2015-10-14 Audit & Risk Committee Meeting - Draft Annual Financial Statements

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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