Annual Report 2019-20

Noosa Shire Council

Notes to the Financial Statements
for the year ended 30 June 2020

Note 30. Financial Instruments and Financial Risk Management                                  (continued)


Rates and charges: Council is empowered under the provisions of the Local Government Act 2009 to sell an
owner's property to recover outstanding rate debts and therefore the expected credit loss is immaterial.
Impairment of rates and charges will occur only if arrears are deemed to be greater than the proceeds Council
would receive from the sale of the respective property.

Statutory charges: In some limited circumstances Council may write off impaired statutory charges, on this
basis Council calculates an ECL for statutory charges (non-rates and utility charges). Although not material,
disclosure is being made for the purposes of public interest and transparency.

Other debtors: Council identifies other debtors as receivables which are not rates and charges or statutory charges.
This includes, but is not limited to, grants, property leases, respite services, venue hire, commercial waste charges
and grants.

Disclosure - credit risk exposure and impairment of receivables
The maximum exposure to credit risk at balance date for receivables is the gross carrying amount of those
assets. No collateral is held as security.

Council uses a provision matrix to measure the expected credit losses on statutory charges and other debtors.
Loss rates are calculated separately for groupings with similar loss patterns. The calculations reflect historical
observed default rates calculated using credit losses experienced on past transactions from the last 6 years for
each group. Loss rates are based on actual credit loss experience over the past 6 years, current conditions
and the Council's view of economic conditions over the expected lives of the receivables. Council has
determined there are three material groupings for measuring expected credit losses based on a combination of
their statutory status, Council's policies and procedures, sale of services and goods, and risk default profiles
of these revenue streams.

After reviewing macro economic conditions, Council reached the conclusion that forward looking conditions
indicate that as a result of the COVID-19 pandemic there is minimal potential for deviations from historically
calculated ratios, and accordingly no forward looking adjustments were made. Any potentinal impact is
expected to be immaterial given the type and nature of Council receivables.

Expected credit loss assessment
The Council uses an allowance matrix to measure the expected credit losses of trade receivables from individual
customers, which comprise a very large number of small balances.

Loss rates are calculated using a 'roll rate' method based on the probability of a receivable progressing through
successive stages of delinquency to write-off.




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