TOURISM VICTORIA ANNUAL REPORT

notes to the financial statements
30 june 2008 (continued)
Note 14. Financial instruments (continued)
d) Credit risk
Credit risk refers to the risk that a counterparty will default
on its contractual obligations resulting in financial loss to
Tourism Victoria.
Tourism Victoria has adopted a policy of only dealing
with creditworthy counterparties and obtaining sufficient
collateral where appropriate, as a means of mitigating
the risk of financial loss from defaults. Toursim Victoria
measures credit risk on a fair value basis.
Tourism Victoria does not have any significant credit risk
exposure to any single counterparty or any group of
counterparties having similar characteristics. The credit risk
on liquid funds and derivative financial instruments is limited
because the counterparties are banks with credit-ratings
assigned by international credit rating agencies.
The carrying amount of financial assets recorded in the
financial statements, net of any allowances for losses, represents
Tourism Victoria’s maximum exposure to credit risk without
taking account for the value of any collateral obtained.
e) Fair value
Management consider that the carrying amount of financial
assets and financial liabilities recorded in the financial
statements approximates their fair values.
The fair values and net fair values of financial assets and
financial liabilities are determined as follows:
• the fair value of financial assets and financial liabilities
with standard terms and conditions and traded on active
liquid markets are determined with reference to quoted
market prices; and
• the fair value of other financial assets and financial
liabilities are determined in accordance with generally
accepted pricing models on discounted cash flow analysis.
The financial statements include holdings in
unlisted shares (note 5).
Transaction costs are included in the determination
of net fair value.
Fair value is estimated using a discounted cash flow
model, which includes some assumptions that are
not supportable by observable market prices or rates.
Changes in these assumptions do not significantly
change the fair value recognised.
Carrying amount
Fair value
2008 2007 2008 2007
$ $ $ $
Financial Assets
Cash and cash equivalents 16,411,824 14,422,871 16,411,824 14,422,871
Trade and other receivables 2,495,615 1,024,324 2,495,615 1,024,324
Shares in other entities 65,010 65,010 65,010 65,010
18,972,449 15,512,205 18,972,449 15,512,205
Financial Liabilities
Payables 4,461,498 3,413,316 4,461,498 3,413,316
Finance lease liabilities 208,667 153,374 208,667 153,374
4,670,165 3,566,690 4,670,165 3,566,690
(f) Foreign exchange rate risk
Tourism Victoria’s foreign exchange rate risk is limited to
the balance of cash at bank in foreign currencies held at
overseas offices. The balance of overseas offices cash at
bank at 30 June 2008 was AUD$194,768.32
(2007: AUD$219,382)
92 FINANCIAL REPORT 2007–2008