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Note 7.3: Administered – financial instruments

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Note 7.3: Administered – financial instruments1

  2016 2015
  Notes $'000 $'000

7.3A: Categories of financial instruments

     
Financial assets      
Loans and receivables      
Cash and cash equivalents 4.1A 1 3
Trade receivables 4.1B 502 559
Loans 4.1B 99,175 120,592
Other receivables 4.1B 6 26
Personal benefit recoveries 4.1B 1,614 1,362
Available-for-sale      
Investments (refer Note 8.1B) 4.1C 348,926 9,140,266
Total financial assets   450,224 9,262,808
       
Financial liabilities      
Financial liabilities measured at amortised cost      
Trade creditors 4.3A 3,022 3,530
Accrued payables 4.3A 9,925 14,319
Operating lease rentals 4.3A 231 211
Grants and subsidies payable 4.3B 5,671 6,771
Total financial liabilities   18,849 24,831
       

7.3B: Net gains and losses from financial assets

     
Loans and receivables      
Interest revenue 2.2B 1,728 6,072
Impairment on financial instruments 2.1F (114) (69)
Impairment on personal benefit recoveries 2.1F (201) (443)
Net gains/(losses) on loans and receivables   1,413 5,560
       
Available-for-sale financial assets      
Dividend revenue 2.2C 163 11,849
Net gains/(losses) on available-for-sale financial assets   163 11,849
       
Net gains on financial assets   1,576 17,409

7.3C: Fair value of financial assets

The Department considers that the carrying amounts of financial instruments reported in the balance sheet are a reasonable approximation of fair value.

7.3D: Credit risk

The administered activities of the Department are exposed to minimal credit risk as the majority of financial assets are trade receivables, advances and loans to state and territory governments, and shares in associated and government-controlled entities. 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 receivables – $101,298,280 (2015: $122,539,748). The Department has assessed the risk of default on payment and has allocated $1,433,245 (2015: $1,191,529) to an impairment allowance account. This amount has been determined following an assessment of invoices greater than 90 days.

Gross exposure to credit risk

  2016 2015
  Notes $'000 $'000
Loans and receivables      
Cash and cash equivalents 4.1A 1 3
Trade receivables 4.1B 502 559
Loans 4.1B 99,175 120,592
Other receivables 4.1B 6 26
Personal benefit recoveries 4.1B 1,614 1,362
Available-for-sale      
Investments 4.1C 348,926 9,140,266
Total   450,224 9,262,808

The Department holds no collateral to mitigate credit risk.


Credit quality of financial instruments not past due or individually determined as impaired

  Not past due
nor impaired
Not past due
nor impaired
Past due
or impaired
Past due
or impaired
   2016 2015 2016 2015
  $'000 $'000 $'000 $'000
Loans and receivables        
Cash and cash equivalents 1 3 - -
Trade receivables 130 180 372 379
Loans 99,175 120,592 - -
Other receivables 6 26 - -
Personal benefit recoveries - - 1,614 1,362
Available-for-sale        
Investments 348,926 9,140,266 - -
Total 448,238 9,261,067 1,986 1,741

Ageing of financial assets that are past due but not impaired for 2016

 

0 to 30
days

31 to 60
days
61 to 90
days
90+
days
Total
  $'000 $'000 $'000 $'000 $'000
Loans and receivables          
Trade receivables 68 - 11 150 229
Personal benefit recoveries - - - 324 324
Total 68 - 11 474 553

Ageing of financial assets that are past due but not impaired for 2015

 

0 to 30
days

31 to 60
days
61 to 90
days
90+
days
Total
  $'000 $'000 $'000 $'000 $'000
Loans and receivables          
Trade receivables 3 - 10 264 277
Personal benefit recoveries - - - 273 273
Total 3 - 10 537 550

Trade receivables have been individually assessed for impairment by departmental officers. Recovery of debt has been considered based on communication with the debtor, and where determined to be unrecoverable, an allowance was recognised.

7.3E: Liquidity risk

The Department’s financial liabilities are trade creditors, grants and subsidies payable. The exposure to liquidity risk is based on the notion that the Department will encounter difficulty in meeting its obligations associated with financial liabilities. This is highly unlikely due to appropriation funding and mechanisms available to the Department (e.g. advance to the Finance Minister) and internal policies and procedures put in place to ensure there are appropriate resources to meet its financial obligations.

The Department receives appropriations and manages its funds to ensure it is able to meet its financial obligations as they fall due. The Department also has policies in place to ensure timely payment of invoices and has no past history of default.

All financial liabilities are expected to mature within one year.

7.3F: Market risk

The Department holds basic financial instruments that do not expose the Department to market risks. The Department is also not exposed to currency risk or other price risk.

Interest rate risk

The only interest-bearing items on the schedule of assets administered on behalf of the Government are loans made to state and territory governments. All those bearing interest are at a fixed interest rate that does not fluctuate due to changes in the market interest rate. Those with variable interest rates are significantly concessional so that any movement in the market rate will not have a material impact on the carrying amount of the receivable.

Note

1 In accordance with the Administrative Arrangements Order of 21 September 2015, the Classification, Copyright and Arts and Cultural Development programs and functions were transferred to the Department of Communications and the Arts with effect from 1 November 2015. Accordingly, both assets and liabilities may be materially different to the comparative shown in the 2014–15 financial year.

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