The Aged Care Quality and Safety Commission has proposed Financial and Prudential Standards 2025*, introducing new liquidity and financial management requirements for providers.
We remain committed to supporting a balanced approach that ensures financial oversight without creating unnecessary burden.
In response, we have collated this report to submit feedback to the Commission and propose targeted changes to ensure the standards achieve their objectives without restricting providers’ ability to operate effectively.
Key concerns begin with the impact of liquidity requirements on cash flow. The undefined term "cash expenses" could lead to inconsistent application and financial constraints, restricting working capital and creating cash flow pressures. We recommend aligning the Minimum Liquidity Amount (MLA) calculations with expected cash outflows for the next quarter to ensure a more practical approach.
Secondly, the increased compliance and reporting obligations, such as quarterly updates to the Written Liquidity Management Strategy (WLMS), could divert resources from service delivery and limit financial flexibility. We propose focusing the WLMS on methodology rather than frequent recalculations.
In addition, restrictions on liquidity sources could reduce financial flexibility and increase risk, making it harder for providers to secure capital for investments and operations. We suggest for broader recognition of liquidity sources, including lines of credit, to maintain financial stability and support sector sustainability.
These concerns highlight the need for practical, well-defined financial standards that support provider stability while ensuring appropriate regulatory oversight.
Our feedback is structured to ensure a comprehensive understanding of the impact and to suggest alternative approaches where necessary. This submission should shed light on the new financial and compliance challenges that could impact providers’ sustainability if these standards proceed without amendment.
As the formal consultation period has now closed, and we now await further updates from the Commission.
We will continue suggesting for a balanced approach that ensures financial oversight without unnecessary burden. If you would like to discuss how these changes might affect your organisation, please don’t hesitate to reach out.
*https://www.agedcarequality.gov.au/resource-library/new-financial-and-prudential-standards
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