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Australian Government - Department of Foreign Affairs and Trade

Advancing the interests of Australia and Australians internationally

Australian Government - Department of Foreign Affairs and Trade

Advancing the interests of Australia and Australians internationally



Note 24: Administered Financial Instruments

 
2010
$'000
2009
$'000
Note 24A: Categories of Financial Instruments    
Financial Assets    
Held-to-maturity:    
    Cash 11,376 5,233
Total 11,376 5,233
Loans and receivables:    
    Goods and services receivables 1,947 5,017
    Consular - Traveller Emergency loans 699 793
    National Interest receivable  - 9,652
    Other - passport fees and VAT 2,166 1,338
Total 4,812 16,800
Available for sale:    
    Investment - Export Finance and Insurance Corporation 407,606 376,700
Total 407,606 376,700
     
Carrying amount of financial assets 423,794 398,733
     
Financial Liabilities    
At amortised cost:    
    Suppliers 12,559 3,961
    National Interest Account (EFIC) 42,908 46,679
Total 55,467 50,640
     
Carrying amount of financial liabilities 55,467 50,640
     
Note 24B Net Income and Expensefrom Financial Assets    
Held-to-maturity    
Interest revenue 91 123
Net gain/(loss) held-to-maturity 91 123
     
Consular - Traveller Emergency loans    
Impairment decrease/(increase) (189) (241)
Write off (39) (82)
Net gain/(loss) Consular - Traveller Emergency loans (228) (323)
     
Net gain/(loss) loans and receivables (137) (200)
     
Available for sale    
Investment - Export Finance and Investment Corporation    
    Dividend revenue 16,802 9,866
    Revaluation gain/loss recognised in equity 30,906 45,500
Net gain/(loss) available for sale 47,708 55,366
     
     
Net gain/(loss) from financial assets 47,571 55,166
     
 
2010
$'000
2009
$'000
Note 24C: Net Income and Expense from Financial Liabilities    
Financial liabilities - at amortised cost     
     
National Interest Account (EFIC)    
    Interest revenue 5,946 8,803
    Other Revenue 9,542 190
    Exchange gains/(loss) 1,160 (2,937)
    Impairment decrease/(increase) (9,652)  -
    Interest Expense  (7,006) (6,949)
    Other Expense  (2,862) (743)
Net gain/(loss) - National Interest Account EFIC (2,872) (1,636)
     
Net gain/(loss) financial liabilities - at amortised cost (2,872) (1,636)
     
Net gain/(loss) from financial liabilities (2,872) (1,636)

 

Note 24D: Fair Value of Financial Instruments        
Carrying
amount
2010
$'000
Fair
value
2010
$'000
Carrying
amount
2009
$'000
Fair
value
2009
$'000
Financial Assets        
    Cash 11,376 11,376 5,233 5,233
    Receivables for goods and services (net) 2,646 2,646 5,810 5,810
    Accrued revenue 2,166 2,166 1,338 1,338
    National Interest receivable  -  - 9,652 9,652
    Investments 407,606 407,606 376,700 376,700
Total 423,794 423,794 398,733 398,733
     
Financial Liabilities    
    Trade creditors 12,559 12,559 3,961 3,961
    Other payables 42,908 42,908 46,679 46,679
Total 55,467 55,467 50,640 50,640

Valuation Method used for determining the Fair Value of Financial Instruments

The following table identifies for those assets and liabilities (those at fair value through profit and loss or available for sale) carried at fair value (above) whether fair value was obtained by reference to market prices or by a valuation technique that employs observable market transactions, or one that uses non-observable market inputs to determine a fair value.

 
Market
Values
$'000
Market 
Inputs
$'000
Non-market
Inputs
$'000
Total
$'000
Financial Assets at Fair Values    
  EFIC - valuation by net assets  -  - 407,606 407,606
Financial Assets at Fair Values  -  - 407,606 407,606

 As the Department only administers basic financial instruments (outlined above), the carrying amounts are a reasonable approximation of fair value.

Reconciliation of level 3 fair value hierachy

 
Investment
2010
$'000
Investment
2009
$'000
Financial assets at fair value    
Opening balance 376,700 331,200
Total gains or losses recognised in other comprehensive income¹  30,906 45,500
Closing balance 407,606 376,700

¹ These gains and losses are presented in the reconciliation of administered items.

Recognised in the DFAT Administered Accounts

Maximum exposure

The Department's Senior Executive has endorsed policies and procedures for debt management (including the provision of credit terms) to reduce the incidence of credit risk. The majority of services provided by the Department on behalf of the Australian Government are delivered to another government entity and therefore represent minimal credit risk. Collateral is not required on any loan.

The Department’s maximum exposure to credit risk at reporting date in relation to each class of recognised administered financial asset is the carrying amount of those assets as indicated in the Schedule of Administered Items, unless otherwise detailed in the table below:

The following table illustrates Administered gross exposure to credit risk, excluding
any collateral or credit enhancements

 
2010
$'000
2009
$'000
Financial assets    
    as per balance sheet 423,794 389,081
Total 423,794 389,081

 

Credit Quality

The Department's Administered Consular Loans receivable includes debtors with a carrying amount of approximately $0.378 million (2009: $0.465 million) which are past due at the reporting date and for which the Department has not provided. Based on past experience, the Department believes that the amounts are still considered receivable. The Department does not  hold any collateral over these balances.  However it requires settlement of the outstanding debt before the debtor's passport is renewed.

Ageing of financial assets that were past due but not impaired for 2010

 
not past due nor impaired
$'000
0 to 30
days
$'000
31 to 60
days
$'000
61 to 90
days
$'000
90+
days
$'000
Total
$'000
Not Impaired            
Cash and Cash Equivalents 11,376  -  -  -  - 11,376
Goods and Services Receivables, Other and Passport fees 3,800 312  -  -  - 4,113
Consular  - Traveller Emergency Loans 321 3 0 51 324 699
Investments - Export Finance and Investment Corporation 407,606  -  -  -  - 407,606
  423,103 315 0 51 324 423,794
             
Impaired            
             
Consular  - Traveller Emergency Loans*   - 1 2 0 561 564
   - 1 2 0 561 564
Total 423,103 316 2 51 885 424,358

* DFAT impaired some traveller emergency loans immediately on issuance as the loan recipient, while requiring consular assistance and legally able to enter into a loan contract, was assessed as not likely to be in a position to repay the loan based on observable evidence and factors.

Ageing of financial assets that were past due but not impaired for 2009

 

 
not past due nor impaired
$'000
0 to 30
days
$'000
31 to 60
days
$'000
61 to 90
days
$'000
90+
days
$'000
Total
$'000
Not Impaired  
Cash and Cash Equivalents 5,233  -  -  -  - 5,233
Goods and Services Receivables, Other and Passport fees and VAT 5,860 495  -  -  - 6,355
National Interest receivable  -  -  -  - 9,652 9,652
Consular  - Traveller Emergency Loans 328 60 1 3 401 793
Investments - Export Finance and Investment Corporation 376,700  -  -  -  - 376,700
  388,121 555 1 3 10,053 398,733
   
Impaired  
   
Consular  - Traveller Emergency Loans*  - 68  -  - 308 376
   - 68  -  - 308 376
Total 388,121 623 1 3 10,361 399,109

Note 24F: Liquidity Risk

The Department receives an annual Administered Appropriation to fund payments due on the financial liabilities listed and therefore does not carry any liquidity risk.

The following tables 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  - 12,559  -  -  - 12,559
National Interest Account - EFIC  - 7,793 9,545 10,125 15,445 42,909
Total Financial Liabilities - Ageing Analysis  - 20,352 9,545 10,125 15,445 55,468
             
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
Trade creditors  - 3,961  -  -  - 3,961
National Interest Account - EFIC^  - 8,038 7,931 11,397 19,313 46,679
     
Total Financial Liabilities - Ageing Analysis  - 11,999 7,931 11,397 19,313 50,640

^ Ageing of the National Interest Account - EFIC liability has been restated in the 2008-09 comparatives due to changes in the disclosure of the NIA.

Note 24G: Market Risk

The following table illustrates the effect on the Department's Administered net income less expenses and equity as at 30 June 2010 from a 14% (2008-09: 12%) increase or decrease against the AUD in the currencies in which financial instruments were administered by the Department, with all other variables held constant.

     
2010
USD $'000
2010
USD $'000
2009
USD $'000
2009
USD $'000
National Interest Account - EFIC     (7,064) (6,105) (8,977) (7,297)
Accrued Expenses - EFIC     (6,178) (5,339) (6,569) (5,339)
NIA Receivable - Indonesia Late Interest      234 203 263 214
Supplier Payable - IOPKO Payable Accrual     (5,061) (4,374) 0 0
Total Exposure USD       (15,616)   (12,423)
       
     
2010
EUR $'000
2010
EUR $'000
2009
EUR $'000
2009
EUR $'000
Supplier Payable - IOPKO Payable Accrual     (93) (66) 247 (142)
NIA Receivable - Indonesia Late Interest      256 180 336 192
Total Exposure EUR       114   50
 
     
Effect on
Effect on
 
variable
Change in 
risk 
variable
%
Profit and
loss
2010
$'000
Equity
2010
$'000
Profit and
loss
2009
$'000
Equity
2009
$'000
Currency Risk - All Currencies +14% (2008-09: +12%) 2,199 2,199 1,628 1,628
Currency Risk - All Currencies -14% (2008-09: -12%) (2,915) (2,915) (2,072) (2,072)

All other items are denominated in AUD and are not subject to market risk due to exchange rate fluctuations.

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Department of Foreign Affairs and Trade