Department of Foreign Affairs and Trade
Notes to and Forming Part of the Financial Statements

Note 15: Financial Instruments

2015 2014
Note 15A: Categories of Financial Instruments Notes $’000 $’000
Financial Assets  
    Loans and receivables  
        Cash and cash equivalents 7A 84,720 75,769
        Goods and services receivable (gross) 7B 82,107 62,877
        Advances receivable 7B 12,922 10,645
        Other receivables 7B 1,938 1,442
    Total loans and receivables   181,687 150,733
Total financial assets   181,687 150,733
     
Financial Liabilities    
    Financial liabilities measured at amortised cost    
        Trade creditors and accruals 9A 121,472   117,087
        Other payables 9B 62,468   45,545
    Total financial liabilities measured at amortised cost   183,940   162,632
Total financial liabilities   183,940 162,632

 

Note 15B: Net Gains or Losses on Financial Assets  
Loans and receivables    
    Exchange gain / (loss) 5,584 (5,626)
    Write-off of financial assets 4D (350) (43)
    Impairment reversal / (loss) 4D 305 (24)
Net gain / (loss) on loans and receivables   5,539 (5,693)
Net gain / (loss) on financial assets   5,539 (5,693)

 

Note 15C: Net Gains or Losses on Financial Liabilities
Financial liabilities measured at amortised cost  
    Exchange gains / (losses) 696 4,379
Net gains / (losses) on financial liabilities measured at amortised cost 696 4,379
Net gains / (losses) on financial liabilities 696 4,379

 

Note 15D: Fair Value of Financial Instruments
As the department only holds basic financial instruments (cash, receivables and payables), the carrying amounts are a reasonable approximation of fair value.
Note 15E: Credit Risk  
Credit risk is the possibility that a debtor will not repay some or all of a loan or receivable in a timely manner, causing loss to the department. The department is exposed to minimal credit risk as cash and cash equivalents, goods and services receivable and other receivables comprise all loans and receivables. The maximum exposure the department has to credit risk at the reporting date in relation to each class of recognised financial assets is the carrying amount of those assets indicated in the Statement of Financial Position.
The department has assessed the risk of default on payment and has allocated $43,172 (2014: $348,297) to an impairment allowance for doubtful debts account. The department has no collateral to mitigate against credit risk.
Credit quality of financial assets 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
2015 2014 2015 2014
    $’000 $’000 $’000 $’000
Cash and cash equivalents 84,720 75,769 – –
Goods and services receivable 80,319 59,132 1,788 3,745
Advances receivable 12,922 10,645 – –
Other receivables 1,415 908 523 534
Total       179,376 146,454 2,311 4,279
             
Ageing of financial assets that were 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
Not impaired    
Goods and services receivables 176 282 104 1,226 1,788
Other receivables 70 174 23 213 480
Total     246 456 127 1,439 2,268
Ageing of financial assets that were past due but not impaired for 2014 0 to 30 days 31 to 60 days 61 to 90 days 90+ days Total
      $’000 $’000 $’000 $’000 $’000
Not impaired    
    Goods and services receivables 2,518 106 105 1,005 3,734
    Other receivables 81 69 10 37 197
Total     2,599 175 115 1,042 3,931

 

Note 15F: Liquidity Risk
The department’s financial liabilities are trade creditors and other payables. 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 it has no history of default. The following table illustrates the maturities for financial liabilities.
Maturities for non-derivative financial liabilities 2015
On demand Within 1 year between 1 to 2 years between 2to 5 years more than 5 years Total
  $’000 $’000 $’000 $’000 $’000 $’000
Trade creditors and accruals – 121,472 – – – 121,472
Other payables – 45,160 17,308 – – 62,468
Total – 166,632 17,308 – – 183,940
Maturities for non-derivative financial liabilities 2014
On demand Within 1 year between 1 to 2 years between 2 to 5 years more than 5 years Total
$’000 $’000 $’000 $’000 $’000 $’000
Trade creditors and accruals – 117,087 – – – 117,087
Other payables – 39,317 6,228 – – 45,545
Total – 156,404 6,228 – – 162,632
The department had no derivative financial liabilities in either 2014 or 2015.

 

 

Note 15G: Market Risk
 
Currency risk
Currency risk refers to the risk that the fair value of future cash flows of 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 overseas operations. The following table illustrates the effect on the department’s operating result (profit or loss) and equity as at 30 June 2015 from a 10.9% (2014: 11.5%) 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 currency risk that the entity is exposed to for 2015   Change in risk variable + Effect on – Effect on
  Risk variable Net cost of services Equity Net cost of services Equity
  $’000 % $’000 $’000 $’000 $’000
Cash and cash equivalents 53,027 10.9% (5,775) (5,775) 5,775 5,775
Goods and services receivable 3,620 10.9% (394) (394) 394 394
Advances receivable 10,987 10.9% (1,197) (1,197) 1,197 1,197
Other receivables 1,300 10.9% (142) (142) 142 142
Trade creditors (21,698) 10.9% 2,363 2,363 (2,363) (2,363)
Sensitivity analysis of the currency risk that the entity is exposed to for 2014 Change in risk variable + Effect on – Effect on
  Risk variable Net cost of services Equity Net cost of services Equity
  $’000 % $’000 $’000 $’000 $’000
Cash and cash equivalents 40,828 11.5% (4,691) (4,691) 4,691 4,691
Goods and services receivable 4,756 11.5% (546) (546) 546 546
Advances receivable 8,929 11.5% (1,026) (1,026) 1,026 1,026
Other receivables 805 11.5% (93) (93) 93 93
Trade creditors (18,552) 11.5% 2,132 2,132 (2,132) (2,132)
Interest Rate Risk and Other Price Risk
Interest rate risk refers to the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The department holds basic financial instruments that do not expose it to interest rate risk or other price risk.