Department of Sustainability, Environment, Water, Population and Communities Annual Report 2011–12

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Note 26D. Fair Value of Financial Instruments

The fair value of all financial assets and liabilities approximate their carrying amounts.

Note 26E. Credit Risk

The administered activities of the Department were not exposed to a high level of credit risk as the majority of financial assets are cash, receivables, advances and loans to State and Territory Governments. 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 in the debt recovery techniques that are to be applied. The Department has assessed the risk of the default on payment and has allocated the following amounts to an impairment allowance account: Other receivables $317,000 (2011: $358,000).

The following table illustrates the Department's gross exposure to credit risk, excluding any collateral or credit enhancements.
	2012	2011
	$'000	$'000
Financial assets
Loans and receivables
Cash and cash equivalents	-	20
Advances and loans	8,116	10,039
Goods and services and other receivables	1,170	1,725
Total	9,286	11,784

The Department holds no collateral to mitigate against 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
		2012	2011	2012	2011
		$'000	$'000	$'000	$'000
Financial assets
Loans and receivables
Cash and cash equivalents		-	20	-	-
Advances and loans		8,116	10,039	-	-
Goods and services and other receivables		868	727	302	998
Total		8,984	10,786	302	998

Ageing of financial assets that were past due but not impaired for 2012
	0 to 30	31 to 60	61 to 90	90+
	days	days	days	days	Total
	$'000	$'000	$'000	$'000	$'000
Loans and receivables
Other receivables	202	2	-	98	302
Total	202	2	-	98	302

Ageing of financial assets that were past due but not impaired for 2011
	0 to 30	31 to 60	61 to 90	90+
	days	days	days	days	Total
	$'000	$'000	$'000	$'000	$'000
Loans and receivables
Other receivables	98	12	-	888	998
Total	98	12	-	888	998

Note 26F. Liquidity Risk

The Department’s financial liabilities are trade creditors and grant payables. 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 as the Department is appropriated funding from the Australian Government and the Department manages its budgeted funds to ensure it has adequate funds to meet payments as they fall due. In addition, the Department has policies in place to ensure timely payment are made when due and has no past experience of default. The following tables illustrate 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
Other liabilities
Trade creditors and accruals	-	8,715	-	-	-	8,715
Grants payable	-	33,334	-	-	-	33,334
Subsidies payable	-	-	-	-	-	-
Total	-	42,049	-	-	-	42,049

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