Online version of the 2013-14 Department of Health Annual Report

Note 26: Administered - Financial Instruments

Notes to and Forming Part of the Financial Statements

Page last updated: 31 October 2014

2014
$'000
2013
$'000
Note 26A: Categories of financial instruments
Financial Assets
Loans and receivables
Cash and cash equivalents
13,254
6,765
Personal benefits receivable
129,284
89,364
Goods and services receivable
132,895
214,173
Loans receivable
-
131,498
Total loans and receivables
275,433
441,800
     
Available-for-sale financial assets
Shares in - Aged Care Standards and Accreditation Agency Ltd
-
14,846
Shares in - Australian Institute of Health and Welfare
4,861
4,673
Shares in - Food Standards Australia New Zealand
7,332
6,732
Shares in - General Practice Education and Training Ltd
25,068
18,253
Shares in - Private Health Insurance Administration Council
4,915
4,912
Shares in - Health Workforce Australia
159,138
143,227
Shares in - Australian Commission on Safety and Quality in Health Care
1,300
963
Shares in - Australian Sports Commission
310,306
-
Shares in - Australian Sports Foundation Ltd
11,910
-
Total available-for-sale financial assets
524,830
193,606
Total financial assets
800,263
635,406
     
Financial Liabilities
Financial liabilities measured at amortised cost
Overdraft
-
(105,428)
Trade creditors
(10,189)
(43,777)
Grants payable
(276,937)
(358,468)
Other payables
-
(42,396)
Total financial liabilities measured at amortised cost
(287,126)
(550,069)
Total financial liabilities
(287,126)
(550,069)
     
Note 26B: Net gains or losses on financial assets
Loans and receivables
Interest revenue
1,107
10,003
Impairment
(6,294)
(291)
Net gains on loans and receivables
(5,187)
9,712
Net gains on financial assets
(5,187)
9,712
     
Note 26C: Net gains or losses on financial liabilities
Financial liabilities measured at amortised cost
Exchange loss
(2)
-
Net losses on financial liabilities measured at amortised cost
(2)
-
Net losses on financial liabilities
(2)
-
Note 26D: Credit risk

The Administered activities of the Department are not exposed to a high level of credit risk as the majority of financial assets are goods and services receivables and shares in Government controlled and funded entities. The Department has policies and procedures that outline the debt recovery techniques to be applied. The Department has assessed the risk of default on payment and has allocated $11,132,000 in 2014 (2013: $25,524,000) to an allowance for impairment account.

Maximum exposure to credit risk
2014
$'000
2013
$'000
Financial assets carried at amount not best representing maximum exposure to credit risk
Personal benefits receivable
129,284
89,364
Goods and services receivable
144,027
239,697
Advances and loans
-
131,498
Shares in - Aged Care Standards and Accreditation Agency Ltd
-
14,846
Shares in - Australian Institute of Health and Welfare
4,861
4,673
Shares in - Food Standards Australia New Zealand
7,332
6,732
Shares in - General Practice Education and Training Ltd
25,068
18,253
Shares in - Private Health Insurance Administration Council
4,915
4,912
Shares in - Health Workforce Australia
159,138
143,227
Shares in - Australian Commission on Safety and Quality in Health Care
1,300
963
Shares in - Australian Sports Commission
310,306
-
Shares in - Australian Sports Foundation Ltd
11,910
-
Total
798,141
654,165
Credit quality of financial instruments not past due or individually determined as impaired
 
Not past due nor
impaired
2014
$'000
Not past due nor
impaired
2013
$'000
Past due or
impaired
2014
$'000
Past due or
impaired
2013
$'000
Personal benefits receivable
129,284
89,364
Goods and services receivable
108,663
123,678
24,232
90,495
Advances and loans
131,498
Shares in - Aged Care Standards and Accreditation Agency Ltd
14,846
Shares in - Australian Institute of Health and Welfare
4,861
4,673
Shares in - Food Standards Australia New Zealand
7,332
6,732
Shares in - General Practice Education and Training Ltd
25,068
18,253
Shares in - Private Health Insurance Administration Council
4,915
4,912
Shares in - Health Workforce Australia
159,138
143,227
Shares in - Australian Commission on Safety and Quality in Health Care
1,300
963
Shares in - Australian Sports Commission
310,306
Shares in - Australian Sports Foundation Ltd
11,910
Total 
762,777
538,146
24,232
90,495
Ageing of financial assets that were past due but not impaired in 2014
 
0 to 30 days
$'000
31 to 60 days
$'000
61 to 90 days
$'000
90+ days
$'000
Total 
$'000
Goods and services receivable
13,100
-
-
-
13,100
Total 
13,100
-
-
-
13,100
Ageing of financial assets that were past due but not impaired in 2013
 
0 to 30 days
$'000
31 to 60 days
$'000
61 to 90 days
$'000
90+ days
$'000
Total 
$'000
Goods and services receivable
53,003
5,952
1,107
4,909
64,971
Total 
53,003
5,952
1,107
4,909
64,971
Note 26E: Liquidity risk

The Department's administered financial liabilities are overdrafts, suppliers payable, grants payable and other payables. The exposure to liquidity risk is based on the notion that the Department will encounter difficulty in meeting its obligations associated with its administered financial liabilities. This is highly unlikely due to appropriation funding and mechanisms available to the Department (e.g. Advance to the Finance Minister) and internal policies and procedures put in place to ensure there are appropriate resources to meet its financial obligations. The Department has no past experience of default.

Maturities for non-derivative financial liabilities in 2014
  On demand
$'000
within 1 year
$'000
between 1 to 2 years
$'000
between 2 to 5 years
$'000
more than 5 years
$'000
Total
$'000
Trade creditors
 -  10,189  -   -   -  10,189
Grants payable
 -  276,937  -   -   -  276,937
Total
 -  287,126  -   -   -  287,126
Maturities for non-derivative financial liabilities in 2013
  On demand
$'000
within 1 year
$'000
between 1 to 2 years
$'000
between 2 to 5 years
$'000
more than 5 years
$'000
Total
$'000
Overdraft
105,428  -   -   -   -  105,428
Trade creditors
 -  43,777  -   -   -  43,777
Grants payable
 -  358,468  -   -   -  358,468
Other payables
 -  42,396  -   -   -  42,396
Total 
105,428 444,641  -   -   -  550,069

The Department had no derivative financial liabilities in both the current and prior financial year.

Note 26F: Market risk

The Department holds financial instruments that are of a nature that do not expose the Department to certain market risks. The Department is not exposed to ‘Currency risk’.

Interest rate risk
Interest rate risk refers to the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The only interest bearing items in the Administered Schedule of Assets and Liabilities were loans receivable. The loans have an interest rate linked to Consumer Price Index and will not fluctuate for changes in market interest rate.

Other price risk
The Department’s administered activities are not exposed to ‘Other Price Risk’. Its administered investments are not traded on the Australian Stock Exchange. It does not hold any other financial instruments that would be exposed to price risk.

Note 26G: Concessional Loans
    Notes 2014
$'000
2013
$'000
Aged care facilities
     
Nominal value
  - 176,227
Less: Unexpired discount
  - (44,729)
Carrying amount
  - 131,498
Total concessional loans
21C  - 131,498

Concessional loans were transferred to DSS during 2014 for no consideration as a result of AAO changes on 18 September 2013.