Annual Report 2021-22

Noosa Council
Notes to the Financial Statements
for the year ended 30 June 2022

Note 30. Financial Instruments and Financial Risk Management
§Subnote§




Noosa Shire Council has exposure to the following risks arising from financial instruments; (i) interest rate risk, (ii) credit risk,
and (iii) liquidity 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.

Council has reviewed its exposure to financial risk as a result of the COVID-19 pandemic, and at present does not anticipate
likelihood of increased financial risk through either the decline in credit rating of financial institutions or increased levels of
default in receivables.


Financial Risk Management
§Subnote§




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.

The Council's audit and risk committee (ARC) oversees how management monitors compliance with the Council's risk
management policies and procedures, and reviews the adequacy of the risk managements framework in relation to the risks
faced by the Council. The ARC is assisted in its oversight role by internal audits conducted by external consultants, the results
of which are reported to the ARC. Council's internal audit register, which is approved by the ARC, details target areas and
the timing for the completion of internal audits.

Council does not enter into derivatives.


Credit Risk
§Subnote§




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 carrying amounts of financial assets at the end of the reporting period represent the maximum exposure to credit risk
for the Council.

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.

Other investments are held with financial institutions, which are rated AAA to AA- based on rating agency Standard and
Poor's ratings, and whilst not capital guaranteed, the likelihood of a credit failure is assessed as remote (if applicable).




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