Annual Report 2014-15

NOOSA SHIRE COUNCIL

    Notes to the financial statements
    For the year ended 30 June 2015

.   28 Financial Instruments
             Noosa Shire Council has exposure to the following risks arising from financial instruments:
             - credit risk      :
             - liquidity risk
             - market risk

             This note provides information (both qualitative and quantitative) to assist statement users evaluate the significance of financial
             instruments on the Council's financial position and financial performance, including the nature and extent of risks and how
             the Council manages these exposures.
             Financial risk management
                  Noosa Shire Council is responsible for the establishment and oversight of the risk management framework, together
                  with developing and monitoring risk management policies.

                  Council's management approves policies for overall risk management, as well as specifically for managing credit,
                  liquidity and market risk.
                  The Council's risk management policies are established to identify and analyse the risks faced, to set appropriate limits
                  and controls and to monitor these risks and adherence against limits. The Council aims to manage volatility to minimise
                  potential adverse effects on the financial performance of the Council. Noosa Shire Council does not enter into derivatives.

             Credit Risk
                  Credit risk is the risk of financial loss if a counterparty to a financial instrument fails to meet its contractual obligations.
                  These obligations arise principally from the Council's investments and receivables from customers.
                  Exposure to credit risk is managed through regular analysis of credit counterparty ability to meet payment obligations.      /
                  The carrying amount of financial assets represents the maximum credit exposure.

                  Investments in financial instruments are required to be made with Queensland Treasury Corporation (QTC) or similar state
                  ‘commonwealth bodies or financial institutions in Australia, in line with the requirements of the Statutory Bodies Financial
                  Arrangements Act 1982.

                  No collateral is held as security relating to the financial assets held by Noosa Shire Council.
                  The following table represents the maximum exposure to credit risk based on the carrying amounts of financial assets at
                  the end of the reporting period:
                                                                                    Note            2015             2014
                  Financial Assets                                                                    $                $
                       Cash and cash equivalents - Bank                               9               175,276            77,994
                       Cash investments held with - QTC                               9            27,742,381        25,118,125
                       Cash investments held with other
                       approved deposit taking institutions                           9            22,973,517         5,926,935
                       Equity investments                                             11           65,211,946        60,978,225
                       Receivables - rates                                            10            4,165,668         4,159,585
                       Receivables - other                                            10           50,481,484        61,074,924
                  Other credit exposure                                          :
                       Guarantee                                                      22              290,070           290,070
                      Total                                                                       171,040,342       157,625,858

                  Cash and cash equivalents
                  The Council may be exposed to credit risk through its investments in the QTC Cash Fund and QTC Working Capital Facility.
                  The QTC Cash Fund is an asset management portfolio that invests with a wide range of high credit rated counterparties.
                  Deposits with the QTC Cash Fund are capital guaranteed. Working Capital Facility deposits have a duration of one day and
                  all investments are required to have a minimum credit rating of A-, therefore the likelihood of the counterparty having
                  capacity to meet its financial commitments is strong.

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