Final Annual Report - Health Workforce Australia

Note 1: Summary of Significant Accounting Policies

Notes to and forming part of the financial statements for the year ended 30 June 2014

Page last updated: 18 May 2015

1.1 Objective of Health Workforce Australia

Health Workforce Australia (HWA) was an Australian Government controlled not for profit entity. HWA was established in July 2009 and its objective was to provide a more effective and integrated clinical training for health professionals, support workforce reform and more efficient workforce use, and provide effective, accurate planning of health workforce needs.

HWA was structured to meet a sole outcome, ‘Improve health workforce capacity, including through a national approach to workforce policy and planning across all health disciplines, which effectively integrated research, education and training’.

In the 2014 Federal Budget the Australian Government announced the closure of HWA, with its functions transferring to the Department of Health. The Health Workforce Australia (Abolition) Act 2014 was given Royal Assent on 24 September 2014 and HWA ceased on 7 October 2014.

1.2 Basis of Preparation of the Financial Statements as an entity

As noted in note 1.1, HWA ceased on 7 October 2014 and the assets and liabilities became assets of the Commonwealth without any conveyance, transfer or assignment. The financial statements have been prepared in accordance with the Commonwealth Authorities and Companies Act 1997 on the assumption that the assets and liabilities will be realised in the normal course of the Department of Health's business.

The financial statements are required by clause 1(b) of Schedule 1 to the Commonwealth Authorities and Companies Act 1997 and are general purpose financial statements.

The financial statements have been prepared in accordance with:

  1. a) Finance Minister’s Orders (FMOs) for reporting periods ending on or after 1 July 2011; and
  2. b) Australian Accounting Standards and Interpretations 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 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 thousand dollars unless otherwise specified.

Unless an alternative treatment is specifically required by an accounting standard or the FMOs, 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 executory contracts 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 the carrying amounts of assets and liabilities within the next reporting 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. No new standards/interpretations/amending standards were issued prior to the sign-off date that were applicable to the current reporting period and had a financial impact on the entity.

AASB 13 Fair Value Measurement was assessed as being immaterial to the financial statements.

Other [new standards/revised standards/interpretations/amending standards] that were issued prior to the sign-off date and are applicable to the current reporting period did not have a financial impact, and are not expected to have a future financial impact on the entity. Future Australian Accounting Standard Requirements

No new standards, revised standards, interpretations or amending standards were issued by the Australian Accounting Standards Board prior to the sign-off date, which are expected to have a financial impact on the entity for future reporting periods.

The new accounting standard AASB 1055 Budgetary Reporting is not expected to have an impact on HWA for the financial year 2014-15 due to HWA not having a budget for the financial year 2014-15.

1.5 Revenue

Interest revenue is recognised using the effective interest method as set out in AASB 139 Financial Instruments: Recognition and Measurement.

Revenue from Government

Funding received or receivable from Government agencies is recognised as Revenue from Government unless they are in the nature of an equity injection or a loan.


Gains from disposal of assets are recognised when control of the asset has passed to the buyer.

1.6 Transactions with the Government as Owner

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.

1.7 Employee Benefits

Liabilities for ‘short-term employee benefits’ (as defined in AASB 119 Employee Benefits) and termination benefits due within twelve months of the 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.

All other employee liabilities are measured at the present value of the estimated future cash outflows to be made in respect of services provided by employees up to the reporting date.


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 entity is estimated to be less than the annual entitlement for sick 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 entity’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 has been determined by reference to the work of an actuary.

Separation and Redundancy

Provision is made for separation and redundancy benefit payments. The entity 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.


HWA staff were members of the following superannuation funds:

  • Australian Government Employee Superannuation Trust (AGEST).
  • Public Sector Superannuation Scheme (PSS).
  • Other superannuation funds of employees' choice.

The PSS is a defined benefit scheme for the Australian Government.

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 as an administered item.

For the PSS Scheme HWA makes employer contributions to the employees' superannuation scheme at rates determined by an actuary to be sufficient to meet the current cost to the Government. HWA accounts for the contributions as if they were contributions to defined contribution plans.

Contributions to other funds are made according to the Superannuation Guarantee (Administration) Act 1992.

1.8 Leases

Operating lease payments are expensed on a straight-line basis which is representative of the pattern of benefits derived from the leased assets.

Lease incentives taking the form of rent free periods are recorded as liabilities. These liabilities are reduced by allocating lease payments between rental expense and a reduction of the liability over the life of the lease.

1.9 Cash

Cash is recognised at its nominal amount. Cash and cash equivalents includes:

  1. a) cash on hand; and
  2. b) 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 changes in value.

1.10 Financial Assets

HWA classifies its financial assets in the following categories:

  1. a) receivables; and
  2. b) held-to-maturity investments.

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.

Effective Interest Method

The effective interest method is a method of calculating the amortised cost of a financial asset and of allocating interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset, or, where appropriate, a shorter period.

Income is recognised on an effective interest rate basis except for financial assets that are recognised at fair value through profit or loss.


Trade receivables and other receivables that have fixed or determinable payments that are not quoted in an active market are classified as ‘receivables’. Receivables are measured at amortised cost using the effective interest method less impairment. Interest is recognised by applying the effective interest rate.

Held-to-Maturity Investments

Non-derivative financial assets with fixed or determinable payments and fixed maturity dates that the group has the positive intent and ability to hold to maturity are classified as held-to-maturity investments. Held-to-maturity investments are recorded at amortised cost using the effective interest method less impairment, with revenue recognised on an effective yield basis.

Impairment of Financial Assets

Financial assets are assessed for impairment at the end of each reporting period.

Financial assets held at amortised cost and if there is objective evidence that an impairment loss has been incurred for 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.

1.11 Financial Liabilities

Financial liabilities are classified as 'other financial liabilities'.

Other Financial Liabilities

Other financial liabilities 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).

1.12 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.

1.13 Property, Plant and Equipment

Asset Recognition Threshold

Purchases of property, plant and equipment are recognised initially at cost in the Statement of Financial Position, except for purchases of information technology costing less than $500 and for all other purchases of property, plant and equipment 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).


Fair values for each class of asset are determined as shown below:

Asset Class Fair Value Measurement
Leasehold Improvements Depreciated replacement cost
Property, plant and equipment Cost

Property, plant and equipment was carried at cost, less subsequent accumulation and impairment losses, which is deemed to be carried at fair value.


Depreciable property, plant and equipment assets are written-off to their estimated residual values over their estimated useful lives to the entity 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:

  2014 2013
Leasehold improvements Lease term 1 to 10 years
Plant and Equipment Lease term 1 to 10 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 to sell 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 entity were deprived of the asset, its value in use is taken to be its depreciated replacement cost.

1.14 Intangibles

HWA's intangibles were purchased software. These assets were 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 entity's software are four years (2012-13: four years).

All software assets were assessed for indications of impairment as at 30 June 2014.

1.15 Taxation

HWA is exempt from all forms of taxation except Fringe Benefits Tax (FBT) and the Goods and Services Tax (GST).

Revenues, expenses and assets are recognised net of GST except:

  1. a) where the amount of GST incurred is not recoverable from the Australian Taxation Office; and
  2. b) for receivables and payables.

1.16 Grants & Subsidies

The entity administered a number of grants and subsidies on behalf of the Government.

Grant and subsidy liabilities are recognised to the extent that (i) the services required to be performed by the grantee have been performed or (ii) the grant eligibility criteria have been satisfied, but payments due have not been made. A commitment is recorded when the Government enters into an agreement to make these grants but services have not been performed or criteria satisfied.

Grant expenditure recoveries were recognised when HWA received the unspent monies or had the rights to receive the unspent monies

Where these recoveries related to grant payments made by HWA in the current year, they have been set-off against grant expenditure. Where they related to grant payments made (and expensed) in prior years, they have been recorded in other revenue

1.17 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.

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