Department of Foreign Affairs and Trade
Notes to and Forming Part of the Financial Statements
Note 19: Administered – Fair Value Measurements
Financial liabilities:
| Note 19A: Fair Value Measurements, Valuation Techniques and Inputs Used | |||||
| Fair value measurements at the end of the reporting period using | For Levels 2 and 3 fair value measurements | ||||
|---|---|---|---|---|---|
| 2015 | 2014 | Level (1, 2 or 3) | Valuation technique(s)1 | Inputs used2 | |
| $’000 | $’000 | ||||
| Financial assets: | |||||
| Other investments: | |||||
| Non-monetary ‘available for sale’ | 1,936,071 | 1,544,835 | 3 | Discounted cash flow method | A discounted rate range is used to discount the expected loan principal repayments of the loan portfolio of IDA and ADF |
| IDA and ADF subscriptions | |||||
| Investment in the Export Finance and | 436,800 | 225,926 | 3 | Net asset position | Balance sheet of the Export Finance and Insurance Corporation’s Commercial Account |
| Insurance Corporation’s Commercial Account | |||||
| Tourism Australia | 19,502 | 16,323 | 3 | Net asset position | Balance sheet of Tourism Australia |
| Total financial assets | 2,392,373 | 1,787,084 | |||
| Non-financial assets: | |||||
| Leasehold Improvements | 1,661 | 2,127 | 3 | Depreciated replacement cost | Replacement cost |
| Consumed economic benefits and obsolescence | |||||
| Property, Plant and Equipment | 18 | 18 | 2 | Market approach | Adjusted market transactions |
| Total non-financial assets | 1,679 | 2,145 | |||
| Total fair value measurements of assets in the administered schedule of assets and liabilities | 2,394,052 | 1,789,229 | |||
| Multilateral grants | 590,449 | 590,525 | 3 | Discounted cash flow method | A discounted rate range and a 10 year government bond rate is used to discount the expected payment schedules of each loan agreement |
| Multilateral contributions payable | 892,360 | 1,068,853 | 3 | Discounted cash flow method | A discounted rate range and a 10 year government bond rate is used to discount the expected payment schedules of each loan agreement |
| Total financial liabilities | 1,482,809 | 1,659,378 | |||
| Total fair value measurements of liabilities in the administered schedule of assets and liabilities | 1,482,809 | 1,659,378 | |||
| There have been no transfers between levels during the year (2014: nil). DFAT’s policy for determining when transfers between levels are deemed to have occurred can be found in Note 1.11. | |||||
| Fair value measurements – highest and best use differs from current use for non-financial assets | |||||
| The department’s Administered assets are held for operational purposes and not held for the purposes of deriving a profit. The current use of all controlled assets is considered their highest and best use. | |||||
| Recurring and non-recurring level 3 fair value measurements – valuation processes | |||||
| Office equipment and artwork were also subject to valuation in the current financial year. All other assets were subject to an independent review as at 30 June 2015 to ensure all asset classes were held at fair value. There is no change in the carrying valuation or valuation techniques used from previous years. The department had no non-recurring fair value measurements as at 30 June 2015. | |||||
| 1. There have been no changes to valuation techniques used. | |||||
| 2. There were no significant inter-relationships between unobservable inputs that materially affect fair value. | |||||
| 3. The future economic benefits of the department’s assets are not primarily dependent on their ability to generate cash flows. DFAT has not disclosed quantitative information about the significant unobservable inputs for the department’s assets. | |||||
| Note 19B: Reconciliation for recurring Level 3 fair value measurements | ||||
| Recurring Level 3 fair value measurements – reconciliation for assets | ||||
| Financial assets | Non-financial assets | |||
|---|---|---|---|---|
| Investments | Total | Leasehold improvements | Total | |
| 2015 | 2015 | 2015 | 2015 | |
| $’000 | $’000 | $’000 | $’000 | |
| Opening balance – 1 July 2014 | 1,787,084 | 1,787,084 | 2,127 | 2,127 |
| Total gains/(losses) recognised in net cost of services1 | 391,236 | 391,236 | (453) | (453) |
| Total gains recognised in other comprehensive income2 | 14,053 | 14,053 | – | – |
| Reclassification | – | – | (13) | (13) |
| Purchases | 200,000 | 200,000 | – | – |
| Closing balance – 30 June 2015 | 2,392,373 | 2,392,373 | 1,661 | 1,661 |
| Changes in unrealised gains/(losses) recognised in net cost of services for assets held at the end of the reporting period3 | – | – | – | – |
| Financial assets | Non-financial assets | |||
| Non-monetary ‘available for sale’ IDA and ADF Subscriptions | Total | Leasehold improvements | Total | |
| 2014 | 2014 | 2014 | 2014 | |
| $’000 | $’000 | $’000 | $’000 | |
| Opening balance – 1 July 2013 | 1,730,296 | 1,730,296 | – | – |
| Assets first assessed as Level 3 – 30 June 2014 | – | – | 2,127 | 2,127 |
| Total gains recognised in net cost of services1 | 56,788 | 56,788 | – | – |
| Closing balance – 30 June 2014 | 1,787,084 | 1,787,084 | 2,127 | 2,127 |
| Changes in unrealised gains/(losses) recognised in net cost of services for assets held at the end of the reporting period3 | – | – | – | – |
| Recurring Level 3 fair value measurements – reconciliation for liabilities | ||||
| Financial Liabilities | ||||
| Multilateral grants | Multilateral contributions payable | Total | ||
| 2015 | 2015 | 2015 | ||
| $’000 | $’000 | $’000 | ||
| Opening balance – 1 July 2014 | 590,525 | 1,068,853 | 1,659,378 | |
| Total gains recognised in net cost of services4 | 18,109 | 87,468 | 105,577 | |
| Purchases | 106,868 | – | 106,868 | |
| Settlements | (125,053) | (263,961) | (389,014) | |
| Closing balance – 30 June 2015 | 590,449 | 892,360 | 1,482,809 | |
| Changes in unrealised gains/(losses) recognised in net cost of services for assets held at the end of the reporting period | – | – | – | |
| Financial Liabilities | ||||
| Multilateral grants | Multilateral contributions payable | Total | ||
| 2014 | 2014 | 2014 | ||
| $’000 | $’000 | $’000 | ||
| Opening balance – 1 July 2013 | 492,252 | 898,042 | 1,390,294 | |
| Total gains/(losses) recognised in net cost of services4 | (62,378) | (73,279) | (135,657) | |
| Purchases | 265,089 | 483,741 | 748,830 | |
| Settlements | (104,438) | (239,651) | (344,089) | |
| Closing balance – 30 June 2014 | 590,525 | 1,068,853 | 1,659,378 | |
| Changes in unrealised gains/(losses) recognised in net cost of services for assets held at the end of the reporting period | – | – | – | |
| 1. These gains/(losses) are represented in the Administered Schedule of Comprehensive Income and in Notes 18D and 21A. | ||||
| 2. These gains/(losses) are represented in the Administered Schedule of Comprehensive income under Movement in the carrying amount of investments. | ||||
| 3. There are no unrealised gains (losses) for level 3 assets in the Administered Schedule of Comprehensive Income as at both 30 June 2015 and 30 June 2014. | ||||
| 4. These gains/(losses) are represented in the Administered Schedule of Comprehensive Income and in Notes 17E, 17G, and 18B. | ||||