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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 13: Financial Instruments

2012
2011
$'000
$'000
Note 13A: Categories of Financial Instruments
Financial Assets
Loans and receivables:
Cash
54,787
58,160
Receivables for goods and services
23,877
30,418
Other receivables
19,231
28,879
Carrying amount of financial assets
97,895
117,457
Financial Liabilities
At amortised cost:
Trade creditors and accruals
76,099
80,184
Carrying amount of financial liabilities
76,099
80,184
Note 13B: Net Income and Expense from Financial Assets
Loans and receivables
Exchange gains/(loss)
(2,051)
(1,293)
Impairment gain/(loss)
156
253
Net gain/(loss) from loans and receivables
(1,895)
(1,040)
Note 13C: Net Income and Expense from Financial Liabilities
Financial liabilities - at amortised cost
Interest expense
-
-
Net gain/(loss) from financial liabilities - at amortised cost
-
-
Note 13D: Fair Value of Financial Instruments
As the Department only holds basic financial instruments (cash, receivables and payables), 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 $43,562,000 (2011: $59,606,000).
The Department has assessed the risk of default on payment and has allocated $453,000 (2011: $ 309,000) 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 2012
Not past due nor impaired
0 to 30 days
31 to 60 days
61 to 90 days
90+ days
Total
$'000
$'000
$'000
$'000
$'000
$'000
Not impaired
Cash
54,787
-
-
-
-
54,787
Receivables for goods and services
19,355
1,829
1,826
728
592
24,330
Other receivables
12,476
100
4
5
6,646
19,231
Impaired
Receivables for goods and services
-
-
-
-
(453)
(453)
Total
86,618
1,929
1,830
733
6,785
97,895
Ageing of financial assets that were past due but not impaired for 2011
Not past due nor impaired
0 to 30 days
31 to 60 days
61 to 90 days
90+ days
Total
$'000
$'000
$'000
$'000
$'000
$'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

 

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 2012
On demand
within 1 year
1 to 2 years
2 to 5 years
> 5 years
Total
$'000
$'000
$'000
$'000
$'000
$'000
Trade creditors
-
76,099
-
-
-
76,099
Total
-
76,099
-
-
-
76,099
Maturities for non-derivative financial liabilities 2011
On demand
within 1 year
1 to 2 years
2 to 5 years
> 5 years
Total
$'000
$'000
$'000
$'000
$'000
$'000
Trade creditors
-
80,184
-
-
-
80,184
Total
-
80,184
-
-
-
80,184
The entity had no derivative financial liabilities in either 2012 or 2011

 

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 2012 from a 15% (2011: 15%) 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 2012              
       
+ Favourable
Effect on
- Unfavourable
Effect on
   
Change in
 
Risk
risk
Profit and
 
Profit and
 
 
variable
variable
loss
Equity
loss
Equity
    % $'000 $'000 $'000 $'000
Cash
44,389
 
15%
(5,790)
(5,790)
7,833
7,833
Receivables for goods and services (net)
1,506
 
15%
(196)
(196)
266
266
Other receivables
4,188
 
15%
(546)
(546)
739
739
Trade creditors
2,890
 
15%
377
377
(510)
(510)
Total 52,973     (6,155) (6,155) 8,328 8,328
               
Sensitivity analysis of the risk that the entity is exposed to for 2011              
       
+ Favourable
Effect on
- Unfavourable
Effect on
   
Change in
 
Risk
risk
Profit and
 
Profit and
 
 
variable
variable
loss
Equity
loss
Equity
    % $'000 $'000 $'000 $'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
               
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'.

Department of Foreign Affairs and Trade