Notes

$’000

$’000

OPERATING ACTIVITIES

Cash received

Fees and fines

4,457

2,604

Total cash received

4,457

2,604

Net cash from operating activities

4,457

2,604

Net increase in cash held

4,457

2,604

Cash and cash equivalents at the beginning of the reporting period

-

-

Cash to the OPA

Administered accounts

(4,457)

(2,604)

Cash and cash equivalents at the end of the reporting period

-

-

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

NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS for the period ending 30 June 2020

Overview

The Basis of Preparation

The financial statements are general purpose financial statements and are required by section 42 of the PGPA Act.

The financial statements have been prepared in accordance with:

  • Public Governance, Performance and Accountability (Financial Reporting) Rule 2015 (FRR)
  • 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 which are reported at fair value. Except where stated, no allowance is made for the effect of changing prices on the results or the financial position.

The financial statements are presented in Australian dollars and values are rounded to the nearest thousand dollars.

New Australian Accounting Standards

Adoption of new Australian Accounting Standard Requirements

AASB 15, AASB 16, AASB 2016-8 and AASB 1058 became effective 1 July 2019.

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 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 agency recognises revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the agency 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 agency to further its objectives, and where volunteer services are received. AASB 15 and AASB 1058 did not have a material effect, and are not expected to have a future material effect, on the agency's financial statements.

AASB 16 Leases

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 16 Leases

The agency adopted AASB 16 using the modified retrospective approach, under which the cumulative effect of initial application is recognised in retained earnings at 1 July 2019. Accordingly, the comparative information presented for 2019 is not restated, that is, it is presented as previously reported under AASB 117 and related interpretations.

The agency 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 agency 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 agency 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 agency recognises right-of-use assets and lease liabilities for most leases. However, the agency 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 agency recognised right-of-use assets and lease liabilities in relation to leases of office space, heavy equipment and automobiles, 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 agency’s incremental borrowing rate as at 1 July 2019. The agency’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 right-of-use assets were measured as follows:

a) Office space: measured at an amount equal to the lease liability, adjusted by the amount of any prepaid or accrued lease payments

b) All other leases: the carrying value that would have resulted from AASB 16 being applied from the commencement date of the leases, subject to the practical expedients noted above.

Impact on transition

On transition to AASB 16, the agency recognised additional right-of-use assets and additional lease liabilities, recognising the difference in munretained earnings. The impact on transition is summarised below:

Departmental

1 July 2019

Right-of-use assets - property, plant and equipment

51,491

Lease liabilities

51,960

Retained earnings

10,555

The following table reconciles the Departmental minimum lease commitments disclosed in the agency'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

61,038

Less: short-term leases not recognised under AASB 16

831

Undiscounted lease payments

60,207

Less: effect of discounting using the incremental borrowing rate as at the date of initial application

8,247

Lease liabilities recognised at 1 July 2019

51,960

Taxation

The agency is exempt from all forms of taxation except fringe benefits tax (FBT) and GST.

Impact of COVID-19 Pandemic

The COVID-19 pandemic has resulted in a significant increase in demand for the agency’s services, particularly with calls to the agency’s Infoline, as the economic impact was felt across the country. The Government provided additional resources to the agency to increase its capacity to deal with the demand, including increasing the number of Infoline and Legal staff. The funds were also used to establish a panel of legal firms to which customers could be referred to obtain advice on workplace laws and to provide funds to employee and employer groups to supplement their existing advice services. In general, the agency’s activities did not change in nature, but additional costs related to telecommunications and technology were incurred in ensuring staff were able to work remotely, while other costs, such as travel were reduced during the period.

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 policies as for departmental items, including the application of Australian Accounting Standards.

Events After the Reporting Date

Departmental

No significant events have occurred after the reporting date that are likely to affect either the ongoing structure or financial activities of the agency.

Administered

No significant events have occurred after the reporting date that are likely to affect either the ongoing structure or financial activities of the agency.

1. Departmental Financial Performance

This section analyses the financial performance of FWOROCE for the year ended 2020.

1.1 Expenses

2020

2019

$’000

$’000

1.1A: Employee Benefits

Wages and salaries

63,603

57,835

Superannuation:

Defined contribution plans

8,608

7,534

Defined benefit plans

3,822

4,027

Leave and other entitlements

13,099

12,010

Separation and redundancies

831

1,127

Other employee expenses

519

375

Total employee benefits

90,482

82,908

Accounting policy

Accounting policies for employee-related expenses are contained in the People and Relationships section.

1.1B: Suppliers

Goods and services supplied or rendered

Contractors

11,169

10,424

Legal fees

5,286

4,542

Property outgoings

2,589

2,683

Travel

1,819

2,248

Training

776

992

Telecommunications

1,584

1,520

Software licensing, support and maintenance

1,010

1,058

Consultants

556

925

Other

3,877

3,932

Total goods and services supplied or rendered

28,666

28,324

Goods supplied

1,734

1,556

Services rendered

26,932

26,768

Total goods and services supplied or rendered

28,666

28,324

Other suppliers

Workers compensation expenses

640

562

Operating lease rentals*

680

7,341

Total other suppliers

1,320

7,903

Total suppliers

29,986

36,227

*The FWOROCE 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

The FWOROCE has short-term property lease commitments of $140,698 and short-term motor vehicle lease commitments of $306,475 as at 30 June 2020.

The above lease disclosures should be read in conjunction with the accompanying notes 3.2 and 3.4A.

1.1 Expenses (continued)

2020

2019

$’000

$’000

Commitments for minimum lease payments in relation to non-cancellable operating leases are payable as follows:

Within 1 year

337

9,833

Between 1 to 5 years

110

39,029

More than 5 years

-

12,176

Total operating lease commitments

447

61,038

Accounting policy

Short-term leases and leases of low-value assets

The FWOROCE 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.

1.2 Own-Source Revenue and Gains

2020

2019

Own-Source Revenue

$’000

$’000

1.2A: Other Income

Resources received free of charge - audit fees

75

75

Other income

846

911

Total other income

921

986

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 these resources is recognised as an expense. Resources received free of charge are recorded as either revenue or gains depending on their nature.

1.2B: Revenue from Government

Appropriations

Departmental appropriations

134,278

119,692

Total revenue from Government

134,278

119,692

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 agency 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 Government

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

2.1 Administered - Expenses

2020

2019

$’000

$’000

Write-Down and Impairment of Assets

Impairment of financial instruments

3,513

988

Total write-down and impairment of assets

3,513

988

Accounting policy

Litigations undertaken by the agency may result in penalties being handed down by the courts against employers and directors of the employing entity. These penalties are held as administered debtors in the accounts of the agency. An assessment of the recoverability of the debt is carried out by the agency's Legal Branch and if a debt is deemed to not be recoverable, a provision is established against the debtor and that associated cost is expensed.

2.2 Administered - Income

2020

2019

$’000

$’000

Revenue

Accounting policy

All administered revenues are revenues relating to ordinary activities performed by the agency on behalf of the Australian Government. As such, administered appropriations are not revenues of the individual agency that oversees distribution of the funds as directed.

2.2A: Fees and Fines

Court-awarded penalties

4,990

3,848

Infringement notices

1,046

589

Other fees from regulatory services

1,595

453

Total fees and fines

7,631

4,890

Accounting policy

Revenue comprises court-awarded penalties and infringement notices relating to breaches of either the Workplace Relations Act 1996 or the Fair Work Act and contrition payments made to FWOROCE under the terms of Enforceable Undertakings. The court-awarded penalty and Enforceable Undertaking revenues are recognised at the nominal amount due less any impairment allowance. The collectability of debts is reviewed at each reporting date by the agency's Legal Branch. Impairment allowances are made when some doubt exists as to the collectability of the debt. Revenue from infringement notices is recognised on receipt of payment.

3. Departmental Financial Position

This section analyses the FWOROCE 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

$’000

$’000

3.1A: Cash and Cash Equivalents

Cash on hand or on deposit

603

1,505

Cash held by contracted agents

105

106

Total cash and cash equivalents

708

1,611

Accounting Policy
Cash is recognised at its nominal amount. Cash and cash equivalents includes:
a) cash on hand; and
b) demand deposits in bank accounts with an original maturity of three months or less that are readily convertible to known amounts of cash and subject to insignificant risk of changes in
value.

3.1B: Trade and Other Receivables

Goods and services receivable

Goods and services

290

2,212

Total goods and services receivables

290

2,212

Appropriations receivables

Appropriation receivable

63,205

52,155

Total appropriations receivables

63,205

52,155

Other receivables

GST receivable from the ATO

501

217

Other

1,538

1,570

Total other receivables

2,039

1,787

Total trade and other receivables

65,534

56,154

No provision for impairment is required as at balance date.

Credit terms for goods and services were within 30 days (2019: 30 days).

Accounting policy

Trade and other receivables

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.

Impairment of financial assets

Financial assets are assessed for credit risk on initial recognition and subsequently assessed for impairment at the end of each reporting period.

3.2 Non-Financial Assets

3.2: Reconciliation of the Opening and Closing Balances of Property, Plant and Equipment and Intangibles

Reconciliation of the opening and closing balances of property, plant and equipment and intangibles for 2020

Land and

buildings

Property,

Intangibles

Right-of-Use

(leasehold

plant and

(computer

Assets

improvements)

equipment

software)

1

Total

$’000

$’000

$’000

$’000

$’000

As at 1 July 2019

Gross book value

-

31,025

5,313

40,518

76,856

Accumulated depreciation, amortisation and impairment

-

(13,139)

(4,413)

(30,394)

(47,946)

Total as at 1 July 2019

-

17,886

900

10,124

28,910

Recognition of right-of-use asset on initial application of AASB 16

51,491

-

-

-

51,491

Adjusted total as at 1 July 2019

51,491

17,886

900

10,124

80,401

Additions

Purchase

-

183

816

4,034

5,033

Depreciation and amortisation

-

(2,874)

(687)

(3,271)

(6,832)

Depreciation on right-of-use assets

(8,673)

-

-

-

(8,673)

Disposals

Other

-

-

(1)

-

(1)

Total as at 30 June 2020

42,818

15,195

1,028

10,887

69,928

Total as at 30 June 2020 represented by

Gross book value

51,491

31,208

5,902

44,552

133,153

Accumulated depreciation, amortisation and impairment

(8,673)

(16,013)

(4,874)

(33,665)

(63,225)

Total as at 30 June 2020

42,818

15,195

1,028

10,887

69,928

Carrying amount of right-of-use assets

42,818

-

-

-

42,818

1. The carrying amount of computer software comprises internally generated software.

No indicators of impairment were found for land and buildings (leasehold improvements). The agency will continue to review its land and buildings (leasehold improvements) holdings to ensure suitable levels of office space are leased and any opportunities for rationalisation are taken. This may result in some leases not being renewed when they expire. However, the agency has no plans to reduce its presence in capital cities or regional locations.

The FWOROCE has no properties that have leasehold improvements where the lease is due for renewal or cessation within the next 12 months.

No indicators of impairment were found for property, plant and equipment and intangibles.

FWOROCE has planned to replaced its current desktops and laptops in the second half of 2020 as part of its regular upgrade program.

Existing desktop and laptops will be disposed of through a third party.

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 the 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 land and buildings (leasehold improvements), 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 agency where there exists an obligation to restore the property to its original condition at the end of the lease term. These costs are included in the value of the agency's land and buildings (leasehold improvements) assets 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 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 FWOROCE 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, land and buildings (leasehold improvements, excludes ROU assets), property, plant and equipment are carried at fair value less subsequent accumulated depreciation and accumulated impairment losses. Valuations are conducted with sufficient frequency to ensure that the carrying amounts of assets did not differ materially from the assets’ fair values as at the reporting date. The regularity of independent valuations depended upon the volatility of movements in market values for the relevant assets.

Revaluation adjustments are made on a class basis. Any revaluation increment is credited to equity under the heading of asset revaluation reserve except to the extent that it reversed a previous revaluation decrement of the same asset class that was previously recognised in the surplus/deficit. Revaluation decrements for a class of assets are recognised directly in the surplus/deficit except to the extent that they reverse 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 agency using, in all cases, the straight-line method of depreciation. Land and buildings (leasehold improvements) are depreciated on a straight-line basis over the lesser of the estimated useful life of the improvements and the unexpired period of the lease.

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 assets are based on the following useful lives:

2020

2019

Leasehold improvements

Lesser of term and useful life

Lesser of term and useful life

Plant and equipment

5 years

5 years

Computer equipment

3-8 years

3-8 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 agency were deprived of the asset, its value in use is taken to be its depreciated replacement cost.

Derecognition

An item of land and buildings (leasehold improvements), property, plant and equipment is derecognised upon disposal or when no further future economic benefits are expected from its use or disposal.

Intangibles

The agency’s intangible assets comprise internally developed 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 agency’s software are three years (2019: three years).

All software assets were assessed for indications of impairment as at 30 June 2020.

3.3 Payables

2020

2019

$’000

$’000

3.3A: Suppliers

Trade creditors and accruals

3,285

3,863

Operating lease rentals

-

2,866

Total suppliers

3,285

6,729

Settlement is usually made net 30 days.

3.3B: Other Payables

Salaries and wages

1,389

624

Lease incentive 1

-

7,721

Total other payables

1,389

8,345

1The Entity 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.

Accounting policy
Suppliers and other payables are recognised at amortised cost. Liabilities are recognised to the extent that the goods and services have been received and irrespective of having been invoiced.

3.4 Interest Bearing Liabilities

2020

2019

$’000

$’000

3.4A: Leases

Lease liabilities

43,935

-

Total leases

43,935

-

Total cash outflow for leases for the year ended 30 June 2020 was $8.025 million.

Accounting policy

Refer Overview section for accounting policy on leases.

3.5 Other Provisions

3.5: Other Provisions

Provision for

Onerous leases

Total

$'000

$'000

As at 1 July 2019

1,086

1,086

Releases of provisions

(1,086)

(1,086)

Total as at 30 June 2020

-

-

The agency has a number of agreements for the leasing of office accommodation which are surplus to its requirements. The agency has made a provision to reflect the present value of the expected costs to be incurred that are in excess of the economic benefit expected to be derived from these leases.

4. Assets and Liabilities Administered on Behalf of Government

This section analyses the assets and liabilities that FWOROCE does not control but administers on behalf of Government. Unless otherwise noted, the accounting policies adopted are consistent with those applied for departmental reporting.

4.1 Administered - Financial Assets

4.1A: Trade and Other Receivables

2020

2019

$'000

$'000

Other receivables

Court-awarded penalties

9,542

10,110

Total trade and others receivables (gross)

9,542

10,110

Less Impairment loss allowance

Other receivables - Court-awarded penalties

(4,383)

(3,826)

Total trade and others receivables (net)

5,159

6,284

All receivables are expected to be settled within 12 months.

Accounting policy

Receivables

Where receivables are not subject to concessional treatment, they are carried at amortised cost using the effective interest method. Gains and losses due to impairment, derecognition and amortisation are recognised through profit or loss. Administered receivables represents debts owed to the agency by employers, workers and organisations as a result of court-awarded penalties.

4.1B: Other Financial Assets

Accrued revenue

1,713

944

Total other financial assets

1,713

944

All other financial assets are expected to be settled within 12 months

5. Funding

This section identifies the FWOROCE funding structure.

5.1 Appropriations

5.1A: Annual Appropriations ('Recoverable GST exclusive')

Annual Appropriation for 2020

Total appropriation

Appropriation Applied in 2020 (current and prior years)

Annual Appropriation

Adjustments to Appropriation1

Variance2

$'000

$'000

$'000

$'000

$'000

Departmental

Ordinary annual services

134,278

4,489

138,767

129,708

9,059

Capital Budget

3

6,987

-

6,987

4,996

1,991

Total departmental

141,265

4,489

145,754

134,704

11,050

Notes:

1. Adjustments to Appropriation in 2019-20 comprised PGPA Act Section 74 receipts of $4.489 million.

2. The variance between total appropriation and appropriation applied in 2020 relates to payments funded from unspent prior year appropriation items.

3. Departmental Capital Budgets are appropriated through Appropriation Acts (No. 1, 3, 5). They form part of ordinary annual services, and are not separately identified in the appropriation acts. The 2019-20 DCB was reduced in value from that initially reported in the 2019-20 PBS by $0.036 million following the imposition of an increase to the Efficiency Dividend in June 2019.

Annual Appropriation for 2019

Total appropriation

Appropriation Applied in 2019 (current and prior years)

Annual Appropriation

Adjustments to Appropriation1

Variance

2

$'000

$'000

$'000

$'000

$'000

Departmental

Ordinary annual services

119,692

4,075

123,767

120,303

3,464

Capital Budget

3

7,215

(318)

6,897

4,946

1,951

Total departmental

126,907

3,757

130,664

125,249

5,415

Notes

1. Adjustments to Appropriation in 2018–19 comprised PGPA Act Section 74 receipts of $4.075 million. In the 2018–19 financial year, the Department of Finance transferred $318,000 of Departmental Capital Budget to the Service Delivery Office as FWOROCE's contribution to the upgrading of the SAP system.

2. The variance between total appropriation and appropriation applied in 2019 relates to payments funded from unspent prior year appropriation items.

3. Departmental Capital Budgets are appropriated through Appropriation Acts (No. 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')

Departmental

2020

2019

$'000

$'000

Appropriation Act (No. 1) 2018-19

-

51,802

Appropriation Act (No. 1) - Capital Budget (DCB) 2018-19

-

1,964

Appropriation Act (No. 1) 2019-2020

56,565

-

Appropriation Act (No. 1) - Capital Budget (DCB) 2019-20

3,942

-

Appropriation Act (No. 3) 2019-2020

1,039

-

Appropriation Act (No. 5) 2019-2020

2,367

-

Total

63,913

53,766

Unspent appropriation includes cash and cash equivalents on hand at 30 June.

Represented by:

Appropriations receivable

63,205

52,155

Cash

708

1,611

63,913

53,766

5.1C: Special Appropriations ('Recoverable GST exclusive')

Authority

Appropriation Applied

2020

2019

Type

Purpose

$'000

$'000

Fair Work Act 2009 s559(4) Administered

Unlimited

To provide an appropriation where an Act or other law requires or permits the repayment of an amount received by the Commonwealth and apart from this section there is no specific appropriation for the repayment.

515

417

Total special appropriations applied

515

417

5.2 Special Accounts

ROC Special Account1

2020

2019

$'000

$'000

Balance brought forward from previous period

3,231

2,208

Increases

5,278

8,750

Total increases

5,278

8,750

Available for payments

8,509

10,958

Decreases

7,169

7,727

Total decreases

7,169

7,727

Total balance carried to the next period

1,340

3,231

Balance represented by:

Cash held in the agency bank account

-

-

Cash held in the OPA

1,340

3,231

Total balance carried forward to next period

1,340

3,231

1. Appropriation: PGPA Act, section 80.

Establishing Instrument: Fair Work (Registered Organisations) Amendment Act 2016, section 329EA.

Purpose: Paying or discharging the costs, expenses and other obligations incurred by the Commonwealth in the performance of the Commissioner's functions.

5.3 Net Cash Appropriation Arrangements

2020

2019

$'000

$'000

Total comprehensive income less depreciation/amortisation

expenses previously funded through revenue appropriations

2,789

458

Plus: depreciation/amortisation expenses previously funded through revenue appropriation

(6,832)

(7,203)

Plus: depreciation right-of-use assets

(8,673)

-

Less: principal repayments - leased assets

8,025

-

Total comprehensive loss - as per the Statement of Comprehensive Income

(4,691)

(6,745)

From 2010–11, the Australian Government introduced net cash appropriation arrangements, where revenue appropriations for depreciation/amortisation expenses ceased. Entities now receive a separate capital budget provided through equity appropriations. Capital budgets are to be appropriated in the period when cash payments 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

2019

$’000

$’000

6.1A: Employee Provisions

Leave

27,411

23,656

Separations and redundancies

-

409

Other

27

22

Total employee provisions

27,438

24,087

Accounting policy

Liabilities for short-term employee benefits and termination benefits expected 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 and long service leave. No provision has been made for personal leave as all personal leave is non-vesting and the average personal leave taken in future years by employees of the agency is estimated to be less than the annual entitlement for personal leave.

The leave liabilities are calculated on the basis of employees’ remuneration at the estimated salary rates that will be applied at the time the leave is taken, including the agency’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 estimate of the present value of the long service leave liability takes into account attrition rates and pay increases through promotion and inflation using the shorthand method prescribed in the FRR.

Separation and redundancy

Provision is made for separation and redundancy benefit payments. The agency 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 agency's staff are members of either the Commonwealth Superannuation Scheme (CSS), the Public Sector Superannuation Scheme (PSS), the PSS Accumulation Plan (PSSap) or other superannuation funds held outside the Australian Government.

The CSS and PSS are defined benefit schemes for the Australian Government. The PSSap is a defined contribution scheme.

The liability for defined benefits is recognised in the financial statements of the Australian Government and is settled by the Australian Government in due course. This liability is reported in the Department of Finance's administered schedules and notes.

The agency makes employer contributions to the employee's defined benefit superannuation schemes at rates determined by an actuary to be sufficient to meet the current cost to the Government.

The agency accounts for the contributions as if they were contributions to defined contribution plans.

The superannuation liability recognised at 30 June represents outstanding contributions.

Accounting judgments and estimates

In the process of applying the accounting policies listed in this note, the agency has made the following judgments that have significant impact on the amounts recorded in the financial statements:- the Australian Government shorthand method has been used to estimate the present value of long service leave liabilities. This involves the estimation of salary growth rates, discount rates, the probability of leave vesting and the amount of leave expected to be settled in service.

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 entity has determined the key management personnel to be the Attorney-General and Minister for Industrial Relations, the Chief Executive, members of the Corporate Board and the Registered Organisations Commissioner. Key management personnel remuneration is reported in the table below:

2020

2019

$'000

$'000

Short-term employee benefits

2,023

1,719

Post-employment benefits

310

284

Other long-term employee benefits

68

60

Total key management personnel remuneration expenses1

2,401

2,063

Notes: The total number of senior management personnel that are included in the above table are 6 (2019: 7).

  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.

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, members of the Corporate Board and the Registered Organisations Commissioner.

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.

7. Managing Uncertainties

This section analyses how the FWOROCE manages financial risks within its operating environment.

7.1 Contingent Assets and Liabilities

7.1A Contingent Assets and Liabilities

Unquantifiable contingencies

The agency has provided an indemnity to the Reserve Bank of Australia (the Bank) against any loss or damage arising from any error, mistake, fraud or negligence resulting from the Bank acting in good faith on instructions given to it by the agency and/or due to any failure by the agency to observe any of its obligations in respect to its banking arrangements.

The likelihood of any payment being required under the indemnity is remote and unquantifiable.

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 the likelihood of settlement is greater than remote.

7.1B: Administered - Contingent Assets and Liabilities

Quantifiable Administered Contingencies

At 30 June 2020, the agency has no quantifiable administered contingent assets. (2019: nil)

At 30 June 2020, the agency has no quantifiable administered contingent liabilities. (2019: nil)

Unquantifiable Administered Contingencies

At 30 June 2020, the agency is currently involved in litigation against 76 entities and while the probability of success is high in these matters, it is not possible to accurately estimate the value of any penalties that may be imposed by the courts. (2019: 70)

At 30 June 2020, the agency has no unquantifiable administered contingent liabilities. (2019: nil)

7.2 Financial Instruments

2020

2019

$'000

$'000

7.2: Categories of Financial Instruments

Loans and receivables

Cash and cash equivalents

708

1,611

Goods and services receivables

290

2,212

Other receivables

1,538

1,570

Total loans and receivables

2,536

5,393

Total financial assets

2,536

5,393

Financial Liabilities

Financial liabilities measured at amortised cost

Suppliers

3,285

6,729

Total financial liabilities measured at amortised cost

3,285

6,729

Total financial liabilities

3,285

6,729

The agency has no net income or expenses from financial instruments.

Accounting policy

Financial assets

With the implementation of AASB 9 Financial Instruments for the first time in 2019, 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 recognized 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.

Financial Assets at Fair Value Through Other Comprehensive Income (FVOCI)

Financial assets measured at fair value through other comprehensive income are held with the objective of both collecting contractual cash flows and selling the financial assets and the cash flows meet the SPPI test.

Any gains or losses as a result of fair value measurement or the recognition of an impairment loss allowance is recognised in other comprehensive income.

Financial Assets at Fair Value Through Profit or Loss (FVTPL)

Financial assets are classified as financial assets at fair value through profit or loss where the financial assets either doesn't meet the criteria of financial assets held at amortised cost or at FVOCI (i.e. mandatorily held at FVTPL) or may be designated.

Financial assets at FVTPL are stated at fair value, with any resultant gain or loss recognised in profit or loss. The net gain or loss recognised in profit or loss incorporates any interest earned on the financial asset.

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.

A write-off constitutes a derecognition event where the write-off directly reduces the gross carrying amount of the financial asset.

Financial liabilities

Financial liabilities are classified as either financial liabilities ‘at fair value through profit or loss’ or other financial liabilities. Financial liabilities are recognised and derecognised upon ‘trade date’.

Financial Liabilities at Fair Value Through Profit or Loss

Financial liabilities at fair value through profit or loss are initially measured at fair value. Subsequent fair value adjustments are recognised in profit or loss. The net gain or loss recognised in profit or loss incorporates any interest paid on the financial liability.

Financial Liabilities at Amortised Cost

Financial liabilities, including borrowings, are initially measured at fair value, net of transaction costs. These liabilities are subsequently measured at amortised cost using the effective interest method, with interest expense recognised on an effective interest basis.

Supplier and other payables are recognised at amortised cost. Liabilities are recognised to the extent that the goods or services have been received (and irrespective of having been invoiced).

7.3 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 AON Pty Ltd for the 2017–18 financial year and relied on valuation models provided by AON. AON provided written assurance to the agency that

the valuation models developed are in accordance with AASB 13.

7.3: Fair Value Measurement

Fair value measurements

at the end of the reporting period

2020

2019

$’000

$'000

Non-financial assets

Land and buildings (leasehold improvements)

15,195

17,886

Property, plant and equipment

1,028

900

Total fair value measurements of assets in the Statement of Financial Position

16,223

18,786

There is no significant change in the valuation technique since the prior year.

8. Other information

8.1 Aggregate Assets and Liabilities

2020

2019

8.1A: Aggregate Assets and Liabilities

$'000

$'000

Assets expected to be recovered in:

No more than 12 months

67,292

59,659

More than 12 months

69,928

28,910

Total assets

137,220

88,569

Liabilities expected to be settled in:

No more than 12 months

25,767

17,706

More than 12 months

50,280

22,541

Total liabilities

76,047

40,247

2020

2019

8.1B: Administered Aggregate Assets and Liabilities

$'000

$'000

Assets expected to be recovered in:

No more than 12 months

6,872

7,228

More than 12 months

-

-

Total assets

6,872

7,228

Liabilities expected to be settled in:

No more than 12 months

-

-

More than 12 months

-

-

Total liabilities

-

-

8.2 Assets Held in Trust

8.2A: Assets Held in Trust

Monetary assets

For the receipt of monies temporarily held in trust or otherwise for the benefit of a person other than the Commonwealth and to repay amounts where an Act or other law requires or permits the repayment of an amount received.

2020

2019

$'000

$'000

Monetary Assets

As at 1 July

2,905

2,599

Receipts

1,329

723

Payments

(515)

(417)

Total monetary assets held in trust as at 30 June

3,719

2,905

The values above are at fair value.