Part 4: Financial Statements – HTML version

Notes to and forming part of the Financial Statements

Note 26: Administered Financial Instruments

a) 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 benefits can be reliably measured.
Cash	21	Cash includes cash on hand and in banks. Cash is recognised at its nominal amount.	The balance of the administered cash account is non-interest bearing.
Loans	21	Loans are recognised at the amounts lent. Collectability of amounts outstanding is reviewed at balance date. Provision is made for bad and doubtful loans where collection of the loan or part thereof is judged to be less rather than more likely.	Loans other than pension loans are made under contract for periods up to 20 years. No security is generally required. Principle is repaid in full at maturity. Interest is not charged to loans on childcare capital projects undertaken by a State/Territory.
Receivables	21	These receivables are recognised at the nominal amounts due less a provision for doubtful debts.	Collectability of debts is reviewed at balance date. Provisions are made when collection of the debt is judged to be less likely rather than more likely.

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a) 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 LIABILITIES	22	Financial liabilities are recognised when a present obligation to another party is entered into and the amount of the liability can be reliably measured.
Trade creditors	22	Creditors 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 or services have been received (and irrespective of having been invoiced).	Settlement is usually made net 30 days.
Grants and subsidies payable	22	Grant liabilities are recognised to the extent that: the services required to be performed by the grantee have been performed; or the grant eligibility criteria have been satisfied and setlement is outstanding.	All grants and subsidies are to entities that are not part of the Australian Government. Settlement is usually made according to the terms and conditions of each grant. This is usually within 30 days of performance or eligibility.
Borrowings	22	Borrowings are comprised of amounts owing to the Commonwealth Bank for the administration of the Student Financial Supplement Scheme. Liabilities are recognised when a present obligation to the Commonwealth Bank exists and the amount can be reliably measured.	Interest charged on borrowings is estimated to be 6.1% p.a (2003: 6.5% p.a).

b) Administered Interest Rate Risk
Financial Instrument	Notes	Floating Interest Rate		Fixed Interest Rate						Non-Interest Bearing		Total		Weighted Average Effective Interest Rate
Financial Instrument	Notes	Floating Interest Rate		1 Year or less		1 to 5 years		> 5 years		Non-Interest Bearing		Total		Weighted Average Effective Interest Rate
		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	21	-	-	-	-	-	-	-	-	2,016	2,224	2,016	2,224	n/a	n/a
Receivables (gross)	21	-	-	-	-	-	-	-	-	5,241,996	4,867,078	5,241,996	4,867,078	n/a	n/a
Less: Provision for doubtful debts	21	-	-	-	-	-	-	-	-	(2,784,524)	(2,605,359)	(2,784,524)	(2,605,359)	n/a	n/a
Loans to State & Territory governments (gross)	21	-	-	-	-	-	-	-	-	3,117	260	3,117	260	n/a	n/a
Loans to Local governments	21	-	-	-	-	-	-	-	-	-	826	-	826	n/a	n/a
Other loans (gross)	21	5,245	4,564	-	-	-	-	-	-	-	2,334	5,245	6,898	5.27%	4.61%
*Total*		5,245	4,564	-	-	-	-	-	-	2,462,605	2,267,363	2,467,850	2,271,927
*Total Assets*												2,468,755	2,278,221

Financial Liabilities
Trade creditors	22	8,724	9,220	-	-	-	-	-	-	3,981,246	1,635,341	3,989,970	1,644,561	n/a	n/a
Grants and subsidies payable	22	-	-	-	-	-	-	-	-	17,110	22,519	17,110	22,519	n/a	n/a
Borrowings	22	574,521	734,520	-	-	-	-	-	-	-	-	574,521	734,520	6.14%	4.98%
*Total*		583,245	743,740	-	-	-	-	-	-	3,998,356	1,657,860	4,581,601	2,401,600
*Total Liabilities*												4,803,745	2,401,680

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c) Net Fair Values of Administered 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
Financial Assets (Recognised)
Cash	21	2,016	2,016	2,224	2,224
Receivables (net)	21	2,457,472	2,457,472	2,261,719	2,261,719
Loans to state and territory governments (net)	21	3,117	3,117	260	260
Loans to local governments	21	-	-	826	826
Other loans (gross)	21	5,245	5,245	6,898	6,898
*Total Financial Assets (Recognised)*		2,467,850	2,467,850	2,271,927	2,271,927
Financial Liabilities (Recognised)
Trade creditors	22	574,521	574,521	734,520	734,520
Grants and subsidies payable	22	17,110	17,110	22,519	22,519
Other Creditors	22	3,989,970	3,989,970	1,644,561	1,644,561
*Total Financial Liabilities (Recognised)*		4,581,601	4,581,601	2,401,600	2,401,600
Financial Liabilities (Unrecognised)
*Total Financial Liabilities (Unrecognised)*		-	-	-	-

Financial Assets

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

The net fair value of loans receivable are based on discounted cash flows using current interest rates for assets with similar risk profiles.

Loans to state and territory governments are carried at cost which is above their net fair value. It is intended that all the loans will be held to maturity.

Financial Liabilities

The net fair values for trade creditors and grant liabilities are short-term in nature, and are approximated by their carrying amounts.

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 Schedule of Administered Items.

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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