Berry Street Web Docs Financial Report 2010 | Page 29

BERRY STREET VICTORIA INC.
ABN 24 719 196 762

NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2010
NOTE 15: FINANCIAL RISK MANAGEMENT (Continued)
(a)

Credit Risk

Exposure to credit risk relating to financial assets arises from the potential non-performance by counterparties
of contract obligations that could lead to a financial loss to the association.
The association does not have any material credit risk exposure as the major source of revenue is the receipt
of grants. Credit risk is further mitigated as over 85% of the grants being received by state and federal
governments are in accordance with funding agreements which ensure regular funding for a period of 3 years.
Credit Risk Exposures
The maximum exposure to credit risk by class of recognised financial assets at the end of the reporting period
is equivalent to the carrying value and classification of those financial assets (net of any provisions) as
presented in the statement of financial position.
Trade and other receivables that are either neither past due or impaired are considered to be of high quality.
Aggregates of such amounts are detailed in Note 5.
The association has no significant concentration of credit risk exposure to any single counterparty or group of
counterparties. Details with respect to credit risk of Trade and Other Receivables are provided in Note 5.
Credit risk related to balances with banks and other financial institutions is managed by the finance committee
in accordance with approved Board policy. Such policy requires surplus funds are only invested with
counterparties with a Standard & Poor’s rating of at least AA. The following table provides information
regarding the credit risk relating to cash and money market securities based on Standard & Poor’s
counterparty credit ratings.
2010
$

2009
$

Cash and cash equivalents
AA rated

(b)

3,030,456

1,003,001

3,030,456

1,003,001

Liquidity Risk

Liquidity risk arises from the possibility that the association might encounter difficulty in settling debts or
otherwise meeting its obligations relation to financial liabilities.
The association manages liquidity risk by monitoring forecast cash flows and ensuring adequate cash
reserves are maintained to meet current commitments. Certainty of cash flow is assured as approximately
85% of all revenue is provided through State and Federal Government contracts, which are paid either
monthly or quarterly and usually run for three year periods.

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