Annual Report 2002–03 > Table of Contents > Financial Statements 2002–03
> Notes to and forming part of the Financial Statements > Note 16

Note 16–Financial Instruments

Note 16A Terms, Conditions and Accounting Policies

Financial Instrument	Notes	Accounting Policies and Methods (including recognition criteria and measurement basis)	Nature of Underlying Instrument (including significant terms and conditions affecting the amount, timing and certainty of cash flows)
Financial Assets		Financial assets are recognised when control over future economic benefits is established and the amount of the benefit can be reliably measured.
Cash	5A	Cash is recognised at its nominal amounts. Interest is credited to revenue as it accrues.	Cash includes notes and coins held and the balances of JHD's bank accounts.
Term Deposit	5A	Term deposits are recognised as cost. Interest is accrued as it is earned	Term deposits held with the Reserve Bank attracted an effective interest rate of 4.73% (2002: 4.72%). With the cessation of the Agency Bank Incentive Scheme as a result of BEFR recommendations (refer to Note 1.4 Other Revenue, there are no term deposits held by JHD at the end as at 30 June 2003.
Receivables for goods and services	5B	Receivables are recognised at the nominal amounts due less any provision for bad and doubtful debts. Collectability of debts is reviewed at balance date. Provisions are made when collection of the debt is judged to be less rather than more likely.	A majority of receivables are with entities external to the Commonwealth. Credit terms are net 30 days (2002: 30 days).
Appropriations receivable	5B	Appropriation receivables are recognised at their nominal amounts.	Amounts appropriated by the Parliament in the current or previous years which are available to be drawn down by JHD. Also includes amounts to be appropriated by the Parliament in a future year for services provided in previous years under a purchasing, workload or similar agreement.
Financial Liabilities		Financial liabilities are recognised when a present obligation to another party is entered into and the amount of the liability can be reliably measured
Finance lease liabilities	7	Liabilities are recognised at the present value of the minimum lease payments at the beginning of the lease. The discount rates used are estimates of the interest rates implicit in the leases.	At the reporting date, JHD had finance leases with terms averaging three years and a maximum term of five years. The interest rate implicit in the leases averaged 6.57% (2002: 6.57%). The lease asset secures the lease liabilities.
Capital Use Charge Payable	8A	This payable is recognised as the amount outstanding on the estimated amount to be paid in accordance with the calculations outlined by the Department of Finance and Administration.	The final amount payable will be 11% (2002: 11%) of the closing balance of Equity less movements in the Asset Revaluation Reserve and any capital injections. JHD has no CUC payable as at 30 June 2003, as the liability was settled before 30 June.
Trade creditors	9	Creditors and accruals are recognised at their nominal amounts, being the amounts at which the liabilities will be settled. Liabilities are recognised to the extent that the goods or services have been received (and irrespective of having been invoiced).	A majority of creditors are entities that are not part of the Commonwealth legal entity. Settlement is usually made net 30 days.

Note 16B Interest Rate Risk (click to enlarge)

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Note 16C Net Fair Values of Financial Assets and Liabilities

		2002–03		2001–02
Departmental	Notes	Total carrying amount	Aggregate net fair value	Total carrying amount	Aggregate net fair value
		$'000	$'000	$'000	$'000
Financial Assets
Cash on hand	5A	9	9	9	9
Cash at bank	5A	1 581	1 581	445	445
Term deposits	5A	-	-	5 500	5 500
Receivables for goods and services	5B	322	322	492	492
Appropriations receivable	5B	4 000	4 000	-	-
Total Financial Assets		5 912	5 912	6 446	6 446

Financial Liabilities (Recognised)
Lease creditor	7	255	255	611	611
Capital use charge	8A	-	-	848	848
Trade creditors	9	961	961	1 766	1 766
Total Financial Liabilities (Recognised)		1 216	1 216	2 377	2 377

Financial Assets

The net fair values of cash and non-interest bearing monetary financial assets approximate their carrying amounts.

Financial Liabilities

The net fair values of the finance lease liabilities are approximated by their carrying amount as current market rates are per fixed rates.

The net fair value for the Capital Use Charge payable is approximated by its carrying amount.

The net fair values for trade creditors are approximated by their carrying amounts.

Note 16D Credit Risk Exposures

JHD's maximum exposures to credit risk at reporting date in relation to each class of recognised financial assets is the carrying amount of those assets as indicated in the Statements of Financial Position.

JHD has no significant exposures to any concentrations of credit risk.

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