Comcare - Australian Government
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Note 1: Summary of significant accounting policies

1.1 Objectives of Comcare

Comcare is an Australian Government controlled entity. Comcare is the statutory body that is responsible for administering the Commonwealth’s occupational health and safety framework, its statutory framework for rehabilitation and workers’ compensation and its common law liabilities for asbestos compensation. Comcare is structured to meet three outcomes.

Comcare’s activities are identified under three outcomes and six program components as follows:

Outcome 1: The protection of the health, safety and welfare at work of workers covered by the Comcare scheme through education, assurance and enforcement.

Program  component 1.1 Occupational Health and Safety Act 1991 (OHS) Act regulation

Outcome 2: An early and safe return to work and access to compensation for injured workers covered by the Comcare scheme through working in partnership with employers to create best practice in rehabilitation and quick and accurate management of workers’ compensation claims.

  • Program  component 1.2.1   Safety, Rehabilitation and Compensation 1988 (SRC) Act regulation
  • Program  component 1.2.2   Management of premium claims
  • Program  component 1.2.3   Management of pre-premium claims
  • Program  component 1.2.4   Provide support to the Seafarers Safety Rehabilitation and Compensation Commission

Outcome 3: Access to compensation for people with asbestos-related diseases where the Commonwealth has a liability, through the management of claims.

Program  component 1.3 Management of common law asbestos claims

The continued existence of Comcare in its present form and with its present programs is dependent on
Government policy and on continued funding by Parliament for its administration and programs.

1.2 Basis of preparation of financial statements

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

The financial statements and notes have been prepared in accordance with:

  • Finance Minister’s Orders (or FMOs) for reporting periods ending on or after 1 July 2010; and
  • 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 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 balance sheet when and only when it is probable that future economic benefits will flow to Comcare or a future sacrifice of economic benefits will be required and the amounts of the assets or liabilities can be reliably measured. Liabilities and assets that are unrecognised are reported in the schedule of commitments or the schedule of contingencies.

Unless an 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 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, revised standards, interpretations and amending standards that were issued prior to the sign-off date were applicable to the current reporting period had a financial impact on Comcare.

Future Australian Accounting Standard requirements

No new standards, revised standards, interpretations and amending standards that were issued prior to the sign-off date are expected to have a financial impact on Comcare for future reporting periods.

1.4 Principles of accounting for workers’ compensation claims

Comcare manages workers compensation claims for Commonwealth employees and employees of the ACT Government under the SRC Act. Workers’ compensation claims for work related injuries and illness sustained on or after 1 July 1989 are referred to as ‘premium claims’ or ‘premium business’. Workers’ compensation claims for work related injuries sustained by Commonwealth employees prior to that date are referred to as ‘pre-premium claims’ or ‘pre-premium business’.

For premium claims, premiums are received from employers covered under the SRC Act. They are calculated using a system and methodology developed by an independent actuary and are intended to fully cover all liabilities incurred over the life of these claims. All premiums are charged up front for the full financial year. There are no unearned premiums or deferred acquisition costs at the end of the financial year. Changes to premiums arising from wage and salary adjustments are recognised in the year they become payable or receivable.

Premiums are not levied in respect of pre-premium claims as they are funded by parliamentary special appropriations on an emerging cost basis.

In accordance with Section 128A of the SRC Act, a provision is not required to be made for liabilities incurred prior to 1 July 1989 in respect of Public Trading/Government Business Enterprises.

As a result of a Federal Court decision, statutory workers’ compensation claims for asbestos-related diseases are now recognised on the earliest of dates on which the employee dies, becomes incapacitated, impaired, or seeks medical treatment as a result of the disease.  Previously these were recognised by reference to the date of inhalation.

1.5 Claims provisions

The liability for workers’ compensation claims (both premium and pre-premium) and common law asbestos related disease claims are determined in accordance with the requirements of AASB 137 Provisions, Contingent Liabilities and Contingent Assets. Provisions for claims are recognised when:

  • Comcare has a present legal or constructive obligation as a result of past events;
  • it is probable that an outflow of resources will be required to settle the obligation; and
  • the amount has been reliably estimated.

Where there are a number of similar obligations for each claim type, the likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a whole. A provision is recognised even if the likelihood of an outflow with respect to any one item included in the same claim type may be small.

The expected future payments are discounted to present value using a risk free rate. The expected future payments include claims reported but not yet paid, claims incurred but not reported (IBNR) and anticipated claims handling costs. Claims handling costs can either be associated directly with individual claims, such as legal and other professional fees, or associated indirectly with individual claims, such as claims administration costs.

The value of each claims provision is measured as the central estimate of the present value of expected future payments against claims incurred at the reporting date. Comcare has reviewed the requirements of AASB 137 in a Commonwealth Government context and concluded that use of the central estimate for the valuation of the provisions is better aligned with “best estimates” requirements of the standard.

1.6 Revenue

Revenue from the sale of goods is recognised when:

  • The risks and rewards of ownership have been transferred to the buyer;
  • Comcare retains no managerial involvement nor effective control over the goods;
  • The revenue and transaction costs incurred can be reliably measured; and
  • It is probable that the economic benefits associated with the transaction will flow to Comcare.

Revenue from the 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 with the transaction have flowed 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 as at balance date. Allowances are made when collectability of the debt is no longer probable.

Interest revenue is recognised using the effective interest method as set out in AASB139 Financial Instruments: Recognition and Measurement.

Revenues from Government

Funding received or receivable from Department of Education, Employment and Workplace Relations is recognised as Revenue from Government unless they are in the nature of an equity injection or a loan.

1.7 Gains

Sale of Assets

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

1.8 Employee benefits

Liabilities for short term employee benefits (as defined in AASB119 Employee Benefits) and termination benefits due within 12 months of balance date 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 benefit 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 Comcare 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 Comcare’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 is recognised and measured at the present value of the estimated future cash flows to be made in respect of all employees at 30 June 2011. In determining the present value of the liability, attrition rates and pay increases through promotion and inflation have been taken into account. 

Separation and redundancy

Provision is made for separation and redundancy benefit payments. Comcare 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 Comcare are members of the Commonwealth Superannuation Scheme (CSS), the Public Sector Superannuation Scheme (PSS), the PSS accumulation plan (PSSap) or other superannuation schemes.

The CSS and PSS are defined benefit schemes for the Australian Government. The PSSap is a defined contribution scheme.

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 Deregulation as an administered item.

Comcare makes employer contributions to the employee superannuation scheme at rates determined by an actuary to be sufficient to meet the cost to the Government of the superannuation entitlements of Comcare’s employees. Comcare accounts for the contributions as if they were contributions to defined contribution plans.

The liability for superannuation recognised as at 30 June represents outstanding contributions for the final fortnight of the financial year.

1.9 Leases

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.

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

Comcare does not hold any finance leases.

1.10 Borrowing costs

All borrowing costs are expensed as incurred.

1.11 Cash

Cash and cash equivalents include cash on hand and 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 is recognised at its nominal amount.

1.12 Financial assets

Comcare classifies its financial assets 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’.

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 over 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 ‘at fair value through profit or loss’.

Loan 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 ‘loan and receivables’. Receivables are measured at amortised cost using the effective interest method less impairment. Interest is recognised by applying the effective interest rate. Comcare has no loans.

Impairment of financial assets

Financial assets are assessed for impairment at balance date.

Financial assets held at amortised cost - If there is objective evidence that an impairment loss has been incurred for receivables 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’.

Financial liabilities at fair value through profit or loss

Financial liabilities at fair value through profit or loss are initially measured at fair value.

Subsequent fair value adjustments are recognised in profit or loss. The net gain or loss recognised in profit or loss incorporates any interest paid on the financial liability.

Supplier and other payables

Supplier and other payables are recognised at amortised cost. Liabilities are recognised to the extent that the goods or services have been received (irrespective of having been invoiced).

1.14 Contingent liabilities and contingent assets

Contingent liabilities and contingent assets are not recognised in the balance sheet 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.

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 are recognised in the transferor’s accounts, immediately prior to the restructuring.

1.16 Property, plant and equipment

Asset recognition threshold

Purchases of property, plant and equipment are recognised initially at cost in the balance sheet, except for purchases costing less than $3,000, 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).

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 ‘make good’ provisions in property leases taken up by Comcare where there exists a potential obligation to restore the property to its original condition. These costs are included in the value of Comcare’s leasehold improvements with a corresponding provision for the ‘make good’ recognised.


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

Asset class Fair value measured at:
Office machines and equipment Market selling price
Leasehold improvements Depreciated replacement cost
Motor vehicles Market selling price

Following initial recognition at cost, property, plant and equipment are carried at fair value less accumulated depreciation and accumulated impairment losses. Valuations are conducted with sufficient frequency to ensure that the carrying amounts of assets do not materially differ to 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 through 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 net amount restated to the revalued amount of the asset.


Depreciable property, plant and equipment is written off to its estimated residual values over its estimated useful life to Comcare using the straight-line method of depreciation. 

Depreciation rates (useful lives), residual value 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:

2010/11 2009/10
Office machines and equipment 2-10 years 2-10 years
Leasehold improvements Lease term Lease term
Motor vehicles 2 years 2 years

The aggregate amount of depreciation allocated for each class of asset during the reporting period is disclosed at Note 4C.


All assets were assessed for impairment at balance date. 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 Comcare 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.

1.17 Intangibles

Comcare’s intangibles comprise purchased software for internal use with an initial cost of $3,000 or more.  These assets are carried at cost less accumulated amortisation and accumulated impairment loss.

Intangible assets are amortised on a straight line basis over their anticipated useful lives.  Useful lives are estimated at 3 to 10 years (2010: 3 to 10 years).

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

1.18 Taxation

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

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

  • where the amount of GST incurred is not recoverable from the Australian Taxation Office (ATO);  and
  • for receivables and payables.

1.19 Significant accounting judgements and estimates

Comcare makes estimates and assumptions in respect of certain key assets and liabilities. Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. The key areas in which critical estimates are applied are described below.

A judgement has been made regarding the application of AASB 137 Provisions, Contingent Liabilities and Contingent Assets to the pre-premium, premium workers’ compensation, and asbestos related disease business. Although such business exhibits many of the characteristics of insurance, it was judged that Comcare’s statutory relationship with its customers and the Commonwealth was not of the nature of an insurance contract as defined under AASB 1023 General Insurance Contracts

For information purposes, the table below provides details of Comcare’s claims provisions based on the central estimate plus a risk margin that would be used to achieve 75% probability of a sufficiency of the claims provisions.

Illustrative impact of risk margins at 75% probability of sufficiency:

  Notes 2011
Pre-premium business
Risk margin percentage 13.1% 12.7%
Actuary assessed gross outstanding liabilities 9B 372,100 395,000
Risk margin 48,745 50,165
Net outstanding claims liability (including risk margin) 420,845 445,165
Asbestos related claims business
Risk margin percentage 40.0% 40.0%
Actuary assessed third party recoveries 6B (29,800) (27,150)
Actuary assessed gross outstanding liabilities 9C 595,100 605,860
Risk margin 226,120 231,484
Net outstanding claims liability (including risk margin) 791,420 810,194
Premium business
Risk margin percentage 11.7% 11.8%
Actuary assessed third party recoveries 6B (17,700) (19,400)
Actuary assessed gross outstanding liabilities 9B 1,517,300 1,281,200
Risk margin 175,453 148,892
Net outstanding claims liability (including risk margin) 1,675,053 1,410,692

The ultimate liability arising from claims made

Provisions are made at the year end for the estimated cost of claims incurred but not settled at the reporting date, including the cost of claims incurred but not yet reported (IBNR) to Comcare.

The estimated cost of claims includes direct expenses to be incurred in settling claims gross of the expected value of recoveries. Comcare takes all reasonable steps to ensure that it has appropriate information regarding its claims exposures. However, given the uncertainty in establishing claims provisions, it is likely that the final outcome will prove to be different from the original liability established.

The estimation of claims IBNR is generally subject to a greater degree of uncertainty than the estimation of the cost of settling claims already notified to Comcare, where more information about the claim event is generally available. IBNR claims may often not be apparent to the insured until many years after the events giving rise to the claims have happened. In calculating the estimated cost of future claim payments, Comcare uses a variety of estimation techniques, generally based upon statistical analyses of historical experience, which assumes that the development pattern of the current claims will be consistent with past experience.

Allowance is made, however, for changes or uncertainties which may create distortions in the underlying statistics or which might cause the cost of claims not yet settled to increase or reduce when compared with the cost of previously settled claims including:

  • changes in Comcare processes which might accelerate or slow down the development and/or recording of paid or incurred claims, compared with the statistics from previous periods;
  • changes in the legal environment;
  • the effects of inflation;
  • movements in industry benchmarks; or
  • medical and technological developments.

The best estimate for the claims provisions has been based on the central estimate. Details of the specific assumptions used in deriving the claims liabilities at year end are detailed in Notes 9F‑H.

The compensation claims provisions disclosed in these financial statements are based on our Actuary's (Taylor Fry Pty Ltd) estimate of outstanding liabilities as at 30 June 2011 detailed in their final valuation report of 29 July 2011.  Since the final valuation report was issued, our Actuary has undertaken an analysis of the effect of changes in economic assumptions (inflation and discount assumptions updated to 30 June 2011) on the claims provision as at 30 June 2011.  The result of this analysis are detailed below:

Impact of updated economic assumptions on provision for workers’ compensation claims:

Final Report
Updated economic assumptions
Premium workers’ compensation claims 1,499.6 1,509.5 0.7%
Pre-premium workers’ compensation claims 372.1 374.2 0.6%
Worker’s compensation claims provision 1,871.7 1,883.7 0.6%

Comcare has determined that the impact of the updated estimates would not have a material impact on the financial statements and they have not been reflected in the financial statements.

Receivable from Government under SRC Act

Under section 90C of the SRC Act, there is payable by the Commonwealth to Comcare such an amount as is necessary to enable Comcare to meet its liability in relation to workers’ compensation claims if there is insufficient money in Comcare-retained funds. The amount of the payable is calculated at balance date as follows:

Receivable from Government under s90C =
Provision for workers’ compensation claims liability
Less: Cash at bank attributable to premium business

Cash at bank attributable to premium business =
Cash and cash equivalent
Less: Cash from non-premium business activities
Less: Revenue received in advance
Less: Retained surplus or deficit from other statutory activities

The retained surplus or deficit from other statutory activities is determined by a cost allocation process which attributes income and expenses to the range of activities performed by Comcare. Other statutory activities relate to regulation of the OHS and SRC legislation, support for the Seacare Authority and the Seafarers Safety Rehabilitation and Compensation Commission, and claims management of common law asbestos related claims.