The Department was exposed to minimal credit risk as loans and receivables were cash and trade receivables. The maximum exposure to credit risk was the risk that arises from potential default of a debtor. This amount was equal to the total amount of trade receivables (2012: $5,787,000 and 2011: $7,920,000).
The Department had assessed the risk of the default on payment and had allocated $130,000 in 2012 (2011: $277,000) to an impairment allowance account. The Department managed its credit risk by undertaking background and credit checks prior to allowing a debtor relationship. In addition, the Department had policies and procedures that guided employees in debt recovery techniques that were to be applied.
The Department held no collateral to mitigate against credit risk.
The following table illustrates the Department's gross exposure to credit risk, excluding any collateral or credit enhancements.
