Note 16: Financial Instruments

	2010 $'000	2009 $'000
Note 16A: Categories of Financial Instruments
Financial Assets
Cash	48,555	40,782
Loans and receivables:
Receivables for goods and services (gross)	14,669	27,947
Other receivables	15,390	17,228
Carrying amount of financial assets	78,614	85,957
Financial Liabilities
At amortised cost:
Finance lease liabilities	-	648
Trade creditors	83,120	85,973
Carrying amount of financial liabilities	83,120	86,621
Note 16B. Net Income and Expense from Financial Liabilities
Loans and receivables
Exchange gains/(loss)	60	336
Impairment	99	293
Net gain/(loss) loans and receivables	159	629
Note 16B. Net Income and Expense from Financial Liabilities
Financial liabilities - at amortised cost
Interest expense	4	4
Net gain/(loss) financial liabilities - at amortised cost	4	4

The total interest expense from financial liabilities not at fair value through profit or loss is $465,000 ($700,000 for 2009).

Note 16D. Fair Value of Financial Instruments

As the Department only holds basic financial instruments (cash, receivables and payables), the carrying amounts are a reasonable approximation of fair value.

Note 16E. Credit Risk

The Department is exposed to minimal credit risk as loans and receivables comprise of trade and other receivables.  The maximum exposure to credit risk is the risk that arises from potential default of a debtor.  This amount is equal to the total amount of these outstanding receivables of $30,600,000 (2009: $45,045,000).

The Department has assessed the risk of the default on payment and has allocated $389,000 (2009: $502,000) to an allowance for doubtful debts account.

The Department manages its credit risk by undertaking background and credit checks prior to allowing a debtor relationship.  In addition, the Department has policies and procedures that guide employees debt recovery.

The Department has no collateral to mitigate against credit risk.

Ageing of financial assets for 2010
	Not past due nor impaired	0 to 30 days $'000	31 to 60 days $'000	61 to 90 days $'000	90+ days $'000	Total $'000
Not impaired
Cash	48,555	-	-	-	-	48,555
Receivables for goods and services	9,004	1,980	101	1,136	2,448	14,669
Other receivables	15,066	82	1	194	48	15,391
Impaired
Receivables for goods and services	-	-	-	-	(389)	(389)
Total	72,625	2,062	102	1,330	2,107	78,226
Ageing of financial assets for 2009
	Not past due nor impaired	0 to 30 days $'000	31 to 60 days $'000	61 to 90 days $'000	90+ days $'000	Total $'000
Not impaired
Cash	40,782	-	-	-	-	40,782
Receivables for goods and services	21,234	975	1,374	276	3,586	27,445
Other receivables	17,159	62	3	-	4	17,228
Impaired
Receivables for goods and services	-	-	-	-	502	502
Total	79,175	1,037	1,377	276	4,092	85,957

The following list of assets have been individually asessed as impaired:

Note 16F. Liquidity Risk

The Department's financial liabilities are trade creditors.  It is highly unlikely that the Department will encounter difficulty in meeting its obligations associated with these liabilities given that it is a Commonwealth entity and has funding mechanisms available to ensure default does not occur. In addition,  the Department has internal policies and procedures in place to ensure there are sufficient resources to make payments and has no history of default.  The following table illustrates the maturities for financial liabilities:

Maturities for non-derivative financial liabilities 2010
	On demand $'000	within 1 year $'000	1 to 2 years $'000	2 to 5 years $'000	> 5 years $'000	Total $'000
Trade Creditors	-	83,120	-	-	-	83,120
Total	-	83,120	-	-	-	83,120
Maturities for non-derivative financial liabilities 2009
	On demand $'000	within 1 year $'000	1 to 2 years $'000	2 to 5 years $'000	> 5 years $'000	Total $'000
Finance lease liability	-	648	-	-	-	648
Trade creditors	-	85,973	-	-	-	85,973
Total	-	86,621	-	-	-	86,621

The Department has no derivative financial liabilities in both the current and prior year.

Note 16G. Market Risk

Currency risk

Foreign currency risk refers to the risk that the fair value of future cash flows of a financial instrument will fluctuate due to changes in foreign currency exchange rates.  The Department is exposed to foreign currency exchange risk primarily through undertaking certain transactions denominated in a wide range of foreign currencies through its operations overseas.

The following table illustrates the effect on the Department's operating result (profit or loss) and equity as at 30 June 2010 from a 14% increase or decrease against the AUD in the currencies in which financial instruments were held by the Department, with all other variables held constant.

			+Favourable		-Unfavourable
Financial Instrument held in foreign currency	Change in variable	AUD equivalent $'000	Profit or loss 2010 $'000	Equity 2010 $'000	Profit or loss 2010 $'000	Equity 2010 $'000
Cash	14%	20,034	(2,460)	(2,460)	3,261	3,261
Receivables for goods and services (net)	14%	905	(111)	(111)	147	147
Other receivables	14%	43,530	(5,346)	(5,346)	7,086	7,086
Trade creditors	14%	5,174	(635)	(635)	842	842
Total		69,643	(8,552)	(8,552)	11,336	11,336
			+Favourable		-Unfavourable
Financial Instrument held in foreign currency	Change in variable	AUD equivalent $'000	Profit or loss 2009 $'000	Equity 2009 $'000	Profit or loss 2009 $'000	Equity 209 $'000
Cash	12%	25,521	(2,737)	(2,737)	3,483	3,483
Receivables for goods and services (net)	12%	1,159	(124)	(124)	158	158
Other receivables	12%	10,836	(1,161)	(1,161)	1,478	1,478
Trade creditors	12%	(6,769)	725	725	(923)	(923)
Total		30,747	(3,297)	(3,297)	4,196	4,196

Interest rate and Other price risk. The Department holds basic financial instruments that do not expose it to 'Interest rate risk' or 'Other price risk'.