Conditional Adjustment Payment (CAP)

Information about the Conditional Adjustment Payment.

Page last updated: 04 July 2013

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About CAP

What is CAP?

CAP stands for the ‘Conditional Adjustment Payment’. It is a significant payment available to eligible approved providers of residential aged care in Australia.

Who is eligible for CAP?

Approved providers of residential aged care who are eligible, under the Aged Care Act 1997, for the payment of a basic subsidy in respect of a resident are also eligible to receive a Conditional Adjustment Payment if they meet the CAP eligibility requirements set out in Part 10, Division 4 of the Residential Care Subsidy Principles 1997 (the Principles).

Apart from a small number of approved providers who have opted out of CAP, all approved providers of Australian Government-funded residential aged care services are currently eligible for CAP, and payment to each approved provider will continue unless and until the approved provider fails to meet one of the eligibility criteria for CAP, or elects not to receive CAP funding.

What are the eligibility criteria for CAP?

The eligibility requirements for the receipt of CAP are set out in the Principles. A copy of the Principles relating to CAP or a complete copy of the Aged Care Principles can be found at the Comlaw website.

In general, for approved providers to be eligible to receive CAP, they must satisfy all of the following eligibility requirements:
  1. They must encourage staff training at the residential aged care service and provide information about the training opportunities that were offered to staff.
  2. They must, in the relevant financial year, provide a copy of the audited General Purpose Financial Report (GPFR) (if any) for the previous financial year to any recipient of the service, potential recipient, or their representatives who ask for a copy.
  3. They must participate in any aged care workforce census conducted by, or on behalf of, the Department of Health and Ageing.
In addition to satisfying these requirements, approved providers must give the Secretary of the Department (Secretary) a copy of the audited GPFR for the relevant financial year by 30 November and Staff Training Statements by the last day in February.

What is the purpose of CAP?

The aim of CAP is to improve the quality, accessibility and sustainability of the aged care sector to better meet the needs of an ageing population.

CAP will strengthen financial management and corporate governance arrangements in the aged care industry, and assist approved providers to improve their services so that they can continue to provide high quality care to residents.

How much is CAP?

The amount of CAP payable in respect of a resident is calculated as a percentage of the basic subsidy amount payable in respect of a resident.

The level of the CAP is 8.75 per cent of the basic aged care subsidy for each resident.

There is no requirement for approved providers to include details on how the CAP was used, nor are approved providers required to submit any compliance reports on expenditure of the payment.
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CAP financial reporting requirements

In order to continue to receive the CAP after 30 November, approved providers must:
  • prepare a GPFR for the relevant financial year;
  • report at the approved provider or residential aged care service level;
  • treat residential care as a reportable segment in their GPFR;
  • have the GPFR audited by a Registered Company Auditor;
  • complete the ‘Declaration on providing GPFR to specified people’;
  • report on all residential aged care services operated for all or part of the relevant financial year;
  • lodge the GPFR and Declaration with the Department, care of Forms Administration Pty Ltd (Forms Administration), by 30 November; and
  • be assessed as eligible for CAP by the Department.

The key elements of the CAP financial reporting requirements are as follows:

1. Prepare a General Purpose Financial Report (GPFR)

  • Approved providers must prepare a GPFR within the meaning of Statement of Accounting Concepts SAC 2 ‘Objective of General Purpose Financial Reporting’, that states that GPFRs are prepared to provide users with information about the reporting entity that is useful for making and evaluating decisions about the allocation of scarce resources.
  • The first note of the GPFR should specify that it is a GPFR and the auditor should confirm that it is a GPFR that has been audited.
  • All GPFRs are required by the accounting standards to include a statement of financial position, statement of comprehensive income, statement of changes in equity, statement of cash flows, and notes, comprising a summary of significant accounting policies and other explanatory information. They are also required to disclose comparative information in respect of the previous period – that is, to disclose as a minimum two of each of the statements and related notes.
  • The GPFR must be in accordance with the applicable accounting standards and give a true and fair view of the financial position and performance of the entity.
  • A Special Purpose Financial Report is not acceptable.
  • The GPFR and audit report must be signed and dated.
  • The reduced disclosure requirements are available to approved providers that are Tier 2 entities. However, for the purpose of segment reporting, approved providers must report as if they are a Tier 1 entity.

2. Report at the approved provider (NAPS ID) or service(s) level (RACS ID)

  • Reporting at the approved provider level means the provision of one report covering all of an approved provider’s residential aged care services and all its other activities.
  • Reporting at a level higher than the ‘approved provider’ is not acceptable. Approved providers should not submit one financial report that covers more than one approved provider.
  • Reporting at the service level means the provision of GPFRs that cover each residential aged care service or groups of services (in any combination, but each service must be reported only once).
  • Where approved providers report at the service level, the audited GPFRs must together list all the services for which the approved provider is receiving subsidy from the Australian Government, including the RACS ID for each service.
  • If approved providers choose to provide separate reports at the service level, each report must be a GPFR and separately audited.

3. Provide one of the following notes on residential aged care operations

  • Type A: Approved providers that deliver only residential aged care services should include a separate note in the GPFR attesting that: “The approved provider delivers only residential aged care services and this GPFR therefore relates only to such operations.
  • Type B: For approved providers involved in other operations in addition to residential aged care services, a Segment Note is required within the meaning of the accounting standard AASB 8 ‘Operating Segments’, i.e. a Segment Note that sets out the revenue, expenses (including any depreciation & amortisation and interest expense), assets and liabilities etc. of the residential aged care operations – see the suggested format for segment information at Attachment A.
  • The segment note should include residential aged care operations as defined under the Aged Care Act 1997, separate from other aged care operations such as community or flexible care, or independent living units for seniors. The segment note must include comparative information in respect of the previous period.
  • If a segment note is required but not provided then the approved provider will not be eligible for CAP after 30 November until the start of the month following the date on which the requirement is met.
  • The suggested format for segment information at Attachment A identifies important elements of the residential care operations that the Department seeks in the segment note. Additional information may be required to comply with the accounting standards. Approved providers should seek independent advice regarding the implications and disclosures requirements of AASB 8 for their particular circumstances. Approved providers are to apply AASB 8 as if they are Tier 1 entities.
The GPFR segment data may be used in the Australian Government’s benchmarking project, see the 2011-12 Aged Care Bench Marking website. Participation in the benchmarking project is voluntary. Segment data provided for each individual service as per the data items on Attachment A offers an approved provider “Silver Level” reporting on the benchmarking project. Please contact Forms Administration should you wish to participate or require further information.

4. Have the GPFR audited by a Registered Company Auditor

  • To receive CAP, approved providers must have their GPFR audited by a Registered Company Auditor (RCA). Section 1281 of the Corporations Act 2001 (Cth) provides that the Auditor-General of the Commonwealth, a state or territory is taken to be a RCA. It is the approved provider’s responsibility to ensure that its auditor is a RCA. One method of checking this is to perform a search on the Australian Securities and Investment Commission’s website and click on ‘Professional registers’ (far right and bottom of screen). Company auditors will need to comply with all applicable auditor independence requirements in the Corporations Act.
  • The only exception to a GPFR being audited by a RCA is where approval has been given for an alternative auditor. The Secretary will not routinely approve a person who is not a RCA to audit financial reports. The application form is to be used to cover exceptional circumstances only.
  • Obtain from the auditor (or the approved person) an audit opinion including, whether the financial report is in accordance with the applicable accounting standards; and whether the financial report gives a true and fair view of the financial position and performance of the entity for the relevant financial year.
  • The audit report must be signed and dated by the auditor before it is deemed complete and must be lodged with the financial report by the due date.

5. Declaration on providing GPFR to specified people

In order to comply with section 21.26F(2)(a)(iv) of the Principles, an approved provider must provide in the relevant financial year a copy of its audited financial report (if any) for the previous financial year to (in respect of a residential care service provided by the provider) any recipient of the service, potential recipient, or their representative who requests a copy.

To confirm compliance with this CAP requirement an approved provider must complete the ‘Declaration on providing GPFR to specified people’ form at Attachment B, and send both Part A and B (together with the GPFR for the relevant financial year) to Forms Administration by 30 November.

Please note, if an approved provider was asked, in the relevant financial year, for a copy of its audited financial report for the previous financial year by (in respect of a residential care service provided by the provider) any recipient of the service, potential recipient, or their representative but did not give that person a copy, then the approved provider will not be eligible for CAP for the period 1 December to 30 November, that is, a period of 12 months.

6. Report on all residential aged care services operated for all or part of the relevant financial year

  • An approved provider must report on all residential aged care services it operated for all or part of the relevant financial year. An approved provider will be eligible for CAP funding only in respect of those residential aged care services that have been reported in a GPFR.
  • If the GPFR does not cover all the approved provider’s residential aged care services that it operated for all or part of the relevant financial year, then the approved provider must provide details of its residential aged care services that are not reported in its GPFR to Forms Administration.

7. Lodge the GPFR and Declaration (Parts A and B) by 30 November

  • Lodge the GPFR and Declaration with the Department, care of Forms Administration Pty Ltd, by 30 November - see Attachment C ‘Checklist for lodgement of financial report and Declaration’ to ensure the GPFR and Declaration are fully completed and signed.
  • Early lodgement is encouraged as this will give approved providers time to fix any problems detected by the Department. If the GPFR and Declaration are posted just before the due date then it is strongly recommended that Express Post be used to ensure it arrives on time.
  • If approved providers are unable to lodge their GPFR by 30 November, a request for a later reporting date must be lodged by 30 November, otherwise CAP will automatically cease from 1 December and will not be reinstated until the first day of the month following the date on which the approved provider becomes CAP compliant.
  • An extension will be granted only if the Secretary is satisfied, on reasonable grounds, that it would be impracticable for an approved provider to comply by the due date. An extension of the reporting date is from one to three months depending on the approved provider’s individual circumstances.
  • If approved providers fail to lodge their GPFR and Declaration by 30 November then CAP will cease from 1 December and will not be reinstated until the first day of the month following the date on which the approved provider becomes CAP compliant.
  • Each GPFR should be clearly marked with the National Approved Provider System (NAPS) or Residential Aged Care Service (RACS) identification number it relates to, and include an Australian Business Number (ABN).
  • The audit report must be signed and dated before it is deemed to be complete.
  • Provide details of a contact officer that the Department can contact should further information be required regarding the GPFR.

8. Assessed as eligible for CAP by the Department

To be eligible for CAP in relation to each residential care service, approved providers must comply with all the statements listed in the Checklist for financial requirements of the Principles at Attachment D.

The Checklist with checkboxes ticked may be returned to the Department, care of Forms Administration, to indicate that each compliance statement has been met.
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Alternative arrangements

Up to 30 November, approved providers may apply for a different financial year, a later reporting date, and/or an alternative auditor. An approved provider may:
  • apply for a determination to move from a non-standard financial year to a standard financial year by allowing for a financial year of less than 12 months;
  • apply for a determination of a non-standard financial year where it is impracticable to comply with the standard financial year (i.e. July to June);
  • request a ‘later reporting date’ from one to three months, if it would be impracticable to satisfy the financial reporting requirements by the standard reporting date of 30 November; and
  • apply for an alternative auditing arrangement if the requirement for the approved provider’s accounts to be audited by a Registered Company Auditor is impracticable.
Relevant application forms can be obtained by contacting Forms Administration by phone (02) 4403 0640. Please note, the Department has 28 working days in which to process any application for alternative arrangements.

Different financial year

Approved providers with a financial year that is not the standard financial year of 1 July to 30 June, may apply for a different financial year. Please note, the Secretary can only approve a different financial year for an approved provider if the Secretary is satisfied, on reasonable grounds, that it would be impracticable for the approved provider to prepare a financial report for the standard financial year. In general, a determination will only be available where an approved provider does not currently have the systems or processes in place that would reasonably allow it to meet the requirement of reporting for the standard financial year.

Later reporting date

Approved providers concerned that they may not be able to lodge their financial report by the standard reporting date of 30 November, may request, before 30 November, a later reporting date. Please note, the Secretary can only approve a later reporting date for an approved provider if the Secretary is satisfied, on reasonable grounds, that it would be impracticable for the approved provider to comply with the requirement to lodge its financial report by 30 November.

Depending on an approved provider’s individual circumstances, an extension of the reporting date would be from one to three months, that is, from December to the end of February. A strong case for a later reporting date will need to be made in any application lodged and an approved provider should not assume that an extension will be granted in every case.

Approved providers that have been approved a calendar year may apply for a later reporting date to the end of April.

Alternative auditor

Approved providers not able to readily access the services of a Registered Company Auditor (RCA), for example, the approved provider is in a rural/remote location where there are no RCAs, may request that the Secretary approve an alternative auditor who is not a RCA. Approval of an alternative auditor is at the discretion of the Secretary. The Secretary will not routinely approve a person who is not a RCA to audit financial reports. The Secretary must be satisfied with the qualifications and experience of the proposed alternative auditor. An application should be used to cover exceptional circumstances only.

Staff Training Statement

Encouraging staff training at the residential care service and providing a written report on the training is one of the CAP conditions. The staff training requirements are set out in section 21.26E of the Principles.

As part of satisfying the CAP Staff Training requirements for the calendar year, approved providers must lodge a correctly completed CAP Staff Training Statement for each service that it operates with Forms Administration. The Staff Training Statements must be lodged by the last day in February.

A CAP Staff Training Statement is sent to the approved provider for each of those services for which the approved provider is currently responsible.

Aged Care Workforce Census and Survey

In order to be eligible to receive CAP, approved providers must participate in any aged care workforce census and survey conducted by, or on behalf of, the Department of Health and Ageing.

The Aged Care Workforce Census and Survey informs workforce planning on issues surrounding the recruitment and retention, training and education, career development and employment conditions of the aged care workforce.

The 2012 National Aged Care Workforce Census and Survey ‘The Aged Care Workforce, 2012 – Final Report’ is published on the Department of Health and Ageing website:

Review of CAP

In the 2008-09 Budget, the Australian Government established a Review of the Conditional Adjustment Payment (the CAP Review). The CAP Review was carried out by the Department of Health and Ageing. It was informed by submissions from aged care providers, consumers, and their representatives and by the analysis of the GPFRs of approved providers and other relevant data and reports.

Submissions to the CAP Review are published on the Department of Health and Ageing website.
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How can I get further information?

If you require further information regarding the CAP reporting requirements, please contact Forms Administration on: (02) 4403 0640 or by email: CAP.


Attachment A

Suggested Segment Information (SSI)

Residential aged care

PDF printable version of Attachment A - Suggested Segment Information (SSI) - Residential aged care (PDF 27 KB)
Word version of Attachment A - Suggested Segment Information (SSI) - Residential aged care (Word 138 KB)

Income Statement

Revenue 2012-13, 2011-12

Operating revenue
Commonwealth subsidies
State grants
Resident/client charges
Bond retentions (if applicable)
Interest
Trust distributions
Donations and contributions
Other operating revenue
Total operating revenue

Non-operating revenue
Capital grants
Profit/loss on sale of assets
Revaluation increase/(decrease)
Insurance claims
Other non-operating revenue
Total non-operating revenue

Total Revenue
Net Profit (Before Tax)
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Expenses 2012-13, 2011-12

Wages & superannuation - care
Wages & superannuation - admin
Wages & superannuation - other
Management fees
Depreciation & amortisation
Interest
One-off expenses

Staff on-costs (ex superannuation)
Building/repairs & maintenance
Insurance
Motor vehicles
Rent
Utilities
Other expenses

Total Expenses

Balance Sheet

Assets 2012-13, 2011-12

Current assets
Cash
Liquid assets (non cash)
Trade receivables
Inventory
Other current assets
Total current assets

Non-current assets
Loans
Property, plant & equipment
Investments
Intangibles
Other non-current assets
Total non-current assets

Total Assets
Net Assets

Liabilities 2012-13, 2011-12

Current liabilities
Short term borrowings
Trade payables
Employee provisions
Accommodation bonds (if applicable)
Other current liabilities
Total current liabilities

Non-current liabilities
Long term borrowings
Employee provisions
Accommodation bonds (if applicable)
Other non-current liabilities
Total non-current liabilities

Total Liabilities

Attachment B

Conditional Adjustment Payment (CAP) 2013
Declaration on providing GPFR to specified people

PDF printable version of Attachment B - Conditional Adjustment Payment (CAP) 2013 - Declaration on providing GPFR to specified people (PDF 15 KB)
Word version of Attachment B - Conditional Adjustment Payment (CAP) 2013 - Declaration on providing GPFR to specified people (Word 59 KB)
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Name of Approved Provider

Name:

NAPS ID of Approved Provider

NAPS ID:

Part A: Compliance

Question 1

During the Provider’s last financial year, was the Provider asked for a copy of its 2011-12 financial report by a resident (or their representative) or a potential resident (or their representative)?

Yes – please proceed to Question 2
No – please proceed to Part B

Question 2

Did the Provider, during the last financial year, give a copy of its 2011-12 financial report to all residents (or their representatives) and all potential residents (or their representatives) who
requested it?

Yes – please proceed to Part B
No – please proceed to Part B

Note: If an approved provider says ‘Yes’ at question 1 and ‘No’ at question 2, then the approved provider will not be eligible for CAP for the period 1 December 2013 to 30 November 2014.

Part B: Approved Provider Declaration

I solemnly and sincerely declare that:
  • I am one of the ‘key personnel’ of the Provider (PROVIDER_NAME) for the purposes of the Aged Care Act 1997;
  • I am authorised by the Provider (PROVIDER_NAME) to complete and lodge this Declaration;
  • I understand that giving false or misleading information to the Australian Government is a serious offence; and
  • I believe that the details contained in this Declaration are true in every particular.

Details of the Key Personnel

who is authorised by the Provider to complete this Declaration

Full Name:
Signature:
Date:
Contact Phone Number:

Details of the Witness

Full Name:
Signature:
Date:
Contact Phone Number:

In the space below, please provide the details of a contact officer if the ‘key personnel’ who signed the declaration above is not the best person for the Department to contact about any matters related to this Declaration.

Please note, the contact person does not need to be a ‘key personnel’, however, by giving their details below, the Provider authorises the Department to liaise with the contact person in regard to the Provider’s Declaration.

Contact Person:
Position / Title:
Phone No.:
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Attachment C

Checklist for lodgement of financial report and Declaration

Please note, you may return this Checklist to the Department, C/- Forms Administration.

PDF printable version of Attachment C - Checklist for lodgement of financial report and Declaration (PDF 11 KB)
Word version of Attachment C - Checklist for lodgement of financial report and Declaration (Word 66 KB)

If your GPFR does not contain the following you will be contacted to provide this information.

1. Note 1 to the financial statements states report is a General Purpose Financial Report (GPFR): (Special Purpose Financial Report (SPFR) is not acceptable):
insert Page No.:
Yes
No

2. GPFR contains income statement, balance sheet, statement of changes in equity and cash flow statement – all having equal prominence and comparative figures:
Yes
No

3. GPFR includes a separate numbered segment note on residential aged care (i.e. either ‘Type A’ (text only note) or ‘Type B’ (financial details required):
insert Page/Note No.:
Yes
No

4. If segment note ‘Type B’ then include comparative information in respect of the previous period:
Yes
No

5. If segment note ‘Type B’ then clearly state ‘residential aged care’:
Yes
No

6. GPFR is signed and dated by a formal office holder, e.g. Directors Report / Directors Declaration:
insert Page No.:
Yes
No

7. Audit Report is signed and dated:
insert Page No.:
Yes
No

8. ‘Declaration on providing GPFR to specified people’ is signed by ‘key personnel’* (see Attachment B):
Yes
No

9. ABN (Australian Business Number) provided (usually front cover):
Yes
No

Note: It is helpful if pages of GPFR are numbered in a logical sequence.

* Please note: Under the Aged Care Act 1997 you are required to notify the Department of any changes of Key Personnel within twenty-eight days of the change occurring. All changes to key personnel must be made on an approved form which can be found at the Department of Health and Ageing website.
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Attachment D

Checklist for financial requirements of the Principles

PDF printable version of Attachment D - Checklist for financial requirements of the Principles (PDF 64 KB)
Word version of Attachment D - Checklist for financial requirements of the Principles (Word 63 KB)

Please note, you may return this Checklist to the Department, C/- Forms Administration
To be eligible for CAP in relation to each residential care service, approved providers must comply with the following statements (which are set out in the Residential Care Subsidy Principles 1997) for each financial report that is prepared in respect of a residential care service(s):

1. A General Purpose Financial Report (GPFR) within the meaning of Statement of Accounting Concepts SAC 2 ‘Objective of General Purpose Financial Reporting’.
- Your GPFR must include: (1) a statement of financial position; (2) a statement of comprehensive income; (3) a statement of changes in equity; (4) a statement of cash flows; and (5) notes to the financial statements.
Yes
No

- Your GPFR must be in accordance with all applicable accounting standards and give a true and fair view of the financial position and performance of the entity.
Yes
No

2. The GPFR is written as if the entity is a reporting entity within the meaning of the Statement of Accounting Concepts SAC 1 ‘Definition of the Reporting Entity’.
- Report is at the Provider level (NAPS ID)
Yes
No
or
- Report is at the Service level (RACS ID)
Yes
No

3. The GPFR treats residential aged care as a reportable segment within the meaning of the accounting standard (AASB 8 ‘Operating Segments’) - provide one of the following notes:
- a note attesting that “The approved provider delivers only residential aged care services and this GPFR therefore relates only to such operations” (text only (type A) - as the Provider delivers only residential aged care services)
Yes
No
or
- a segment note setting out the financial details of the residential aged care operations, i.e. revenue, expenses (including any depreciation & amortisation and interest expense), assets and liabilities etc. – see also suggested format (financial details required (type B) - as the Provider is involved in other operations in addition to residential aged care services)
Yes
No

4. The GPFR has been audited by a registered company auditor and the auditor has provided an audit opinion, including a statement as to whether the GPFR:
- is in accordance with the applicable accounting standards; and
Yes
No

- gives a true and fair view of the financial position and performance of the entity for the relevant financial year.
Yes
No

(The audit report must be signed and dated before it is deemed complete)

5. Provide a copy of the audited financial report for the relevant financial year to the Department by 30 November, and in the relevant financial year provide a copy of the audited financial report for the previous financial year to any recipient of the service, potential recipient, or their representative who request a copy.
Yes
No

6. Report on all residential aged care services operated for all or part of the relevant financial year. List the residential care services that you are reporting on in your GPFR.

If your GPFR does not cover all the residential aged care services you operated for all or part of the relevant financial year, then provide details of the residential aged care services that you are not reporting in your GPFR to Forms Administration.

Note: The approved provider will be taken to have complied with these compliance statements in relation to a residential aged care service during any of the relevant financial year that the approved provider was not responsible for the operation of the residential care service.
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