Proposed changes to financial reporting for providers of residential aged care and home care
To improve and simplify financial reporting in the Aged Care sector, a new Comprehensive Financial Report (CFR) is in development. This new streamlined report will replace the current reporting structure and come into effect for the 2015-16 financial year.
While the basic CFR structure and timelines have been set, refinements are still needed.
In January 2014 the Department of Social Services (The Department) asked The Aged Care Financing Authority (ACFA) to provide advice on options to improve the collection of financial data from aged care providers. ACFA was also asked to include options to streamline current financial reporting requirements.
ACFA’s report (released on Tuesday 28 October 2014) recommended:
- The introduction of a single Comprehensive Financial Report (CFR) to consolidate and replace four existing reports.
1) The General Purpose Financial Report (GPFR)
2) The Annual Prudential Compliance Statement (APCS)
3) The Survey of Aged Care Homes (SACH)
4) The home care Financial Accountability Reports (FAR)
- The formation of a design and implementation group to assist in the design of the new CFR. This group was to include residential and home care providers and ACFA representatives.
- The new CFR collects income and expenditure information at the service level (i.e. from each individual facility)
- The CFR is introduced for optional reporting for residential care providers for the 2014-15 financial year
- The CFR be introduced for compulsory reporting for residential and home care providers for the 2015-16 financial year
- Standard Business Reporting (SBR) is adopted over the longer term, post the 2015-16 financial
On 22 October 2014 the Assistant Minister of the Department indicated his support in-principle for the suggested changes outlined in ACFA’s report, subject to further consultation with Aged Care stakeholders.
Higher value, more usable financial reports
The improvements expected to flow from the proposed CFR reporting for the Aged Care Sector are:
- Financial reporting is simplified, it will be cheaper to produce and easier to comply with
- The quality and usability of financial data will improve and add more value to the stakeholders in the sector
- Financial data is drawn from the raw business data held in the provider’s financial system
- Data collected is used by stakeholders to improve knowledge and identify and reduce risk
The latest developments: simplicity and refinements needed.
Following consultation with stakeholders, these are the recommendations submitted to the Department at the end of February 2015:
- The level of detail required in CFRs is extensive. This is a concern for providers. The CFR needs to be reviewed and refined so as to achieve its ultimate purpose of “a minimum set of meaningful data”.
- There needs to be alignment between the data sought and the way providers operate their businesses
- The Department is encouraged to engage with Medicare to develop a process to directly feed Medicare data into a central point. This would be enormously helpful for both quality of data and simplicity of process
- Smaller, for profit operators will benefit from the reduction in audit requirements, however many others (especially those with multiple facilities) will face significant new costs to meet the level of detail required in CFR
- Additional support is requested for smaller providers to facilitate a smooth transition to the proposed financial reporting regime
In summary, providers were supportive of providing useful information but have concerns that the Department has not yet achieved the simplicity and efficiency that providers are expecting, yet there are additional information required for larger providers.
The Department has been recommended to further review and refine the CFR to achieve simplicity and efficiency, or to demonstrate how the required level of data detail will be of assistance to the industry.
Watch this space for more progress
There is still much to be done, but the level of progress made and the involvement of provider feedback are both positive indicators.
We look forward to providing further updates as the Department takes these recommendations on board. We will continue to observe and report as the CFR structure is finalised and transition made to the proposed new financial reporting regime.
For more information about these proposed changes, please contact Vanessa Wu or any of our Taxation and Business Advisory specialists from around Australia