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Note 23: Administered Financial Instruments

Categories of Financial Instruments
    2013 2012
    $’m $’m
Note 23A. Categories of Financial Instruments      
Financial Assets Notes    
Loans and receivables:      
Cash and cash equivalents 18A 79 63
Total loans and receivables   79 63
Available for sale:      
Investments in Commonwealth entities 18C 1,230 1,226
Total available for sale   1,230 1,226
Carrying amount of financial assets   1,309 1,289
Financial Liabilities      
At amortised cost:      
Health care payables   36 28
Grants payables   1 1
Other payables   28 24
Total financial liabilities at amortised cost   65 53
Carrying amount of financial liabilities   65 53

Note 23B. Fair Value of Financial Instruments

Fair Value of Financial Instruments
  Carrying
amount
2013
$’m
Fair
value
2013
$’m
Carrying
amount
2012
$’m
Fair
value
2012
$’m
Financial Assets        
Cash and cash equivalents 79 79 63 63
Investments 1,230 1,230 1,226 1,226
Total 1,309 1,309 1,289 1,289
Financial Liabilities        
Health Care payables 36 36 28 28
Grants payables 1 1 1 1
Other payables 28 28 24 24
Total 65 65 53 53

Fair value measurements categorised by fair value hierarchy

The following table provides an analysis of financial instruments that are measured at fair value by valuation method. The different levels are defined below:

Level 1 - quoted prices (unadjusted) in active markets for identical assets and liabilities

Level 2 - Fair value derived from inputs other than quoted prices included within Level 1 that are observable for the instrument, either directly or indirectly.

Level 3 - Fair value derived from inputs that are not based on observable market data

Fair value hierarchy for financial assets
  Level 1   Level 3   Total  
  2013 2012 2013 2012 2013 2012
  $’m $’m $’m $’m $’m $’m
Financial assets at fair value            
Cash and cash equivalents 79 63 - - 79 63
Investments - - 1,230 1,226 1,230 1,226
Total 79 63 1,230 1,226 1,309 1,289
Fair value hierarchy for financial Liabilities Level 1   Level 3   Total  
  2013 2012 2013 2012 2013 2012
  $’m $’m $’m $’m $’m $’m
Financial liabilities at fair value            
Health Care payables 36 28 - - 36 28
Grants payables 1 1 - - 1 1
Other payables 28 24 - - 28 24
Total 65 53 - - 65 53

Notes to and forming part of the financial statements

Fair Value of Financial Instruments
Reconciliation of Level 3 fair value hierarchy Australian War
Memorial
  2013 2012
  $’m $’m
Financial assets at fair value    
Opening balance 1,226 1,148
Net movement recognised in equity 4 78
Closing balance 1,230 1,226

Note 23C. Credit Risk

The administered activities of DVA were not exposed to a high level of credit risk as the majority of financial assets are cash and investments in government controlled and funded entities. The maximum exposure to credit risk at reporting date in relation to each class of administered financial assets is the carrying amount of those assets as indicated on the Administered Schedule of Assets and Liabilities. As these financial assets consist of cash and investment in government controlled and funded entity, the risk of default is minimal if not nil. DVA manages its credit risk by undertaking background and credit checks prior to allowing a debtor relationship. In addition, DVA has policies and procedures in place that guide employees in debt recovery techniques that are to be applied.

DVA assessed the risk of the default on payment and has not identified any amounts to be allocated as impaired.

DVA held no collateral to mitigate against credit risk.

Gross exposure to credit risk
      2013 2012
      $’m $’m
Financial assets  
Investments accounted for using the equity method     1,230 1,226
Total     1,230 1,226
Credit quality of financial instruments not past due or individually determined as impaired  
  Not past due nor impaired Not past due nor impaired Past due or impaired Past due or impaired
  2013 2012 2013 2012
  $’m $’m $’m $’m
Loans and receivables        
Cash and cash equivalents 79 63 - -
Financial Assets  
Investments accounted for using the equity method 1,230 1,226 - -
Total 1,309 1,289 - -

Notes to and forming part of the financial statements

Note 23D. Liquidity Risk

DVA’s financial liabilities are payables related to health care and other payables. The exposure to liquidity risk is based on the notion that DVA will encounter difficulty in meeting its obligations associated with financial liabilities. This is highly unlikely as DVA is appropriated funding from the Australian Government and DVA manages its budgeted funds to ensure it has adequate funds to meet payments as they fall due. In addition, DVA has policies in place to ensure timely payments are made when due and has no past experience of default.

Maturities for non-derivative financial liabilities 2013
  On demand Within 1 year 1 to 2 years 2 to 5 years > 5 years Total
  $’m $’m $’m $’m $’m $’m
Health care payables - 36 - - - 36
Grants payables - 1 - - - 1
Other payables - 28 - - - 28
Total - 65 - - - 65
Maturities for non-derivative financial liabilities 2012  
  On demand Within 1 year 1 to 2years 2 to 5 years >5 Total
  $’m $’m $’m $’m $’m $’m
Health care payables - 28 - - - 28
Grants payables - 1 - - - 1
Other payables - 24 - - - 24
Total - 53 - - - 53

DVA has no derivative financial liabilities in either 2013 or 2012.

Note 23E. Market Risk

DVA holds basic financial instruments that do not expose DVA to certain market risks, such as ’Currency risk’ and ’Other price risk’

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