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 13: Financial Instruments

 

  2011
$'000
2010
$'000
Note 13A: Categories of Financial Instruments    
Financial Assets    
Loans and receivables:    
      Cash 58,160 48,555
      Receivables for goods and services (gross) 30,727 14,669
      Other receivables 28,879 15,390
Carrying amount of financial assets 117,766 78,614
     
Financial Liabilities    
At amortised cost:    
      Trade creditors 80,184 83,120
Carrying amount of financial liabilities 80,184 83,120
     
Note 13B: Net Income and Expense from Financial Assets    
Loans and receivables    
Exchange gains/(loss) (1,293) 60
Impairment gain/(loss) 253 99
Net gain/(loss) from loans and receivables (1,040) 159
     
Note 13C: Net Income and Expense from Financial Liabilities    
Financial liabilities - at amortised cost    
      Interest expense - 4
Net gain/(loss) from financial liabilities - at amortised cost - 4

The interest expense from financial liabilities not at fair value from profit and loss is $nil (2010: $465,000).

 

Note 13D: Fair Value of Financial Instruments

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

 

Note 13E: Credit Risk

The Department is exposed to minimal credit risk as loans and receivables comprise trade and other receivables. The maximum exposure to credit risk is the risk that arises from potential default of a debtor. This is equal to the total amount of these outstanding receivables of $59,606,000 (2010: $30,060,000).
The Department has assessed the risk of default on payment and has allocated $309,000 (2010: $ 389,000) 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 that were past due but not impaired for 2011          
  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 58,160 -  - - - 58,160
      Receivables for goods and services 26,391 2,926 88 232 1,090 30,727
      Other receivables 21,340 238 7 2 7,292 28,879
Impaired            
      Receivables for goods and services - -  - - (309) (309)
Total 105,891 3,164 95 234 8,073 117,457
             
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 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

 

Note 13F: 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 2011

  On
demand
$'000
within 1
year
$'000
1 to 2
years
$'000
2 to 5
years
$'000
> 5
years
$'000

Total
$'000
      Trade Creditors - 80,184  - - - 80,184
Total - 80,184 - - - 80,184
             
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

The entity has no derivative financial liabilities in either the current or prior year.

 

Note 13G: Market Risk

Currency risk
Foreign currency risk refers to the risk that the fair value of future cash flows of a financial instruments 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 currency 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 2011 form a 15% (2010: 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. 

 

Sensitivity analysis of the risk that the entity is exposed to for 2011
    + Favourable
Effect on
- Unfavourable
Effect on
  Risk
variable
Change in 
risk 
variable
%
Profit and
loss
$'000
Equity
$'000
Profit and
loss
$'000
Equity
$'000
Cash  19,736 15% (2,574) (2,574) 3,483 3,483
Receivables for goods and services (net)  2,234 15% (291) (291) 394 394
Other receivables  36,966 15% (4,822) (4,822) 6,523 6,523
Trade creditors (2,338) 15% 305 305 (413) (413)
Total 56,598   (7,382) (7,382) 9,987 9,987
           
Sensitivity analysis of the risk that the entity is exposed to for 2010
    + Favourable
Effect on
- Unfavourable
Effect on
  Risk
variable
Change in 
risk 
variable
%
Profit and
loss
$'000
Equity
$'000
Profit and
loss
$'000
Equity
$'000
Cash  20,034 14% (2,460) (2,460) 3,261 3,261
Receivables for goods and services (net)  905 14% (111) (111) 147 147
Other receivables  43,530 14% (5,346) (5,346) 7,086 7,086
Trade creditors 5,174 14% (635) (635) 842 842
Total  69,643   ( 8,552) ( 8,552)  11,336  11,336

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'.   

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