Note 6.1: Financial Instruments
|The carrying amount of all financial assets and liabilities is a reasonable approximation of their fair value.|
|Loans and receivables|
|Cash and cash equivalents||1,075||1,382|
|Goods and services receivables||3.1a||1,446||1,845|
|Total loans and receivables:||2,521||3,227|
|Total financial assets||2,521||3,227|
|Financial liabilities measured at amortised cost|
|Trade creditors and accruals||3.3a||3,808||4,166|
|Total financial liabilities measured at amortised cost||3,898||4,225|
|Carrying amount of financial liabilities||3,898||4,225|
Note 6.1b: Credit risk
The APSC was exposed to minimal credit risk as loans and receivables were goods and services receivables. The maximum exposure to credit risk was the risk that arises from the potential default of a debtor. This amount was equal to the total amount of goods and services receivables (see note 6.1a).The APSC has assessed the risk of the default on payment and has allocated an allowance for impairment on goods and services receivables (see note 3.1a). The ageing of goods and services receivables and a reconciliation of the impairment allowance are disclosed in note 3.1a.
The APSC's goods and services receivables are principally recoverable from other Australian Government entities. In addition, the APSC had policies and procedures that guide the debt recovery processes.
The APSC holds no collateral to mitigate against credit risk.
Note 6.1c: Liquidity risk
The APSC is exposed to minimal liquidity risk as it has sufficient appropriation funding from the Australian Government to ensure it meets payment obligations as they fall due. In addition, the APSC has policies in place to ensure timely payments are made when due and has no past experience of default.
The APSC had no derivative financial instruments in2016 (2015: nil).
Note 6.1d: Market risk
The APSC holds basic financial instruments that do not expose the APSC to certain market risks such as 'Currency risk' and 'Other price risk'.
There are no interest-bearing items on the statement of financial position.
Note 6.2: Fair value measurement
The following table provides an analysis of assets and liabilities that are measured at fair value. The different levels of fair value hierarchy are defined below.
Level 1: Quoted process (unadjusted) inactive markets for identical assets or liabilities that the APSC can access at measurement date.
Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.
Level 3:Unobservable inputs for the asset or liability.
The APSC determines fair value for non-financial assets using level 3 inputs in the fair value hierarchy. The following table discloses the fair value at 30 June and the valuation techniques used to derive fair value.
|Fair value||Category level||Valuation technique(s) and Inputs
1.There is no change in the valuation technique since the prior year.
2.The major input relevant to leasehold improvements is an estimate of replacement cost based upon the specifics of each particular leasehold improvement including construction type, use, services, specialist components and the like. The fair value is then assessed by having regard to that portion of the likely length of the lease term that has expired, the remaining lease term and remaining useful life. Assets in this class are considered on an individual basis, not on any average or weighted average basis, as each needs to be considered specifically to represent its characteristics.
3. The primary input for other property, plant and equipment is the replacement cost of the asset as at the date of valuation. The fair value is assessed by reference to the asset's physical and functional characteristics,the APSC's internal policy for each class, the adopted useful life and the expended and remaining useful life of each asset. Assets are considered on an individual basis, rather than from any predetermined averaging or weighted averages, however where there are numerous alike assets, for example, computers which are all identical and purchased on the same date, the assessment of one asset is then utilised for those alike assets.
|Leasehold improvements||1,949||1,764||Level 3||Depreciated replacement cost –see footnote 2|
|Other property, plant and equipment||934||1,039||Level 3||Depreciated replacement cost –see footnote 3|
Recurring and non-recurring Level 3 fair value measurements - valuation process
In 2015-16 the APSC procured valuation services from a valuation expert and relied on the valuations made by this expert. The expert provided written assurance that the models developed to value assets are in compliance with accounting standards. The depreciated replacement cost approach was used to determine the fair value.
The fair value of leasehold improvements increased by $570,000 and revaluation of restoration obligations decreased the provision by $125,000. Both of these changes were taken to the asset revaluation reserve.
APSC's assets are held for operational purposes and not held for the purposes of deriving a profit. The highest and best use of all non-financial assets is the same as their current use. The weighted average is determined by assessing the fair value measurement as a proportion of the total fair value for the class against the total useful life of each asset.