LEGAL SERVICES COMMISSIONER ANNUAL REPORT 2012

15 Financial instruments CONTINUED(f) Liquidity riskLiquidity risk is the risk that the LSC would be unable to meet its financial obligations as and when they fall due. The LSCoperates under the Government’s fair payments policy of settling financial obligations within 30 days and in the event of adispute, making payments within 30 days from the date of resolution.The LSC’s maximum exposure to liquidity risk is the carrying amounts of financial liabilities as disclosed in the face of thebalance sheet. The LSC manages its liquidity risk by:• maintaining an adequate level of uncommitted funds that can be drawn at short notice to meet its short term obligations;and• careful maturity planning of its financial obligations based on forecasts of future cash flows.The LSC’s exposure to liquidity risk is deemed insignificant based on prior periods’ data and current assessment of risk.(g) Maturity analysis of contractual financial liabilities2012 CARRYINGAMOUNTNOMINALAMOUNTLESSTHAN 1MONTH1-3MONTHS3 MONTHS-1 YEAR1-5YEARS$ $ $ $ $ $Contractual financial liabilities:Interest bearing liabilities 44,123 44,123 1,978 3,956 21,882 16,307Payables 460,545 460,545 219,490 241,055 - -Total 504,668 504,668 221,468 245,011 21,882 16,3072011Contractual financial liabilities:Interest bearing liabilities 81,347 81,347 2,669 5,338 29,217 44,123Payables 487,139 487,139 261,993 225,146 - -Total 568,486 568,486 264,662 230,484 29,217 44,123The above amounts disclosed are the contractual undiscounted cash flows of each class of financial liabilities.(h) Market riskThe LSC has insignificant exposure to foreign currency risk, interest rate risk, and other price risk. Objectives, policies andprocesses used to manage each of these risks are disclosed below:(i) Foreign currency riskThe LSC is not exposed to foreign currency risk as it does not hold any foreign financial instrument.(ii) Interest rate riskFair value interest rate risk is the risk that the fair value of a financial instrument will fluctuate because of changes in marketinterest rates. The LSC does not hold any interest bearing instruments that are measured at fair value, therefore has noexposure to fair value interest rate risk.As at 30 June 2012 the LSC has minimal exposure to cash flow interest rate risk as its Operating Bank Account is funded/swept nightly to the LSB General Account. The Disputed Cost Account is a trust account and all interest received is paidto disputing parties when disputes are resolved.The inter company loan balance owed by LSB to the LSC attracts no interest as the LSB is only required to pay the LSC theapproved funding budget to meet the expenses of the LSC.(iii) Other price riskThe LSC does not believe it has any exposure to other price risk.Legal Services COMMISSIONER Annual Report 2012 75