President’s Statement Financial Statement10718. CAPITAL COMMITMENTApproved by Council and contracted for but notprovided in the financial statements:<strong>2011</strong> 2010RM RMUpgrading and modernisation ofthe <strong>Institute</strong>’s information technology systems 168,000 465,00019. FINANCIAL INSTRUMENTSA financial instrument is any contract that gives rise to both a financial asset of one enterprise and a financialliability or equity instrument of another enterprise.Financial assets of the <strong>Institute</strong> include receivables, fixed deposits and cash and bank balances.Financial liabilities of the <strong>Institute</strong> include payables and accruals.(a)Categories of Financial Instruments<strong>The</strong> following are details of the financial assets and financial liabililties of the <strong>Institute</strong> analysed by categories:Financial Assets<strong>2011</strong> 2010RMRMLoans and receivables:Receivables and deposits 322,371 471,335Fixed deposits with licensed banks 1,815,800 1,131,517Cash and bank balances 475,281 108,524Total loans and receivables 2,613,452 1,711,376Financial LiabilitiesFinancial liabilities measured at amortised costs:Payables 831,691 590,450Accruals 380,054 304,501Total financial liabilities measured at amortised costs 1,211,745 894,951
108Financial StatementPresident’s Statement(b)Financial Risk Management<strong>The</strong> <strong>Institute</strong>’s overall financial risk management objective is to seek to address and control the risks to whichthe <strong>Institute</strong> is exposed and to minimise or avoid the incidence of loss that may result from its exposure tosuch risks and to enhance returns where appropriate.<strong>The</strong> main risks arising from the <strong>Institute</strong>’s activities are credit risk, liquidity risk, interest rate risk and currencyrisk. <strong>The</strong> Council reviews and agrees policies for managing each of these risks and they are summarisedbelow:(i)Credit riskCredit risk is the risk of financial loss attributable to default on obligations by parties contracting with the<strong>Institute</strong>. <strong>The</strong> <strong>Institute</strong>’s main exposure to credit risk is in respect of its receivables and deposits, fixeddeposits and cash and bank balances. <strong>The</strong> counter parties are members, licensed banking institutionsand professional organisations. It is the policy of the <strong>Institute</strong> to monitor the financial standing of thesecounter parties on an ongoing basis to ensure that the <strong>Institute</strong> is exposed to minimal credit risk.At the reporting date, the <strong>Institute</strong> has subscriptions receivable of RM248,213 (2010 : RM374,278) whichhave been outstanding for more than 30 days and bank balance and fixed deposits of RM2,289,081(2010 : RM1,238,041) with some major licensed banking institutions in Malaysia.Other than as mentioned, the <strong>Institute</strong> has no significant concentration of credit risk. <strong>The</strong> maximum exposuresto credit risk are represented by the carrying amount of the financial assets in the reporting date.(ii)Liquidity and cash flow risksLiquidity or funding risk is the risk of the inability to meet commitments associated with financialinstruments while cash flow risk is the risk of uncertainty of future cash flow amount associated with amonetary financial instrument.<strong>The</strong> <strong>Institute</strong> practises prudent liquidity risk management to minimise the mismatch of financial assetsand liabilities and to maintain sufficient fund for contingent funding requirements of working capital.Maturity analysis<strong>The</strong> maturity profile of the <strong>Institute</strong>’s financial liabilities as at the end of the reporting period based onundiscounted contractual payments are as follows:Less than1 yearRM<strong>2011</strong>Advances for study manuals 40,000Due to students societies 211,560Other payables 580,131Accruals 380,0542010Advances for study manuals 115,455Due to students societies 205,935Other payables 269,060Accruals 304,501