Safe Work Australia does not have any administered funding and there were no new measures sought or provided in the 2013-14 financial year. The agency had a full year operating deficit for 2013–14 that reduces the previous accumulated surplus in 2012–13. There are steps in place to fully expend the remaining surplus in 2014–15 while being very mindful of any impact on the out-year budgets, particularly in terms of staffing levels.
Safe Work Australia’s major assets are its leasehold improvements and property, plant and equipment. These assets are presented in the financial information provided in the financial statements. Software assets are recognised at cost value in accordance with the AASB 138. Purchases of property, plant and equipment are recognised initially at cost value in the statement of financial position, except for purchases costing less than $2000, which are expensed in the year of acquisition.
There were no contracts in excess of $10 000 (inclusive of GST) or standing offers that were exempt from the requirement to publish on AusTender during 2013–14. Australian National Audit Office access clause All contracts over $100 000 entered into during the reporting period contained an ANAO access to premises clause.
When undertaking procurement activities, Safe Work Australia adheres to the principles of:
- value for money
- encouraging competition among actual or potential suppliers
- efficient, effective and ethical use of resources, and
- accountability and transparency.
Safe Work Australia has a small procurement area responsible for co-ordinating key procurements for the agency, developing and maintaining procurement policies, procedures, templates and forms, and providing advice
for staff undertaking procurements.
Memorandum of understanding (MOU)
Safe Work Australia had an extended MOU arrangement with the Department of Employment and Department of Education Shared Services Centre (SSC) throughout 2013-14 that covered:
- information technology services including records management and mailing services, and
- enabling services including parliamentary, payroll, library and legal services and access to finance and human resources management systems.
During 2013-14, Safe Work Australia also had an MOU with Comcare for the reimbursement of costs associated with the management of the AMR. The arrangement has been extended for 2014-15.
Grants and sponsorships
Information on grants awarded by Safe Work Australia during the period 1 July 2013 to 30 June 2014 is available on our website.
Information required by the Legal Services Direction 2005 on the agency’s legal services purchasing for 2013-14 is available on our website.
Information on the value of specific contracts and consultancies is available on the AusTender website. During 2013-14, 20 new consultancy contracts were entered into involving total actual expenditure of $1 589 978.
Safe Work Australia engages consultants when certain specialist expertise or independent research, review or assessment is required. Consultants are typically engaged to investigate or diagnose a defined issue or problem; carry out defined reviews, evaluations or data collection for research; or provide independent advice, information or creative solutions to assist in Safe Work Australia’s decision making. Prior to engaging consultants Safe Work Australia takes into account the skills and resources required for the task, the skills available internally and the costeffectiveness of engaging external expertise. The decision to engage a consultant is guided by the requirements in the FMA Act and Regulations, the Commonwealth Procurement Rules and associated Financial Management Guidance Notes.
Safe Work Australia Resource Statement 2013-14
|Actual available appropriation for 2013-14 $’000
|Payments made 2013-14 $’000
|Balance remaining 2013-14
|Ordinary annual services (1)|
|Total available annual appropriations||9,506||9,515|
|Total appropriations excluding special accounts||9,506||9,515|
|Non-appropriation receipts to special account||9,751||10,340|
|Total special account||10,708|
|Less appropriations drawn from annual appropriations above and credited to special accounts||9,506||9,515|
|Total net resourcing for Safe Work Australia||26,732||30,145|
1. Appropriation Bill (No. 1) 2013-14
Reader note: All figures are GST exclusive.
Expenses and Resources for Outcome 1
Outcome 1: Safer and more productive Australian workplaces through harmonising national occupational health and safety and workers’ compensation arrangements
|Budget 2013-14 $’000
|Actual 2013-14 $’000
|Variation 2013-14 $’000|
|Ordinary annual services (Appropriation Bill No. 1)||9,374||9,374||0|
|Expenses not requiring appropriation in the budget year||548||729||-181|
|Total for Outcome 1||19,673||18,634||1,039|
|Average staffing level (number)||102||100|
Statement by the Chief Executive Officer and Chief Financial Officer
In our opinion, the attached financial statements for the year ended 30 June 2014 are based on properly maintained financial records and give a true and fair view of the matters required by the Finance Minister’s Orders made under the Financial Management and Accountability Act 1997, as amended.
Chief Executive Officer (Acting)
30 September 2014
Chief Financial Officer (Acting)
30 September 2014
Note 1: Summary of Significant Accounting Policies
1.1 Objectives of Safe Work Australia
Safe Work Australia is an Australian Government controlled entity. It is a not-for-profit entity. The objective of Safe Work Australia is to improve work health and safety and workers’ compensation arrangements across Australia. Safe Work Australia was established as an Executive Agency on 1 July 2009 and as a Statutory Agency from 1 November 2009.
Safe Work Australia’s functions under the Safe Work Australia Act 2008 include to:
- develop national policy relating to OHS and workers’ compensation, and
- prepare a model Act and model regulations relating to OHS and, if necessary, revise them:
- for approval by the Ministerial Council, and
- for adoption as laws of the Commonwealth, each of the states and each of the territories.
Safe Work Australia has a single outcome as follows:
Outcome 1: Safer and more productive Australian workplaces through harmonising national occupational health and safety and workers’ compensation arrangements.
The continued existence of the Agency in its present form is dependent on Government policy and on continuing appropriations by Parliament and contributions from State and Territory Governments for the Agency’s administration and program.
The Agency's activities contribute toward the stated outcome and are classified as departmental. Departmental activities involve the use of assets, liabilities, income and expenses controlled or incurred by the Agency in its own right.
1.2 Basis of Preparation of the Financial Statements
The financial statements are required by section 49 of the Financial Management and Accountability Act 1997 and are general purpose financial statements.
The Financial Statements have been prepared in accordance with:
- Finance Minister’s Orders for reporting periods ending on or after 1 July 2011, and
- Australian Accounting Standards and Interpretations issued by the Australian Accounting Standards Board 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 and values are rounded to the nearest dollar unless otherwise specified.
Unless an alternative treatment is specifically required by an accounting standard or the Finance Minister’s Orders, assets and liabilities are recognised in the statement of financial position when and only when it is probable that future economic benefits will flow to the entity or a future sacrifice of economic benefits will be required and the amounts of the assets or liabilities can be reliably measured. However, assets and liabilities arising under agreements equally proportionately unperformed are not recognised unless required by an accounting standard. Liabilities and assets that are unrecognised are reported in the schedule of commitments or the schedule of contingencies.
Unless alternative treatment is specifically required by an accounting standard, income and expenses are recognised in the statement of comprehensive income when and only when the flow, consumption or loss of economic benefits has occurred and can be reliably measured.
1.3 Significant Accounting Judgements and Estimates
No accounting assumptions or estimates have been identified that have a significant risk of causing a material adjustment to carrying amounts of assets and liabilities within the next accounting period.
1.4 New Australian Accounting Standards
Adoption of New Australian Accounting Standard Requirements
No accounting standard has been adopted earlier than the application date as stated in the standard.
The following new or revised standards were issued prior to the signing of the Statement by the Chief Executive Officer and Chief Financial Officer, were applicable to the current reporting period and had a material financial impact on the agency financial statements:
- AASB 13 Fair Value Measurement – a significant increase to the level of disclosures for items carried at fair value (including requirement to designate items as level 1, 2 or 3).
- AASB 119 Employee benefits – all government agencies will be required to recognise actuarial gains and losses for defined benefit plans on the same basis. Additional disclosures will be required for defined benefit plans, and annual leave will be disclosed as a long-term benefit. Revisions to termination benefits may result in changed timing for recognition of termination expenses.
- All other new / revised / amending standards and/or interpretations that were issued prior to the sign-off date and are applicable to the current reporting period did not have a material effect, and are not expected to have a future material effect, on the agency’s financial statements.
Future Australian Accounting Standard Requirements
The following new or revised standard and interpretation that was issued by the Australian Accounting Standards Board prior to the signing of the Statement by the Secretary and Chief Financial Officer is expected to have a financial impact on the agency for future reporting periods:
- AASB1055 Budgetary Reporting (effective date 1 July 2014) – new requirement to
report budgetary information and explain significant variances between budget and
actual at the individual entity level.
Revenue from Government
Amounts appropriated for departmental outputs for the year (adjusted for any formal additions and reductions) are recognised as revenue 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.
Revenue from States and Territories
State and Territory contributions are recognised in equal monthly amounts over the course of the year as work is completed. All contributions are deemed as being earned at the reporting date. Contribution amounts are derived by reference to the Inter-Governmental Agreement for Regulatory and Operational Reform in Occupational Health and Safety.
Other Types of Revenue
Revenue from rendering of services is recognised by reference to the stage of completion of contracts at the reporting date. The revenue is recognised when:
- the amount of revenue, stage of completion and transaction costs incurred can be
reliably measured, and
- the probable economic benefits associated with the transaction will flow to the entity.
The stage of completion of contracts at the reporting date is determined by reference to the proportion that costs incurred to date bear to the estimated total costs of the transaction.
Receivables for goods and services, which have 30 day terms, are recognised at the nominal amounts due less any impairment allowance account. Collectability of debts is reviewed at balance date. Allowances are made when collectability of the debt is no longer probable.
Resources Received Free of Charge
Resources received free of charge are recognised as gains when, and only when, a fair value can be reliably determined and the services would have been purchased if they had not been donated. Use of those resources is recognised as an expense.
Resources received free of charge are recorded as either revenue or gains depending on their nature.
Contributions of assets at no cost of acquisition or for nominal consideration are recognised as gains at their fair value when the asset qualifies for recognition, unless received from another Government agency or authority as a consequence of a restructuring of administrative arrangements (Refer to Note 1.7).
Sale of Assets
Gains from disposal of assets are recognised when control of the asset has passed to the buyer.
1.7 Transactions with the Government as Owner
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 Australian Government agency or authority under a restructuring of administrative arrangements are adjusted at their book value directly against contributed equity.
1.8 Employee Benefits
Liabilities for ‘short-term employee benefits’ (as defined in AASB 119 Employee Benefits) and termination benefits due within twelve months of end of reporting period are measured at their nominal amounts.
The nominal amount is calculated with regard to the rates expected to be paid on settlement of the liability.
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.
The liability for employee benefits includes provision for annual leave and long service leave. No provision has been made for sick leave as all sick leave is non-vesting and the average sick leave taken in future years by employees of the Agency is estimated to be less than the annual entitlement for sick leave.
The leave liabilities are calculated based on employees’ remuneration at the estimated salary rates that will apply 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 liability for long service leave has been determined by reference to the Finance Minister’s Orders issued by the Department of Finance. 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 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.
Staff of the Agency are members of the Commonwealth Superannuation Scheme (CSS), the Public Sector Superannuation Scheme (PSS), the PSS accumulation plan (PSSap) or other non-government superannuation funds.
The CSS and PSS are defined benefit schemes for the Australian Government. The PSSap and other non-government funds are defined contribution schemes.
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 by the Department of Finance and as an administered item.
The Agency makes employer contributions to the employee superannuation scheme at rates determined by an actuary to be sufficient to meet the current cost to the Government of the superannuation entitlements of the Agency’s employees. The Agency accounts for the contributions as if they were contributions to defined contribution schemes.
The liability for superannuation recognised as at 30 June 2014 represents outstanding contributions for the final fortnight of the year.
A distinction is made between finance leases and operating leases. Finance leases effectively transfer from the lessor to the lessee substantially all the risks and rewards incidental to ownership of leased assets. An operating lease is a lease that is not a finance lease. In operating leases, the lessor effectively retains substantially all such risks and benefits.
Where an asset is acquired by means of a finance lease, the asset is capitalised at either the fair value of the lease property or, if lower, the present value of minimum lease payments at the inception of the contract and a liability is recognised at the same time and for the same amount.
The discount rate used is the interest rate implicit in the lease. Leased assets are amortised over the period of the lease. Lease payments are allocated between the principal component and the interest expense. Operating lease payments are expensed on a basis, which is representative of the pattern of benefits, derived from the leased assets.
Cash is recognised at its nominal amount. Cash and cash equivalents include:
- cash on hand;
- 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;
- cash held by outsiders; and
- cash in special accounts.
1.11 Fair Value Measurement
The entity deems transfers between levels of the fair value hierarchy to have occurred at the end of the reporting period.
1.12 Financial Assets
Safe Work Australia classifies its financial assets in the following categories:
- financial assets at fair value through profit or loss;
- held-to-maturity investments;
- available-for-sale financial assets; and
- loans and receivables.
The classification depends on the nature and purpose of the financial assets and is determined at the time of initial recognition. Financial assets are recognised and derecognised upon trade date.
Loans and Receivables
Trade receivables, loans and other receivables that have fixed or determinable payments that are not quoted in an active market are classified as ‘loans and receivables’. Loans and receivables are measured at amortised cost using the effective interest method less impairment. Interest is recognised by applying the effective interest rate.
Impairment of Financial Assets
Financial assets are assessed for impairment at the end of each reporting period.
Financial assets held at amortised cost - if there is objective evidence that an impairment loss has been incurred for loans and receivables or held to maturity investments held at amortised cost, the amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows discounted at the asset’s original effective interest rate. The carrying amount is reduced by way of an allowance account. The loss is recognised in the Statement of Comprehensive Income.
1.13 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’.
Other Financial Liabilities
Other 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 yield basis.
The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments through the expected life of the financial liability, or, where appropriate, a shorter period.
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).
1.14 Contingent Liabilities and Contingent Assets
Contingent liabilities and contingent assets are not recognised in the statement of financial position but are reported in the relevant schedules and 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.
Safe Work Australia has no contingent liabilities or assets for the reporting period. The Agency is unaware of any quantifiable, unquantifiable or significant remote contingencies for the reporting period.
1.15 Acquisition of Assets
Assets are recorded at cost on acquisition except as stated below. The cost of acquisition includes the fair value of assets transferred in exchange and liabilities undertaken. Financial assets are initially measured at their fair value plus transaction costs where appropriate.
Assets acquired at no cost, or for nominal consideration, are initially recognised as assets and income at their fair value at the date of acquisition, unless acquired as a consequence of restructuring of administrative arrangements. In the latter case, assets are initially recognised as contributions by owners at the amounts at which they were recognised in the transferor’s accounts immediately prior to the restructuring.
Asset Recognition Threshold
Purchases of leasehold improvements, plant and equipment are recognised initially at cost in the statement of financial position, except for purchases costing less than the thresholds listed below for each class of asset, 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).
|Asset class||Recognition threshold|
|Plant and Equipment||$2,000|
|Internally Developed Software||$50,000|
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 restoration provisions in property leases taken up by the Agency where there exists an obligation to restore the property to its original condition. These costs are included in the value of the Agency’s leasehold improvements with a corresponding provision for the restoration recognised.
1.16 Buildings, Plant and Equipment
Fair values for each class of asset are determined as shown below:
|Leasehold Improvements||Fair Value|
|Plant and Equipment||Fair Value|
Following initial recognition at cost, leasehold improvements, 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 do not differ materially from the assets’ fair values as at the reporting date. The regularity of independent valuations depends upon the volatility of movements in market values for the relevant assets.
Revaluation adjustments are made on a class basis. Any revaluation increment is credited to equity under the heading of asset revaluation reserve except to the extent that it reverses 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.
Depreciable leasehold improvements, 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.
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:
|Leasehold Improvements||Lease term||Lease term|
|Plant and Equipment||3 to 15 years||3 to 15 years|
All assets were assessed for impairment at 30 June 2014. 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.
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.
Safe Work Australia’s intangibles comprise internally developed software and purchased software for internal use. These assets are carried at cost less accumulated amortisation and accumulated impairment losses. Purchases costing less than $2,000 are expensed in the year of acquisition, other than when they form part of a group of similar items, which are significant in total.
Software is amortised on a straight-line basis over its anticipated useful life, as shown below for each class:
|Purchased Software||2 to 5 years||2 to 5 years|
|Internally Developed Software||2 to 5 years||2 to 5 years|
All software assets were assessed for indications of impairment as at 30 June 2014.
Revenues, expenses and assets are recognised net of GST except:
- where the amount of GST incurred is not recoverable from the Australian Taxation Office; and
- for receivables and payables.
The risks associated with the business of the Agency are covered by arrangements with Comcover. Arrangements are in place with Comcare to protect the health, safety and welfare of the Agency’s employees.
1.20 Commonwealth Expenditure
The Australian Government continues to have regard to developments in case law, including the High Court’s most recent decision on Commonwealth expenditure in Williams v Commonwealth (2012) 288 ALR 410, as they contribute to the larger body of law relevant to the development of Commonwealth programs. In accordance with its general practice, the Government will continue to monitor and assess risk and decide on any appropriate actions to respond to risks of expenditure not being consistent with constitutional or other legal requirements.