Part 4: Financial Statements – HTML version

Notes to and forming part of the Financial Statements

Note 18: Financial Instruments

Note 18a: Terms, Conditions and Accounting Policies
Financial Instrument	Notes	Accounting Policies and Methods (including recognition criteria and measurement basis)	Nature of Underlying Instrument (including significant terms and conditions affecting the amount, timing and certainty of cash flows)
FINANCIAL ASSETS		Financial assets are recognised when control over future economic benefits is established and the amount of the benefit can be reliably measured.
Cash	7A	Cash includes cash on hand and in banks. Cash is recognised at its nominal amount.	The majority of the Department's cash is held by the Department of Finance. No interest is applied to the Department under this arrangement.
Receivables	7B	These receivables are recognised at the nominal amounts due less any provision for bad and doubtful debts. Collectability of debts is reviewed at balance date. Provisions are made when collection of the debt is judged to be less rather than more likely.	All receivables with entities external to the Commonwealth have credit terms net 30 days or less (2003: 30 days).
Appropriations receivable	7B	These receivables are recognised at their nominal amounts.	Appropriation receivable will be drawn upon as required.
FINANCIAL LIABILITIES		Financial liabilities are recognised when a present obligation to another party is entered into and the amount of the liability can be reliably measured.
Finance lease liabilities	9A	Liabilities are recognised at the present value of the minimum lease payments at the beginning of the lease. The discount rates used are estimates of the interest rates implicit in the lease.	At reporting date, the Department had finance leases with terms averaging 3 years. The interest rate implicit in the leases averaged 10.16% (2003: 9.83%).
Trade creditors	11A	Creditors and accruals are recognised at their nominal amounts, being the amounts at which the liabilities will be settled. Liabilities are recognised to the extent that the goods and services have been received (and irrespective of having been invoiced).	Settlement is usually made net 30 days.
UNRECOGNISED FINANCIAL LIABILITIES
Indemnities	14	Details are disclosed in Note 14 - Contingent Liabilities and Assets.	Refer Note 14 - Contingent Liabilities and Assets.

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Note 18B: Interest Rate Risk
Financial Instrument	Notes	Floating Interest Rate		Fixed Interest Rate Maturing In						Non-Interest Bearing		Total		Weighted Average Effective Interest Rate
				1 Year or Less		1 to 5 Years		> 5 Years
		2004 $'000	2003 $'000	2004 $'000	2003 $'000	2004 $'000	2003 $'000	2004 $'000	2003 $'000	2004 $'000	2003 $'000	2004 $'000	2003 $'000	2004 %	2003 %
Financial Assets
Cash	7A	2,554	2,944	-	-	-	-	-	-	-	-	2,554	2,944	2.00%	2.00%
Other receivables	7B	-	-	-	-	-	-	-	-	74,784	84,862	74,784	84,862	n/a	n/a
Less: Provision for doubtful debts	7B	-	-	-	-	-	-	-	-	(727)	(68)	(727)	(68)	n/a	n/a
*Total*		2,554	2,944	-	-	-	-	-	-	74,057	84,794	76,611	87,738
*Total Assets*												145,476	161,619

Financial Liabilities
Finance lease liabilities	9A	-	-	1,383	987	1,002	1,183	-	-	-	-	2,385	2,170	10.16%	9.83%
Trade creditors	11A	-	-	-	-	-	-	-	-	35,218	36,451	35,218	36,451	n/a	n/a
*Total*		-	-	1,383	987	1,002	1,183	-	-	35,218	36,451	37,603	38,621
*Total Liabilities*		-	-	-	-	-	-	-	-	-	-	126,272	150,940

Liabilities not recognised		-	-	-	-	-	-	-	-	-	-	-	-
Indemnities	14	-	-	-	-	-	-	-	-	100	100	100	100	n/a	n/a
Total		-	-	-	-	-	-	-	-	100	100	100	100

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Note 18C: Net Fair Values of Financial Assets and Liabilities
		2004		2003
	Notes	Total Carrying Amount $'000	Aggregate Net Fair Value $'000	Total Carrying Amount $'000	Aggregate Net Fair Value $'000
Departmental Financial Assets
Cash	7A	2,554	2,554	2,944	2,944
Receivables for goods and services (net)	7B	74,057	74,057	84,794	84,794
*Total Financial Assets*		76,611	76,611	87,738	87,738
Financial Liabilities (Recognised)
Finance lease liabilities	9A	2,385	2,385	2,170	2,170
Trade creditors	11A	35,218	35,218	36,451	36,451
*Total Financial Liabilities (Recognised)*		37,603	37,603	38,621	38,621
Financial Liabilities (Unrecognised)
Indemnities	14	100	100	100	100
*Total Financial Liabilities (Unrecognised)*		100	100	100	100

The net fair values of cash and non-interest bearing monetary financial assets approximate their carrying amounts.

The net fair values of the finance leases are based on discounted cash flows using current interest rates for liabilities with similar risk profiles.

The net fair values for the trade creditors are approximated by their carrying amounts.

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Note 18D: Credit Risk Exposures

The Department's maximum exposures to credit risk at reporting date in relation to each class of recognised financial assets is the carrying amount of those assets as indicated in the Statement of Financial Performance.

The Department has no significant exposures to any concentrations of credit risk.

All figures for credit risk referred to do not take into account the value of any collateral or other security.

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