Read an overview of the Jobs and Small Business portfolio including details of key activities, expenses and staffing levels. The audit focus section outlines the influences on the ANAO’s allocation of financial audit resources and the selection of performance audit topics and other activities. Also included is a list of material and non-material entities within the portfolio with their corresponding risk profile and key risks. Any risks that are considered key audit matters (KAMs) by the ANAO are separately identified.

Portfolio overview

Jobs and Small Business became a component of the Jobs and Innovation portfolio   in December 2017 to bring together policy and programs focusing on job creation. The portfolio consists of two sub-portfolios: Jobs and Small Business; and Industry, Innovation and Science. Audit considerations for the Industry, Innovation and Science sub-portfolio are discussed separately.

The Department of Jobs and Small Business is responsible for policies and programs to help Australians find and keep employment, and work in safe, fair and productive workplaces. It has also been charged with reducing regulation and small business policy and programs. Further information is available from the department’s website at www.jobs.gov.au.

In addition to the Department of Jobs and Small Business, there are eight entities within the sub-portfolio that provide workplace and work health and safety advice, initiatives and programs, and monitor compliance with Commonwealth workplace laws.

In the 2018–19 Portfolio Budget Statements (PBS) for the Jobs and Small Business sub-portfolio, the aggregated budgeted expenses for 2018–19 total $3.09 billion. The PBS contain budgets for those entities in the general government sector (GGS) that receive appropriations directly or indirectly through the annual appropriation acts.

The level of budgeted departmental and administered expenses and the average staffing level for entities in the GGS within this sub-portfolio are shown in Figure 1. The Department of Jobs and Small Business represents the largest proportion of the sub-portfolio’s expenses, and administered expenses are the most material component, representing 67 per cent of the entire sub-portfolio’s expenses.

Figure 1: Jobs and Small Business sub-portfolio — total expenses and average staffing level by entity

Bar chart showing the average staffing level and expenses for entities in the portfolio.

Source: ANAO analysis of 2018–19 PBS Budget related papers.

Audit focus

The Department of Jobs and Small Business, and eight related entities, aim to improve the performance of labour markets and stimulate stronger jobs growth through activities such as the Youth Jobs PaTH program, and the overall management of the contracted employment services program.

Specific characteristics and risks within the sub-portfolio that influence the ANAO’s allocation of financial audit resources and the annual selection of performance audit topics and other activities include the:

  • effectiveness of policy and programs established to foster a competitive labour market through assisting jobseekers and employers, facilitating the growth of small business, and promoting workplace safety and business productivity;
  • financial management and reporting arrangements for grant payments;
  • distribution of employment-related responsibilities, which requires interaction and collaboration with a wide range of stakeholders;
  • administration and regulation of the workplace relations system and monitoring employer compliance with legislated requirements; and
  • valuation methodology used to estimate the Government’s liability under the workers’ compensation and asbestos schemes.

Considering the identified risks, expenditure and diversity of the sub-portfolio, the ANAO has planned three performance audits for 2018–19.

Financial statements audits and other audit engagements

Entities within the Jobs and Small Business sub-portfolio, and the risk profile of each entity, are shown in Table 1.

Table 1: Jobs and Small Business sub-portfolio entities and risk profile

 

Type of entity

Risk of material misstatement

Number of higher risks

Number of moderate risks

Material entities  

Department of Jobs and Small Business

Non-corporate

Moderate

0

2

Coal Mining Industry (Long Service Leave Funding) Corporation

Corporate

Moderate

2

1

Comcare

Corporate

Moderate

1

1

Non-material entities  

Asbestos Safety and Eradication Agency

Non-corporate

Low

 

Australian Building and Construction Commission

Non-corporate

Low

Fair Work Commission

Non-corporate

Low

Fair Work Ombudsman and Registered Organisations Commission Entity

Non-corporate

Low

Safe Work Australia

Non-corporate

Low

Seafarers Safety, Rehabilitation and Compensation Authority

Non-corporate

Low

     

Material entities

Department of Jobs and Small Business

The Department of Jobs and Small Business is responsible for the provision of advice on national policies and programs that help Australians find and keep employment, facilitate the growth of small business, and create safe, fair and productive workplaces.

The department’s total budgeted expenses for 2018–19 are just under $2.48 billion, with 62 per cent of these expenses attributable to supplier expenses, as shown in Figure 2.

Figure 2: Department of Jobs and Small Business’ total budgeted expenses by category ($’000)

 

Source: ANAO analysis of 2018–19 PBS Budget related papers.

The two key risks for the Department of Jobs and Small Business’ financial statements that have been highlighted for specific audit coverage, including one that is considered a key audit matter (KAM) by the ANAO, are the:

  • effectiveness of the design and implementation of the significant ‘jobactive’ compliance program to reduce invalid claims, and the outsourced arrangements for data collection over many locations (KAM – Accuracy and completeness of administered expenses); and
  • complexities involved in initiating, managing and finalising intangible assets projects associated with increasing internally developed software.

Coal Mining Industry (Long Service Leave Funding) Corporation

The Coal Mining Industry (Long Service Leave Funding) Corporation (Coal LSL) collects levies from employers to fund long service leave payments made to employees in the Australian black coal mining industry. The levies collected are invested until the employee takes long service leave, at which point the employer makes a payment to the employee and seeks reimbursement from Coal LSL in accordance with legislative arrangements.

Coal LSL’s total actual expenses for 2016–17 were $181.41 million, with 91 per cent of these expenses attributable to increases in the provisions for reimbursements, as shown in Figure 3.

Figure 3: Coal Mining Industry (Long Service Leave Funding) Corporation’s total actual expenses by category ($’000)

 

Source: ANAO analysis of Coal Mining Industry (Long Service Leave Funding) Corporation’s 2016–17 annual report.

The three key risks for Coal LSL’s financial statements are the:

  • complex valuation processes used to determine the fair values attributed to unlisted trust investments;
  • significant management judgement required to estimate the value of employee benefit provisions, due to the methodology and estimation process; and
  • the continued effective operation of previously outsourced administrative processes and systems that were brought back in-house to Coal LSL, in conjunction with a new general ledger system for the agency from 1 July 2017.

Comcare

Comcare is responsible for the administration of an integrated safety, rehabilitation and compensation scheme for federal employers, employees and their representatives; some state and territory bodies; and other organisations. Comcare aims to support participation and productivity nationally, through healthy and safe workplaces that minimise harm in the workplace. This also includes the management of a comprehensive workers’ compensation liability scheme and the Commonwealth common law liabilities for asbestos compensation.

Comcare’s total budgeted expenses for 2018–19 are just over $341.83 million, with 68 per cent of these expenses attributable to claims payments, as shown in Figure 4.

Figure 4: Comcare’s total budgeted expenses by category ($’000)

 

Source: ANAO analysis of 2018–19 PBS Budget related papers.

The two key risks for Comcare’s financial statements are the:

  • judgements required in selecting assumptions when calculating workers compensation and asbestos-related disease claim provisions and related expense accounts; and
  • timing of revenue recognition relating to the collection of workers compensation and common law asbestos premiums involving complex calculations prescribed in legislation.