A number of changes are being introduced to the Aged Care Financial Report (ACFR) in improving transparency and accountability in reporting by aged care providers.
Some of the changes include:
- Consolidated Parent Level Segment Report – to enable the department to make a reasonable assessment of the provider’s financial viability at a group level.
- Strengthened Approved Provider Reporting, including:
- Reconciliations for certain financial assets, loans receivable for related and non-related entities, non-current assets, refundable loans (residential aged care and independent living) and borrowings
- Presenting the statement of financial position based on liquidity, with the requirement to split resident loan balances on the face of the statement of financial position rather than in a separate note. This is to aid in the department’s ability to better assess the true liquidity of the provider
- Residential Segment Income Statement at the facility level – for the department to assess the performance of individual facilities
- Permitted Uses Reconciliation – for the department to determine whether Refundable Accommodation Deposit funds have been correctly used for permitted uses during the year.
For providers currently unable to capture information at the levels outlined above, transitional reporting provisions will apply. The department will be checking that providers’ ACFR aligns with their general-purpose financial report and may contact providers should this not be the case. HLB Mann Judd recommends providers address this in mitigating a last-minute rush.
Further, there are changes to the Accountability Amendment (Financial Information) Principles 2021.
On 30 June 2021, Minister for Senior Australians and Aged Care Services, Richard Colbeck, amended the Accountability Principles 2014 to achieve the following:
- Provide greater transparency of the financial viability of approved aged care providers;
- Enable the Australian Government to better identify and monitor at-risk providers earlier; and
- Improve the accuracy and validity of financial reporting to the government.
The amendment includes the following:
- The requirement of the ACFR to be signed by those charged with governance
- If the approved provider is a subsidiary of another body corporate, then a ‘financial support statement’ is required when submitting the ACFR.
Providers will be required to align these changes with their usual governance process for reviewing and approving the organisation’s annual report.
HLB Mann Judd recommends considering this now to prevent issues encountered before the 31 October lodgement date. Education may be required of company boards to fully understand the changes in requirements, as well as to fully understand the information disclosed in the ACFR.