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Forest NSW Annual Report 2012

Notes to and forming part of the financial statements For the year ended 30 June 2012 in return for their service in the current and at its cost, including transaction costs and NSW, to set appropriate risk limits and controls prior periods; that benefit is discounted to subsequently restated at fair value. Gains or and to monitor risks and adherence to limits. determine its present value. Any unrecognised losses arising from changes in the fair value Compliance with policies is reviewed by the past service costs and the fair value of any plan of investment property are included in the internal auditors on a continuous basis. assets are deducted. Expected future payments Statement of Comprehensive Income when are discounted using market yields at reporting they arise. Credit Risk date on national government bonds with terms to maturity and currency that match, as closely Investment properties are derecognised when Credit risk arises when there is the possibility as possible, the estimated future cash outflows. they have either been disposed of or when the of Forests NSW debtors defaulting on their investment property is permanently withdrawn contractual obligations, resulting in a financial The calculation is performed annually by Pillar from use and no future benefit is expected. loss to Forests NSW. The maximum exposure Administration, who are the appointed trustee to credit risk is generally represented by the of the defined benefit plans for the NSW public (aa) Adoption of New and carrying amount of the financial assets (net of service. When the calculation results in a Revised Accounting Standards any allowance for impairment). benefit to the Economic Entity, the recognised asset is limited to the total of any unrecognised A number of new standards, amendments to Credit risk arises from the financial assets of past service costs and the present value of standards and interpretations are effective Forests NSW, including cash, receivables and economic benefits available in the form of any for annual periods beginning after 1 July authority deposits. Some collateral is held by future refunds from the plan or reductions 2012, and have not been applied in preparing Forests NSW. Forests NSW has not granted any in future contributions to the plan. In order these financial statements. None of these is financial guarantees. to calculate the present value of economic expected to have a significant effect on the Credit risk associated with Forests NSW financial benefits, consideration is given to any financial statements of Forests NSW, except for assets, other than receivables, is managed minimum funding requirements that apply to AASB 9 Financial Instruments, which becomes through the selection of counterparties and any plan in the Economic Entity. An economic mandatory for the 2014 financial statements establishment of minimum credit rating benefit is available to the Economic Entity if and could change the classification and standards. Authority deposits held with it is realisable during the life of the plan, or measurement of financial assets. Forests NSW NSW Treasury Corporation (NSW TCorp.) are on settlement of the plan liabilities. When the does not plan to adopt this standard early guaranteed by the State and are AAA rated by benefits of a plan are improved, the portion of and the extent of the impact has not been Standard and Poor’s. the increased benefit relating to past service by determined. employees is recognised in profit or loss on a The credit risk on the financial assets of Forests straight-line basis over the average period until (ab) Comparative Figures NSW has been recognised in the Statement of the benefits become vested. To the extent that Financial Position at the carrying amount, net of the benefits vest immediately, the expense is Certain comparative amounts have been any allowance for doubtful debts. reclassified to conform with the current year’s recognised immediately in profit or loss. Forests NSW have a Credit Policy, which aimspresentation. These amendments have no The Economic Entity recognises all actuarial material impact and were made for consistency to mitigate the credit risk exposure from our gains and losses arising from defined benefit purposes only. sales customers. Customers are assessed for plans in other comprehensive income and all credit worthiness before payment and delivery expenses related to defined benefit plans in Note 3: Financial Risk terms are offered. Forests NSW review includes personnel expenses in profit or loss. external ratings, when available, company Management searches, and trade references. Purchase limits The Economic Entity recognises gains and are established and customers are required losses on the curtailment or settlement of a to lodge suitable security for the estimatedForests NSW have exposure to the following defined benefit plan when the curtailment maximum credit exposure to its sales. Therisks from their use of financial instruments: or settlement occurs. The gain or loss on policy requires stringent credit assessment curtailment comprises any resulting change Credit Risk; of customers before the granting of any in the fair value of plan assets, change in the Liquidity Risk; unsecured credit. present value of defined benefit obligation Market Risk. and any related actuarial gains and losses and Forests NSW has established an allowance past service cost that had not previously been for impairment that represents its estimate ofThis note presents information about Forests recognised. incurred losses in respect of trade and otherNSW exposure to each of the above risks and the objectives, policies and processes receivables. The main components of this The superannuation asset or liability is for measuring and managing risk. Further allowance are a specific loss component that recognised in Forestry Commission Division quantitative and qualitative disclosures relates to individually significant exposures, (refer Note 17). are included throughout these financial and a collective loss component established in statements. respect of losses that have been incurred but (z) Investment Assets The Commissioner for the Forestry Commission not yet identified. The collective loss allowance is based on historical data of payment statistics. of NSW (Forests NSW) has overall responsibility Forests NSW does not actively trade or engage in the investment property market. It leases Liquidity Riskfor the establishment and oversight ofrisk management and reviews any agreed offices and other buildings sites for rental policies for managing each of these risks. Liquidity risk is the risk that Forests NSW will income that are surplus to its requirements. Risk management policies are established to be unable to meet its payment obligations Investment property is measured initially identify and analyse the risks faced by Forests when they fall due. Forests NSW continuously Forests NSW Annual Report 2011–12 Social, Environmental and Economic Performance 63


Forest NSW Annual Report 2012
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