NDIS Financial Management Workshop Overview

1. The common experience of service providers in NDIS trial sites around Australia is that their accounting and financial management policies, practices, processes and systems have required changes to effectively and efficiently manage the flow of service and business data in service providers’ organisations to accountably implement NDIS. These pervasive changes in financial policies, processes and systems must respect, reflect and respond to the statutory principles embodies in the NDIS legislation, notably participants’ choice and control. Within service providers’ organisations, changes will be needed within the structure of the various accounting software packages. This will require review and reconsideration of most service and business processes – notably rostering, time reporting, payroll, general ledger structure, debtor controls, cost centre controls, NDIA portal interfacing (claiming for NDIS-funded services satisfactorily delivered from participants’ approved plans) and stakeholder reporting.

2. WORKSHOP OBJECTIVES • Overview of impact of NDIS legislation on service providers’ financial systems • Changes in operational policies, practices and processes • Changes in administrative and management policies, practices and processes • Reviewing the impact on the General Ledger (within National Standard Chart of Accounts) • Importance of activity-based cost-centre accounting • Changes in financial reporting to all stakeholders - e.g. Members AGM, board, management, participants, Australian Charities and Not For Profits Commission (ACNC) • Sharing tips and traps in efficiently and effectively financially managing in the NDIS environment.

3. Overview of impact of NDIS legislation on service providers’ financial systems • National Disability Insurance Scheme Act 2013 • National Disability Insurance Scheme Rules (pursuant to sec. 17 of Act) << NDIS (Registered Providers of Supports) Rule 2013 • NDIA’s CEO “Operational Guidelines”(pursuant to a Rule under the Act) << Operational Guideline – Registered Providers of Supports and NDIS Terms of Business for Registered Support Providers

4. Overview of impact of NDIS legislation on service providers’ financial systems • NDIS Act 2013 (Cwth) – sec. 3 – Objects of the Act: (extracts only) • Provide reasonable and necessary supportsfor participants in the NDIS launch (s.3(1)(d)) • Enable people with disability to exercise choice and control in the pursuit of their goals and the planning and delivery of their supports (s.3(1)(e)) • Adopting an insurance-based approach, informed by actuarial analysis, in the provision and funding of supports for people with disability(s.3(2)(b)) • In giving effect to the objects of the Act, regard is to be had to … the need to ensure the financial sustainability of the NDIS (s.3(3)(b))

5. Overview of impact of NDIS legislation on service providers’ financial systems • People with disability have the same right as other members of Australian society to be able to determine their own best interests, including the right to exercise choice and control, and to engage as equal partners in decisions that will affect their lives, to the full extent of their capacity. (NDIS Act s.4 (8)) • Participant’s Plan must include any general or reasonable and necessary supportsthat will be provided or funded as part of the plan. • Supports must provide value for money(s.34 ) • Delegate documents statement of reasonsfor the decision (the letter that accompanies the provision of the plan) and provide a copy of the plan to the participant within 7 days.

6. Overview of impact of NDIS legislation on service providers’ financial systems • NDIA ACT Section 73 • … • (2) The National Disability Insurance Scheme rules may make provision in connection with registered providers of supports, including by prescribing: • (a) the consequences of registered providers of supports failing to comply with this Act, the regulations or the National Disability Insurance Scheme rules; and • (b) requirements with which registered providers of supports must comply, including in relation to the following: • (i) governance; • (ii) business practice; • (iii) accounting practice; and • (c) the obligations of registered providers of supports in relation to the monitoring of compliance; and … • (e) auditing requirements in relation to registered providers of • supports.

7. Overview of impact of NDIS legislation on service providers’ financial systems • NDIS Terms of Business for Registered Support Providers • “Records management: A provider is to keep proper and accessible records of the supports delivered to National Disability Insurance Scheme participants including financial records that are fit for audit. Adequate records must be maintained as evidence of the provision and payment for a support. Financial records are to be retained for at least 5 years. All other records are to be retained for a length of time in accordance with the relevant State or Territory laws. “

8. Overview of impact of NDIS legislation on service providers’ financial systems • Compliance and Reporting System • Contract management • Portal interfacing • Client stakeholder reporting • Internal control • External audit • Client Management System (CMS) • Client intake/update data • Service Agreements • Client services data • Client services scheduling • Staff rostering • Staff timesheets • Accounting System • Payroll • General Ledger • Accounts Receivable (Debtors) • Accounts Payable (Creditors) • Budgeting • Client/Job Costing • Asset Management • Policies, Procedures, Practices and Processes • Operations & Services • Administrative and Management

9. Changes in operational policies, practices and processes CONDUCT A PROCESS AUDIT (“review”) to identify which policies, procedures and practices are impacted by NDIS

10. Changes in operational policies, practices and processes Example: operational policies, procedures, practices and processes impacted by NDIS • Terms of Business“Supports are to be delivered in accordance with the Objectives and Principles of the National Disability Insurance Scheme Act 2013, all relevant National Disability Insurance Scheme Rules and Guidelines, the provider’s own Code of Conduct, Code of Ethics or Service Charter and any legislative or other requirements of the Commonwealth, State …“) • Marketing of NDIS services • Negotiating Service Agreements • Participant intake • Scheduling of services • Delivery of services (“What exactly is included in an “hour” of service?”) • Direct service staff timesheets OTHER EXAMPLES OPERATIONAL CHANGES??

11. Changes in administrative and management policies, practices and processes. Example: administrative and management policies, procedures, practices and processes impacted by NDIS • Terms of Business “Records management: A provider is to keep proper and accessible records of the supports delivered to National Disability Insurance Scheme participants including financial records that are fit for audit. Adequate records must be maintained as evidence of the provision and payment for a support. Financial records are to be retained for at least 5 years. All other records are to be retained for a length of time in accordance with the relevant State or Territory laws.“) • Services Agreements • Delivery of services (“What exactly is included in an “hour” of service?”; “Hour of service or part thereof?”) • Subcontracting services • Invoicing and Billing • Costing and Pricing (NDIS Price Guide) • Internal Controls and Financial Reviews • Additional value added services (non-NDIS Plan’s reasonable and necessary funded services) OTHER EXAMPLES OF CHANGES??

12. Reviewing the impact on the General Ledger (within National Standard Chart of Accounts) • General Ledger Account Codes for NDIS services revenues (NSCOA) • Example - NDIS Item 09 011 - Assistance with self-care activities: weekday day • e.g. 4-3500 • General Ledger Organisational Activity Codes (using e.g. MYOB Category Code function) • e.g. 106 Mobility assistance • 108 Meals assistance • General Ledger Client Codes (using e.g. MYOB Job Cost Code function) • e.g. 407 Chris Brown

13. Importance of activity-based cost-centre accounting GENERALLY NDIS FUNDED SUPPORTS ARE FIXED UNIT PRICES AND PUBLISHED IN NDIA’S PRICE GUIDE … These prices are calculated by NDIA using the “NDIA report on the methodology of the efficient price”(18 July 2014)

14. Importance of activity-based cost-centre accounting EXAMPLE OF NDIA FIXED PRICE COMPONENTS From 1/7/2015 “Standard” now $41.18/hr daytime weekdays

15. Changes in financial reporting to all stakeholders - e.g. Members AGM, board, management, participants, Australian Charities and Not For Profits Commission (ACNC) • Annual Report disclosure commentary – NDIS impact on participants, members, operations, management • Financial Statements disclosure and commentary – material change in revenues, costs, assets, liabilities and benchmark ratios due to NDIS • External audit disclosure – material change in funding sources from Govt.grants to participants’ service agreements revenues • Provision for bad/doubtful debts • Decision on recognising material “Work in Progress” (WIP) in financial statements. OTHER EXAMPLES OF CHANGES??

16. Sharing tips and traps in efficiently and effectively financially managing in the NDIS environment. • Prepare early - Profile existing clients transition to NDIS “reasonable and necessary” supports funded by NDIS • Prepare early – Forecast NDIS-funded revenues for existing/additional participants • Prepare early – Calculate present unit costs for all service activities (using NDIS price guide items) and plan for any cost-saving and/or asset utilization/investment changes for NDIS environment • Prepare early – Audit/review ALL financial systems, policies, procedures, practices, documents to recognise NDIS obligations OTHER TIPS AND TRAPS?

17. Final questions? Additional resources: TDSA previously supplied a CD containing additional resources (including copies of the Workbook, Handouts and Presentation Slides). Instead of CDs, the TDSA website now enables a download of all these additional resources for all TDSA Think Tank modules you attend. You will need the password to access each module – and will be provided to you (or you can obtain it directly by emailing or phoning TDSA) We thank you for your participation in today’s Think Tank ! Could you please complete the Feedback/Evaluation Form and leave it face down on the desks. Thank you