Royal Botanic Gardens Victoria Annual Report 2018-19

7. RISKS, CONTINGENCIES AND VALUATION JUDGEMENTS
2018 Current Less than 1
month
1 - 3 months 3 months - 1
year
1 - 5 years
Total
Expected loss rate
Gross carrying amount
Loss allowance
0% 0% 0% 0% 0%
5,423,268 160,658 17,674 29,169 - 5,630,769
- - - - - -
Contractual receivables are written off when there is no reasonable expectation of recovery and impairment losses are classified as a
transaction expense. Subsequent recoveries of amounts previously written off are credited against the same line item.
In prior years, a provision for doubtful debts is recognised when there is objective evidence that the debts may not be collected and bad
debts are written off when identified. A provision is made for estimated irrecoverable amounts from the sale of goods when there is
objective evidence that an individual receivable is impaired. Bad debts are considered as written off by mutual consent.
Statutory receivables at amortised cost
The Board’s non-contractual receivables arising from statutory requirements are not financial instruments. However, they are nevertheless
recognised and measured in accordance with AASB 9 requirements as if those receivables are financial instruments.
The Board's statutory receivables are considered to have low credit risk, taking into account the counterparty’s credit rating, risk of default
and capacity to meet contractual cash flow obligations in the near term. As a result, the loss allowance recognised for these financial
assets during the period was limited to 12 months' expected losses. No loss allowance has been recognised at 30 June 2018 under AASB
139. No additional loss allowance was required upon transition into AASB 9 on 1 July 2018.
Financial instruments - liquidity risk
Liquidity risk is the risk that the Board would be unable to meet its financial obligations as and when they fall due. The Board's maximum
exposure to liquidity risk is the carrying amounts of financial liabilities as disclosed in the face of the balance sheet. The Board
continuously manages risk through monitoring future cash flows and maturities planning to ensure adequate holding of high quality liquid
assets and dealing in highly liquid markets.
The Board's exposure to liquidity risk is deemed insignificant based on prior periods’ data and current assessment of risk. Cash for
unexpected events is generally sourced from its cash and deposits balance.
Financial instruments - market risk
The Board’s exposures to market risk are primarily through interest rate risk.
The Board's sensitivity to market risk is determined based on past performance, future expectations and economic forecasts and,
accordingly, the Board believes that a movement of 100 basis points is 'reasonably possible' over the next 12 months.
Interest rate risk
Fair value interest rate risk is the risk that the fair value of a financial instrument will fluctuate because of changes in market interest rates.
The Board does not hold any interest bearing financial instruments that are measured at fair value and therefore has nil exposure to fair
value interest rate risk.
Cash flow interest rate risk is the risk that the future cash flows of a financial instrument will fluctuate because of changes in market
interest rates.
The Board has minimal exposure to cash flow interest rate risk through its cash and deposits and finance lease liabilities that are at a
floating rate.
The Board manages this risk by mainly undertaking fixed rate or non-interest bearing financial instruments with relatively even maturity
profiles, with only insignificant amounts of financial instruments at a floating rate. Management has concluded that cash at bank financial
assets can be left at floating rate without necessarily exposing the Board to significant bad risk. Movements in interest rates are monitored
on a daily basis by Management.
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Royal Botanic Gardens Board Victoria 2018-19 Financial Report Page 25