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Financial reporting change for aged care industry – dig a little deeper

20 January 2017

Kim Colyer , Partner, Audit & Assurance |

Financial reporting arrangements for residential aged care and home care package providers has never been straight forward. The nature of the industry and the services it delivers have always attracted considerable regulatory attention.

Recently, this attention has resulted in what appears – on the surface – to be a step in the right direction for improving the financial reporting efficiency of operators in the sector. The new arrangements, which will require providers who report on a 30 June financial year-end basis to submit their reports by 31 October 2017, hone in on two key things – consolidation and flexibility.

Below is a summary of the key changes:

  • Residential Aged care providers will now submit an audited General Purpose Financial Report (GPFR) and an unaudited Aged Care Financial Report (ACFR)
  • The ACFR is a new single report (template included on the Department of Health’s website under ‘More Information’) that will consolidate the following:
    • Annual Prudential Compliance Statement (APCS)
    • Building Activity component of the Survey of Aged Care Homes (SACH)
    • Home Care Financial Report (HCFR)
  • The ACFR is not required to be audited
  • Providers of home care who do not also provide residential care will not be required to submit a GPFR
  • The ACFR and the GPFR should be submitted at the same time via a new online portal. The ACFR is to be completed in the portal also. The changes also include flexibility around the inclusion of mandated line items in either their GPFR or ACFR
  • Flexibility provided around the inclusion of mandated line items in either their GPFR or ACFR.

Reading between the lines

While the need to prepare fewer reports and choose where you disclose certain information certainly presents much more freedom than before, it also raises a range of important issues providers must consider. These include:

  • The ACFR does not need to be reviewed by the auditor, but providers must ensure the information contained in the ACFR is consistent with the financial information contained in the GPFR
  • Despite the flexibility now afforded, more detailed information must be submitted to the Department 
  • While completing an ACFR could be time consuming, efficiencies may be gained by electing to disclose items in the GPFR
  • Segment reporting in the ACFR will require judgment where providers do not have separate balance sheets for each segment
  • Some of the mandated line items included in the ACFR may not necessarily comply with the Accounting Standards (in particular presentation)
  • Auditors will need to review their approach to determine what audit procedures will now be required to be performed to ensure the GPFR is in accordance with Aged Care Act.
  • Any choices providers make regarding the treatment of mandated line items in their GPFR must comply with Australian Accounting Standards
  • Each individual component of the ACFR must be completed in its entirety in either the ACFR or the GPFR, however there is flexibility in presenting this data in the GPFR
  • If a Provider elects to present mandated data in the GPFR, the provider needs to refer to this when completing the ACFR.

To avoid any unintentional breaches of the new requirements, providers should seek assistance from their auditor to ensure they meet relevant requirements and that the information contained in the ACFR is consistent with the audited GPFR.

If you have any questions about the application of these new financial reporting arrangements to your organisation, please connect with me.