ACT AUDITOR–GENERAL’S REPORT TRANSFER OF WORKERS’ COMPENSATION ARRANGEMENTS FROM COMCARE REPORT NO.6 / 2020 www.audit.act.gov.au © Australian Capital Territory, Canberra 2020 ISSN 2204-700X (Print) ISSN 2204-7018 (Online) This work is copyright. Apart from any use as permitted under the Copyright Act 1968, no part may be reproduced by any process without written permission from the Territory Records Office, Shared Services, Chief Minister, Treasury and Economic Development Directorate, ACT Government, GPO Box 158 Canberra City ACT 2601. ACT Audit Office The roles and responsibilities of the Auditor-General are set out in the Auditor-General Act 1996. The Auditor-General is an Officer of the ACT Legislative Assembly. The ACT Audit Office undertakes audits on financial statements of Government agencies, and the Territory’s consolidated financial statements. The Office also conducts performance audits, to examine whether a Government agency is carrying out its activities effectively and efficiently and in compliance with relevant legislation. The Office acts independently of the Government and reports the results of its audits directly to the ACT Legislative Assembly. Accessibility Statement The ACT Audit Office is committed to making its information accessible to as many people as possible. If you have difficulty reading a standard printed document, and would like to receive this publication in an alternative format, please telephone the Office on (02) 6207 0833. If English is not your first language and you require the assistance of a Translating and Interpreting Service, please telephone Access Canberra on 13 22 81. If you are deaf or hearing impaired and require assistance, please telephone the National Relay Service on 13 36 77. Audit Team Laura Thomas KPMG Financial Services Consulting The support of David Kelly and Taylah Commisso is appreciated. Produced for the ACT Audit Office by Publishing Services, Chief Minister, Treasury and Economic Development Directorate, ACT Government Publication No. 200488 ACT Government Homepage address is: http://www.act.gov.au Appendix A: Financial audit fees Audit fees contribute to meeting the costs of other activities such as developing the Audit A TRANSMITTAL CERTIFICIATE Office’s financial audit method, working with reporting agencies on emerging audit and accounting issues and quality assurance work. Table 1: Summary of financial audit fees 2017-18 2018-19 Actual Estimated Audit Fees Audit Fees $ $ Ms Joy Burch MLA Territory’s financial statements (refer Table 2) 143 497 151 893 Speaker Directorates (refer Table 2) 2 084 114 2 159 594 Legislative Assembly for the ACT London Circuit Statutory authorities (refer Table 3) 1 021 966 1 046 582 CANBERRA ACT 2601 Territory-owned corporations and companies (refer Table 4) 362 885 389 468 Joint ventures and partnerships (refer Table 5) 321 474 331 474 PA 20/01 Dear Madam Speaker Other audits (refer Table 6) 168 051 162 852 Total financial audit fees 4 101 987 4 241 863 I have pleasure in submitting the 2018-19 Annual Report of the ACT Audit Office (Audit Office). The Annual Report has been prepared to fulfil the requirements of section 7A of the Annual Reports (Government Agencies) Act 2004. While paragraph 8(2)(b) of the Act advises that an annual report direction does not Source: Audit Office records applyThe Speaker to Officers of the ACT Legislative Assembly, this report has been prepared to respect the directions outlinedACT Legislative in the Annual Assembly Reports (Government Agencies) Directions 2019. Table 1 shows that audit fees are estimated to increase slightly by $139 876 (3 percent) Civic Square, London Circuit from $4 101 987 in 2017-18 to $4 241 863 in 2018-19. I CANBERRAcertify that ACTthe 2601information in the attached 2018-19 Annual Report, and information for whole of government reporting, is an honest and accurate account of the management of the Audit Office and that Financial audit fees charged to agencies are presented in Tables 1 to 6 of this Appendix. all material information on the operations of the Audit Office has been included for the period from These fees vary from that reported in the Audit Office’s financial statements because the 1 July 2018 to 30 June 2019. financial statements include amounts owed to the Audit Office at the end of each reporting I also hereby certify that fraud prevention in 2018-19 was managed in accordance with Public Sector period covered by the financial statements. ManagementDear Speaker Standards 2006 (repealed), Part 2.3 (see section 113, Public Sector Management Standards 2016). Explanations for fee variations of ten percent or more on individual audits are provided I am pleased to forward to you a Performance Audit Report titled ‘Transfer of workers’ compensation arrangements from Comcare’ for tabling in the Legislative Assembly pursuant to after Table 6 in this Appendix. Section 15 of the Annual Reports (Government Agencies) Act 2004 requires that you present a copy of the Subsection 17(5) of the Auditor-General Act 1996. Annual Report to the ACT Legislative Assembly within 15 weeks after the end of the reporting year. Estimated financial audit fees (excluding GST) shown for 2018-19 are for audits with Yours sincerely Yours sincerely reporting periods ending 31 December 2018 and 30 June 2019. Further information can be obtained from: Mr Ajay Sharma Assistant Auditor-General, (02) 6207 0830 [email protected] Michael Harris Financial Audit and Chief Finance Michael Harris Officer Auditor-General 8Auditor-General October 2019 30 June 2020 The ACT Audit Office acknowledges the Ngunnawal people as traditional custodians of the ACT and pays respect to the elders; past, present and future. The Office acknowledges and respects their continuing culture and the contribution they make to the life of this city and this region. Page 128 Annual report 2018-19 Annual report 2018–19 Page 1 CONTENTS Summary ................................................................................................................................... 1 Conclusions ............................................................................................................................... 1 Key findings .............................................................................................................................. 2 Response from entities ............................................................................................................. 8 1 Introduction ..................................................................................................................... 9 Workers’ compensation ........................................................................................................... 9 Workers’ compensation and self-insurance ........................................................................... 10 Territory as a self-insured licensee ......................................................................................... 13 Audit objective and scope ...................................................................................................... 15 Audit criteria, approach and method ..................................................................................... 16 2 Assessment of liabilities and assets .................................................................................19 Summary ................................................................................................................................. 19 Transition to self-insurance .................................................................................................... 22 Valuation of liabilities and assets ........................................................................................... 25 3 Transfer of claims data ....................................................................................................37 Summary ................................................................................................................................. 37 Claims transfer governance .................................................................................................... 39 Claims transfer arrangements ................................................................................................ 46 Ongoing access to documents ................................................................................................ 53 4 Governance and administrative arrangements ................................................................55 Summary ................................................................................................................................. 55 Territory governance arrangements ...................................................................................... 57 Self-insurance licence compliance monitoring ....................................................................... 60 Management of the Employers Mutual Limited contract ...................................................... 73 ACT Government Self-Insurance In-House Feasibility Review ............................................... 82 Transfer of workers’ compensation arrangements from Comcare Page i SUMMARY In 2018 the Territory applied for, and was granted, a workers’ compensation self-insurance licence under the Safety, Rehabilitation and Compensation Act 1988. Prior to this, ACT Public Service workers’ compensation had been insured under the Commonwealth workers’ compensation scheme through Comcare. In becoming a self-insured licensee, the