YOUTH INSEARCH FOUNDATION (AUST) INCORPORATED Financial Report For The Year Ended 30 June 2016
Youth Insearch Foundation (Aust) Incorporated Financial Report For The Year Ended 30 June 2016 CONTENTS Page Committee's Report 1 Statement of Profit or Loss and Other Comprehensive Income 3 Statement of Financial Position 4 Statement of Changes in Equity 5 Statement of Cash Flows 6 Notes to the Financial Statements 7 Statement by Members of the Committee 17 Independent Auditor's Report 18
STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE YEAR ENDED 30 JUNE 2016 Note 2016 2015 (Restated) Revenue 2 1,021,279 953,275 Other income 2 217,399 1,912 Employee benefits expense (765,797) (550,733) Depreciation and amortisation expense 3 (16,134) (7,620) Camp Expense (197,070) (181,397) Travel and accommodation (22,774) (13,785) Sundry expenses (336,232) (246,378) Net current year surplus/(deficit) (99,329) (44,726) Net current year surplus attributable to members of the entity (99,329) (44,726) Other comprehensive income Fair value remeasurement gains/(losses) on available-for-sale financial assets (736) (258) Total comprehensive income for the year (100,065) (44,984) The accompanying notes form part of these financial statements. 2
STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2016 Note 2016 2015 Restated ASSETS CURRENT ASSETS Cash on hand 4 1,496,906 1,116,834 Accounts receivable and other debtors 5 55,180 14,199 Other current assets 6 43,614 10,967 TOTAL CURRENT ASSETS 1,595,700 1,142,000 NON-CURRENT ASSETS Property, plant and equipment 7 78,775 263,994 Other non-current assets - Shares 5,423 5,552 TOTAL NON-CURRENT ASSETS 84,198 269,546 TOTAL ASSETS 1,679,898 1,411,546 LIABILITIES CURRENT LIABILITIES Accounts payable and other payables 8 63,938 18,595 Other current liabilities 9 474,960 172,818 Employee provisions 10 52,961 35,311 TOTAL CURRENT LIABILITIES 591,859 226,724 NON-CURRENT LIABILITIES Employee provisions 10 3,282 - TOTAL NON-CURRENT LIABILITIES 3,282 - TOTAL LIABILITIES 595,141 226,724 NET ASSETS 1,084,757 1,184,822 Accumulated Funds Share revaluation reserve 2,882 3,618 Accumulated Funds at the end of the financial year 1,081,875 1,181,204 TOTAL ACCUMULATED FUNDS 1,084,757 1,184,822 The accompanying notes form part of these financial statements. 3
STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 30 JUNE 2016 Balance at 1 July 2014 Comprehensive Income Deficit for the year Other comprehensive income for the year Unrealised revaluation gain/(loss) Balance at 30 June 2015 Balance at 1 July 2015 Comprehensive Income Deficit for the year Other comprehensive income for the year Unrealised revaluation gain/(loss) Balance at 30 June 2016 Share Revaluation Reserve Accumulated Funds Total Restated Restated Restated $ 3,876 1,225,930 1,229,806 (44,726) (44,726) (258) (258) 3,618 1,181,204 1,184,822 3,618 1,181,204 1,184,822 (99,329) (99,329) (736) (736) 2,882 1,081,875 1,084,757 The accompanying notes form part of these financial statements. 4
STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 30 JUNE 2016 Note 2016 2015 CASH FLOWS FROM OPERATING ACTIVITIES Cash receipts in the course of operations 1,286,750 1,034,946 Cash payments in the course of operations (1,290,148) (994,900) Interest received 229 31,616 Interest paid - (345) Net cash generated from operating activities 15 (3,169) 71,317 CASH FLOWS FROM INVESTING ACTIVITIES Proceeds from sale of property, plant and equipment 446,473 - Proceeds From Borrowings 1,295 - Payment for property, plant and equipment (64,527) (5,984) Net cash used in investing activities 383,241 (5,984) Net increase in cash held 380,072 65,333 Cash on hand at beginning of the financial year 1,116,834 1,051,501 Cash on hand at end of the financial year 4 1,496,906 1,116,834 The accompanying notes form part of these financial statements. 1
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2016 The financial statements were authorised for issue on 27 September 2016 by the members of committee of the association. Note 1 Summary of Significant Accounting Policies Basis of Preparation These general purpose financial statements have been prepared in accordance with the Australian Charities and Not-for-profits Commission Act 2012, Australian Accounting Standards and Interpretations of the Australian Accounting Standards Board and International Financial Reporting Standards as issued by the International Accounting Standards Board. The company is a not-forprofit entity for financial reporting purposes under Australian Accounting Standards. Material accounting policies adopted in the preparation of these financial statements are presented below and have been consistently applied unless stated otherwise. The financial statements, except for the cash flow information, have been prepared on an accruals basis and are based on historical costs, modified, where applicable, by the measurement at fair value of selected non-current assets, financial assets and financial liabilities. The amounts presented in the financial statements have been rounded to the nearest dollar. The financial report covers Youth lnsearch Foundation (Australia) Inc. as an association incorporated in New South Wales under the Associations Incorporation Act 2009. The following is a summary of the material accounting policies adopted by the Association in the preparation of the financial report. The accounting policies have been consistently applied, unless otherwise stated. Accounting Policies (a) REVENUE Government Grants Government grants are assistance by the government in the form of cash to the Association for the requirement of the Association to use the funds within the community. Government grants relating to income are recognised as income over the periods necessary to match them with the related costs. Government grants that are receivable as compensation for expenses or losses already incurred or for the purpose of giving immediate financial support to the Association with no future related costs are recognised as income in the period in which it becomes receivable. Government grants relating to assets are treated as deferred income and recognised in profit and loss over the expected useful lives of the assets concerned. Interest Revenue Interest revenue is recognised on a proportional basis taking into account the interest rates applicable to the financial assets. Rendering of Services Revenue from the rendering of a service is recognised upon the delivery of the service to the client. Dividend Revenue Dividend revenue is recognised and brought to account when the right to receive a dividend has been established. Donations, bequests and fundraising Donations, bequests and fundraising income are recognised and brought to account on receipt of the funds at the Association's offices or direct deposited into its bank account. When donations, bequests and fundraising income received is conditional upon the happening of a future event, these funds are recorded as income received in advance under current liabilities in the statement of financial position. These funds are recognised and treated as income in the statement of comprehensive income when all conditions have been satisfied. All revenue is stated net of the amount of GST. 6
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2016 (b) (c) CASH AND CASH EQUIVALENTS Cash and Cash Equivalents comprise cash on hand, cash in banks and investments in money market instruments, net of outstanding bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities on the Statement of Financial Position. PRIOR YEAR ERROR A grant received in May 2015 was incorrectly recognised as revenue in the prior year. This grant was spent during the 2016 Financial year. In line with the association's accounting policy, the grant has been recognised as revenue in 2016. Therefore, the prior year accounts have been restated: Previously stated Adjustment Restated amount Revenue 1,079,187 (124,000) 955,187 Other current liabilities 48,818 124,000 172,818 Accumulated Funds 1,308,822 (124,000) 1,184,822 (d) (e) COMPARATIVE AMOUNTS When required by accounting standards, comparative figures have been adjusted to conform with changes in presentation for the current financial year. FUNDRAISING ACTIVITIES Charitable Fundraising Act 1991 This Act and supporting Charitable Fundraising Regulations prescribe the manner in which fundraising appeals are conducted, controlled and reported in NSW. The amounts shown in Note 16 are in accordance with Authority Condition 7, which is issued to the Association under section 19 of the Act. Donations and bequests are returned as income as and only when received at the Association's administrative offices or deposited into the Association's bank account. As specified in the Act, unsolicited donations, members' donations and bequests are not treated as fundraising income when determining information required under the Act. They are treated as gifts under the tax legislation and deposited in the Fundraising bank account. Cost of Fundraising: Costs used in Note 16 include direct fundraising costs. The inclusion of indirect costs is discretionary. Indirect costs which have been excluded, include overheads such as the time spent by accounting of office staff administering appeals, printing, postage and stationery, travel expenses and insurance. Exclusion of the indirect costs decreases the cost of fundraising and increases the margins from fundraising shown in Note 16. (f) PROPERTY, PLANT AND EQUIPMENT Each class of property, plant and equipment is carried at cost or fair value as indicated, less, where applicable, accumulated depreciation and impairment losses. Freehold Property Freehold land and buildings are shown at their fair value based on periodic, but at least triennial, valuations by external independent valuers, less subsequent depreciation for buildings. In periods when the freehold land and buildings are not subject to an independent valuation, the members of committee conduct members of committee valuations to ensure the carrying amount for the land and buildings is not materially different to the fair value. Increases in the carrying amount arising on revaluation of land and buildings are recognised in other comprehensive income and accumulated in the revaluation surplus in equity. Revaluation decreases that offset previous increases of the same class of assets shall be recognised in other comprehensive income under the heading of revaluation surplus. All other decreases are recognised in profit or loss. Any accumulated depreciation at the date of the revaluation is eliminated against the gross carrying amount of the asset and the net amount is restated to the revalued amount of the asset. Freehold land and buildings that have been contributed at no cost or for nominal cost are valued and recognised at the fair value of the asset at the date it is acquired. 7
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2016 Plant and Equipment Plant and equipment are measured on the cost basis and are therefore carried at cost less accumulated depreciation and any accumulated impairment losses. In the event the carrying amount of plant and equipment is greater than its estimated recoverable amount, the carrying amount is written down immediately to its estimated recoverable amount and impairment losses are recognised either in profit or loss or as a revaluation decrease if the impairment losses relate to a revalued asset. A formal assessment of recoverable amount is made when impairment indicators are present (refer to Note 1(f) for details of impairment). Subsequent costs are included in the asset s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the association and the cost of the item can be measured reliably. All other repairs and maintenance are recognised as expenses in profit or loss in the financial period in which they are incurred. Plant and equipment that have been contributed at no cost or for nominal cost are recognised at the fair value of the asset at the date it is acquired. Depreciation The depreciable amount of all fixed assets, including buildings and capitalised lease assets, but excluding freehold land, is depreciated on a straight-line basis over the asset's useful life to the entity commencing from the time the asset is available for use. Leasehold improvements are depreciated over the shorter of either the unexpired period of the lease or the estimated useful lives of the improvements. The depreciation rates used for each class of depreciable assets are: Class of Fixed Asset Plant and equipment Motor Vehicles Straight line Depreciation Rate 7.5% - 33% 12.5% - 15% Diminishing Value Depreciation Rate 7.5% - 22.5% 18.75% The assets residual values and useful lives are reviewed and adjusted, if appropriate, at the end of each reporting period. Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These gains or losses are recognised as income in profit or loss in the period in which they arise. When revalued assets are sold, amounts included in the revaluation surplus relating to that asset are transferred to retained surplus. (g) (h) DISTRIBUTION OF SURPLUS Annual surplus: the rules and regulations of the entity prohibit the distribution of any surplus to members. All income must be applied solely towards the promotion of the objects of the Association. FINANCIAL INSTRUMENTS Initial Recognition and Measurement Financial assets and financial liabilities are recognised when the entity becomes a party to the contractual provisions to the instrument. For financial assets, this is equivalent to the date that the association commits itself to either purchase or sell the asset (i.e. trade date accounting is adopted). Financial instruments are initially measured at fair value plus transactions costs except where the instrument is classified at fair value through profit or loss, in which case transaction costs are recognised as expenses in profit or loss immediately. Classification and Subsequent Measurement Financial instruments are subsequently measured at fair value, amortised cost using the effective interest rate method, or cost. Where available, quoted prices in an active market are used to determine fair value. In other circumstances, valuation techniques are adopted. Amortised cost is calculated as the amount at which the financial asset or financial liability is measured at initial recognition less principal repayments and any reduction for impairment, and adjusted for any cumulative amortisation of the difference between that initial amount and the maturity amount calculated using the effective interest method. 8
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2016 The effective interest method is used to allocate interest income or interest expense over the relevant period and is equivalent to the rate that exactly discounts estimated future cash payments or receipts (including fees, transaction costs and other premiums or discounts) through the expected life (or when this cannot be reliably predicted, the contractual term) of the financial instrument to the net carrying amount of the financial asset or financial liability. Revisions to expected future net cash flows will necessitate an adjustment to the carrying value with a consequential recognition of an income or expense item in profit or loss. (i) Financial assets at fair value through profit or loss Financial assets are classified at "fair value through profit or loss" when they are held for trading for the purpose of short-term profit taking, derivatives not held for hedging purposes, or when they are designated as such to avoid an accounting mismatch or to enable performance evaluation where a group of financial assets is managed by key management personnel on a fair value basis in accordance with a documented risk management or investment strategy. Such assets are subsequently measured at fair value with changes in carrying amount being included in profit or loss. (ii) Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market and are subsequently measured at amortised cost. Gains or losses are recognised in profit or loss through the amortisation process and when the financial asset is derecognised. (iii) Held-to-maturity investments Held-to-maturity investments are non-derivative financial assets that have fixed maturities and fixed or determinable payments, and it is the association s intention to hold these investments to maturity. They are subsequently measured at amortised cost. Gains or losses are recognised in profit or loss through the amortisation process and when the financial asset is derecognised. (iv) Available-for-sale investments Available-for-sale investments are non-derivative financial assets that are either not capable of being classified into other categories of financial assets due to their nature or they are designated as such by management. They comprise investments in the equity of other entities where there is neither a fixed maturity nor fixed or determinable payments. They are subsequently measured at fair value with any remeasurements other than impairment losses and foreign exchange gains and losses recognised in other comprehensive income. When the financial asset is derecognised, the cumulative gain or loss pertaining to that asset previously recognised in other comprehensive income is reclassified into profit or loss. Available-for-sale financial assets are classified as non-current assets when they are not expected to be sold within 12 months after the end of the reporting period. All other available-for-sale financial assets are classified as current assets. (i) (j) PAYABLES Accounts payable and other payables represent the liability outstanding at the end of the reporting period for goods and services received by the association during the reporting period which remain unpaid. The balance is recognised as a current liability with the amounts normally paid within 30 days of recognition of the liability. EMPLOYEE ENTITLEMENTS Wages and salaries A liability is recognised and is measured as the amount unpaid at the year end date at current pay rates in respect of employees' service up to the year end date. Annual and long service leave Provision is made for the association's liability for employee entitlements arising from services rendered by employees to the year end date. Employee entitlements expected to be settled within one year, have been measured at the nominal amount. Other employee entitlements payable later than one year have not been discounted and have been measured at nominal amounts. Contributions are made by the association to superannuation funds nominated by employees and are treated as expenses when incurred. (k) ACCOUNTS RECEIVABLE AND OTHER DEBTORS Accounts receivable and other debtors include amounts due from members as well as amounts receivable from customers for goods sold in the ordinary course of business. Receivables expected to be collected within 12 months of the end of the reporting period are classified as current assets. All other receivables are classified as non-current assets. 9
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2016 (l) RESTRICTE/UNRESTRICTED FUNDS Restricted Funds are funds received or reserves held that must be spent on the purpose for which they were received or are held. They comprise: (i) (ii) (iii) (iv) Government funding must be spent in accordance with the terms of the funding agreement Donations and bequests where the donor indicates a preference for the use to which the funds are to be used; Donations received in response to specific purpose appeals. Provisions for statutory entitlements due to employees. All other funds are unrestricted in that the Committee has discretion to spend them on purposes for which the charity is established. (m) TAXATION Income Tax: Under the New Tax System, the Foundation was endorsed on 1 July 2000 by the ATO as an exempt charity. Fringe benefits tax: The Foundation as a public benevolent institution, was exempt from fringe benefits tax under Section 57A, Fringe Benefits Tax Assessment Act 1986. The grossed up value of specified fringe benefits to individual employees has been included on each employee's Statement of Earnings as required by law. From 1 April 2001 this exemption ceased for certain fringe benefits paid to employees in excess of $30,000 grossed up value for each employee. Payroll Tax: The Foundation as a public benevolent institution is exempt from payroll tax under Section 10(1 )(a2), Payroll Tax Act 1971. Land Tax: The Foundation as a public benevolent institution is exempt from land tax under Section 10(d), Land Tax Act. Goods and Services Tax: The Foundation as a public benevolent institution is registered for the goods and services tax (GST) applicable from 1 July 2000. The tax is paid on commercial activities and sponsorship. Revenues, costs and assets are recognised net of the amount of GST except: (i) (ii) Note 2 where the amount of GST incurred is not recoverable from the ATO, it is recognised as part of the cost of acquisition of an asset or as part of an item of cost; or or receivables and payables which are recognised inclusive of GST. Revenue and Other Income Revenue Unrestricted Funds Restricted Funds 2016 2015 (Restated) Operating activities Revenue Government grant - 100,000 100,000 406,410 Donations, bequests, and fund raising 762,683 45,000 807,683 412,541 Membership fees 80-80 160 Camp fees 92,244-92,244 102,160 855,007 145,000 1,000,007 921,271 Other revenue Dividends received 229-229 388 Interest received on investments in government and fixed interest securities 21,043-21,043 31,616 21,272-21,272 32,004 Total revenue 876,279 145,000 1,021,279 953,275 Other income Gain on disposal of property, plant and equipment 212,861-212,861 - Other 4,538-4,538 1,912 Total other income 217,399-217,399 1,912 Total revenue and other income 1,093,678 145,000 1,238,678 955,187 10
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2016 Note 3 Surplus/(Deficit) for the year (a) 2016 2015 Expenses Depreciation and amortisation: motor vehicles 16,134 4,545 Furniture, fittings & equipment - 3,075 Total depreciation and amortisation 16,134 7,620 Audit fees audit services 8,000 8,000 taxation services - - Total Audit Remuneration 8,000 8,000 (b) Significant Revenue and Expenses Property, plant and equipment: Net gain on disposal 212,861 212,861 - Note 4 Cash on Hand 2016 2015 CURRENT Cash at bank 1,493,981 1,115,308 Cash on hand 300 26 Undeposited funds 2,625 1,500 Total cash on hand as stated in the statement of financial position and statement of cash flows 1,496,906 1,116,834 Note 5 Accounts Receivable and Other Debtors Note 2016 2015 CURRENT Accounts receivable 55,180 14,199 Total current accounts receivable and other debtors 55,180 14,199 Note 6 Other Current Assets 2016 2015 Prepayments 43,614 10,967 43,614 10,967 11
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2016 Note 7 Property, Plant and Equipment 2016 2015 LAND AND BUILDINGS Freehold land and building: At cost - 233,612 Total freehold land and buildings - 233,612 PLANT AND EQUIPMENT Furniture, fittings and equipment At cost 46,000 35,865 Less accumulated depreciation (31,314) (27,039) 14,686 8,826 Motor vehicles: At cost 115,957 61,566 Less accumulated depreciation (51,868) (40,010) 64,089 21,556 Total property, plant and equipment 78,775 263,994 Land and Buildings $ Furniture, fittings and equipment $ Motor Vehicles $ 2015 Balance at the beginning of the year 233,612 5,987 26,101 265,700 Additions at cost 5,984 5,984 Disposals - Depreciation expense (3,145) (4,545) (7,690) Carrying amount at the end of the year 233,612 8,826 21,556 263,994 2016 Balance at the beginning of the year 233,612 8,826 21,556 263,994 Additions at cost 10,135 54,392 64,527 Disposals (233,612) (233,612) Depreciation expense (4,275) (11,859) (16,134) Carrying amount at the end of the year - 14,686 64,089 78,775 Yarramundi Property The Yarramundi property was sold on 27th July 2015 for $450,000. Total $ Note 8 Accounts Payable and Other Payables 2016 2015 Note CURRENT Accounts payable 53,191 23,801 GST (8,383) (3,415) PAYG Withholding 12,450 (5,854) Superannuation Payable 6,680 4,063 63,938 18,595 Note 9 Other Current Liabilities CURRENT Income received in advance Specific purpose funds received 2016 2015 (Restated) Note 68,615 45,000 406,345 127,818 474,960 172,818 12
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2016 Note 10 Employee Provisions 2016 2015 CURRENT Provision for employee benefits: annual leave 52,961 35,311 52,961 35,311 NON-CURRENT Provision for employee benefits: long service leave 3,282-3,282-56,243 35,311 Number of employees at the end of the financial year 9 6 Note 11 Insurance Cover 2016 2015 Insurance premiums paid Workers compensation insurance $20,123 $11,574 Comprehensive motor vehicle $7,055 $3,270 Property, business, interruption, personal $19,245 $15,000 46,423 29,844 With the exception of workers' compensation insurance and motor vehicle third party insurance where the rates are set externally, the extent and value of the cover is reviewed every year. Note 12 Fundraising Income And Expenses Details of aggregate gross income and total expenses in fundraising appeals for the year ended 30 June 2016 as follows: Net Surplus Gross Direct Expenses After Direct Expenses Fundraising Events $ June 2015 Appeal 4,435 1132 3,303 Christmas 2015 Appeal 37,438-37,438 June 2016 Appeal 136,718 1,165 135,553 Dasher 2016 100,725 2,208 98,517 Total 279,316 4,505 274,811 Results of all appeals during the year were accounted for in line with guidelines prescribed by the Charitable Fundraising Act. The Statement of Significant Accounting Policies, Note 1, provides further details on the accounting policies adopted. The net result of fundraising activities has been applied to furthering the principal activities of the association for the benefit of youth welfare as a whole. Note 13 Government grant During the financial year Youth Insearch Foundation (Aust) Inc has received two government grants totaling $100,000. These amounts have been deposited in separate specific bank accounts. Note 14 Members 2016 2015 Membership fees (excludes initial fees) 160 160 There were 8 registered members at 30 June 2016 (30 June 2015:8). All members pay an annual subscription fee of $20 (2015: $20) 13
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2016 Note 15 Cash Flow Information 2016 2015 Restated Reconciliation of Cash Flows from Operating Activities with Net Current Year Surplus Net current year surplus/(deficit) (99,329) (44,726) Non-cash flows: Depreciation and amortisation expense 16,134 7,690 Gain on disposal of property, plant and equipment (212,861) - (Increase)/decrease in accounts receivable and other debtors (40,981) (3,728) Increase/(decrease) in accounts payable and other payables 43,441 (17,766) Increase/(decrease) in income received in advance 302,143 115,103 Increase/(decrease) in employee provisions 20,931 7,457 (Increase)/decrease in other assets (32,647) 7,287 (3,169) 71,317 Note 16 Association details The principal place of business of the association is: Unit 7 9 Hudson Avenue Castle Hill NSW 2154 Note 17 Financial Risk Management The association's activities expose it to a variety of financial risks: market risk (including interest rate risk), credit risk and liquidity risk. The association's overall risk management program focuses on the unpredictability of financial markets, and seeks to minimise potential adverse effects on the financial performance of the association. Management is carried out by the Finance department under policies approved by the Committee. The association held the following financial instruments: 2016 Note $ Financial assets Cash and cash equivalents 4 1,496,906 1,116,834 Trade and receivables 5 55,180 14,199 Available-for-sale financial assets 5,423 5,552 Total financial assets 1,557,509 1,136,585 Financial liabilities accounts payable and other payables 8 63,938 18,595 Total financial liabilities 63,938 18,595 2015 $ (a) (b) (c) (d) Interest rate risk The association monitors interest rate risk on an ongoing basis. At the balance sheet date there were no significant exposures to interest rate risk. Trade payables were calculated based on their notional value, which the Committee have deemed to be fair value. The Committee has determined that the effect of the discounting is not material. Credit risk Credit risk refers to the risk that acounterparty will default on its contractual obligations and result in a financial loss to the association. Credit risk can also arise from cash and cash equivalents. The maximum exposure to credit risk as at reporting date is illustrated in the table above. For banks, only independently rated banks and financial institutions are accepted, with a minimum rating of A. For receivables, the notional value is deemed to reflect the fair value, with the effect of discounting not being material. At balance sheet date, there were no significant exposures to credit risk. Liquidity risk The ultimate responsibility for liquidity risk management rests with the Committee, who have built an appropriate liquidity risk management framework for the management of the association's funding requirements. The association manages liquidity by maintaining adequate reserves and banking facilities by continuously monitoring forecast and actual cash flows. The association has no derivative financial liabilities at year end. Fair value of financial instruments The fair value of financial assets and liabilities with standard terms and conditions and traded on active liquid markets are determined with references to quoted market prices. 14
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2016 The fair value of receivables and payables are deemed to be their carrying values less any impairment. The effect of discounting has been determined by the Committee as not being material. (e) Financial The association's instrument exposure composition to interest and risk, maturity which is analysis the risk that the value of a financial instrument will fluctuate as a result of changes in market interest rates and the effective weighted average interest rates on classes of financial assets and liabilities is as follows: Weighted Average Note Effective Interest Rate Floating Interest Rate Non-Interest bearing 2016 2015 2016 2015 2016 2015 % % Financial assets Cash on hand (i) 4 2.25% 2.25% 1,496,906 1,116,834 Accounts receivable and other debtor 5 55,180 14,199 Investments 5,423 5,552 Total financial assets 1,496,906 1,116,834 60,603 19,751 Financial liabilities Accounts payable and other payables 8 63,938 18,595 Total financial liabilities 63,938 18,595 15