Download the Annual report 2011 - Unisa

Financial risk management
UNISA ANNUAL REPORT 2011
The University’s principal financial instruments comprise the following: interest-bearing borrowings, financial assets at
fair value through profit or loss (including equity instruments, debt instruments and unit trust investments) as well as
cash and cash equivalents. The main purpose of these financial instruments is to fund the University’s current and future
operations. The University has other financial assets and liabilities such as student and other receivables and trade payables,
which arise directly from its operations.
The main risks arising from the University’s financial instruments are credit risk, market risk and liquidity risk
The University’s financial risk management objectives and policies are governed by a formalised investment policy and
related procedures approved by the Council of the University. The means by which the risks referred to above are managed
include a specified strategic asset allocation between different categories of financial assets and the appointment
of specialised investment managers. The investment managers are issued with specific mandates that include restrictions
to manage the financial risks referred to above. The Operational Investment Committee monitors the investment
performance on a regular basis.
The University does not undertake any specific hedging activities.
19.1 Credit risk
Credit risk is the risk of financial loss to the University if a student, employee or counter party to a financial
instrument fails to meet its contractual obligations, and arises principally from the University’s receivables from
students, employees and investment securities.
The University is exposed to credit risk arising from student receivables relating to outstanding fees. The
University requires students to pay a minimum deposit on registration in respect of fees in order to mitigate
this risk. Outstanding fees are monitored on a regular basis and action is taken in respect of long outstanding
amounts. The University is also exposed to credit risk arising from unsecured vehicle loans made to employees.
The University no longer grants loans.
Credit risk also arises from the University’s other financial assets, which comprise cash and cash equivalents
and financial assets at fair value through profit or loss. The University places cash and cash equivalents with
reputable financial institutions and invests through specialised investment managers with mandates restricting
credit risk exposure.
19.1.1 Exposure to credit risk
Impairment losses
The ageing of student receivables at the reporting date was:
Gross debtors
impaired
2011 2010
Gross debtors
not impaired
| 107 |
Gross debtors
impaired
Gross debtors
not impaired
R’000 R’000 R’000 R’000
Past 120 days 74 779 36 890 38 058 39 397
More than one year 0 0 0 0
Total 74 779 36 890 38 058 39 397
All debtors that are past 120 days are past due.
The maximum exposure to credit risk for student receivables at the reporting date by geographic region was: