Table of contents - Notes

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Note 1 : Summary of Significant Accounting Policies

Note 2 : Events After the Reporting Period

Note 3 : Expenses

Note 4 : Income

Note 5 : Financial Assets

Note 6 : Non-Financial Assets

Note 7 : Payables

Note 8 : Provisions

Note 9 : Cash Flow Reconciliation

Note 10 : Contingent Assets and Liabilities

Note 11 : Directors Remuneration

Note 12 : Related Party Disclosures

Note 13 : Senior Executive Remuneration

Note 14 : Remuneration of Auditors

Note 15 : Financial Instruments

Note 16 : Financial Assets Reconciliation

Note 17 : Compensation and Debt Relief

Note 18 : Assets Held in Trust

Note 19 : Reporting of Outcomes

TORRES STRAIT REGIONAL AUTHORITY
Notes to and forming part of the financial statements
for the period ended 30 June 2013

Note 1: Summary of Significant Accounting Policies

1.1 Objective of the Torres Strait Regional Authority

The Torres Strait Regional Authority (TSRA) is an Australian Government controlled entity. It is a not-for-profit entity. The objective of the Torres Strait Regional Authority is to achieve a better quality of life and develop an economic base for Torres Strait Islander and Aboriginal persons living in the Torres Strait.

The TSRA is structured to meet one outcome:

Progress towards closing the gap for Torres Strait Islander and Aboriginal people living in the Torres Strait Region through development planning, coordination, sustainable resource management, and preservation and promotion of Indigenous culture.
The continued existence of the TSRA in its present form and with its present programs is dependent on Government policy and on continuing funding by Parliament for the TSRA's administration and programs.

1.2 Basis of Preparation of the Financial Statements

The financial statements are general purpose financial statements and are required by clause 1(b) of Schedule 1 to the Commonwealth Authorities and Companies Act 1997.

The financial statements have been prepared in accordance with:

  1. Finance Minister's Orders (FMO's) for reporting periods ending on or after 1 July 2011; and
  2. Australian Accounting Standards and Interpretations issued by the Australian Accounting Standards Board (AASB) that apply for the reporting period.

The financial statements have been prepared on an accrual basis and in accordance with historical cost convention, except for certain assets and liabilities at fair value. Except where stated, no allowance is made for the effect of changing prices on the results or the financial position.

The financial statements are presented in Australian dollars and values are rounded to the nearest thousand dollars unless otherwise specified.

Unless an alternative treatment is specifically required by an accounting standard or the FMOs, assets and liabilities are recognised in the balance sheet when and only when it is probable that future economic benefits will flow to TSRA or a future sacrifice of economic benefits will be required and the amounts of the assets or liabilities can be reliably measured. However, assets and liabilities arising under executor contracts are not recognised unless required by an accounting standard. Liabilities and assets that are unrecognised are reported in the schedule of commitments or the schedule of contingencies.

Unless alternative treatment is specifically required by an accounting standard, income and expenses are recognised in the Statement of Comprehensive Income when and only when the flow, consumption or loss of economic benefits has occurred and can be reliably measured.

1.3 Significant Accounting Judgements and Estimates

In the process of applying the accounting policies listed in this note, the TSRA has made the following judgements that have the most significant impact on the amounts recorded in the financial statements:

  • The fair value of land and buildings has been taken to be the market value of similar properties as determined by an independent valuer as detailed in Note 1.16.
  • The initial fair value of concessional loans is taken to be the present value of all future cash receipts, discounted using the prevailing market rate of interest for instruments of a similar structure (currency, term, type of interest rate, credit risk). Subsequently the value of the loan is derived by applying the amortised cost using the effective interest method, with the initial market rate as the effective rate, and anticipated cash flows based on contracted repayment terms, resulting in the amortisation of the discount over the anticipated life of the loan.

No accounting assumptions or estimates have been identified that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next reporting period.

1.4 New Australian Accounting Standards

Adoption of New Australian Accounting Standard Requirements

No accounting standard has been adopted earlier than the application date as stated in the standard. There have been no new standards, revised standards, amended standards or interpretations that were issued by the AASB prior to the sign off date that are applicable to the current reporting period and have a material financial impact on TSRA.

Future Australian Accounting Standard Requirements

The following new standards/revised standards/interpretations/amending standards were issued by the Australian Accounting Standards Board prior to the sign-off date, which are expected to have a financial impact on the TSRA for future reporting periods:

- AASB 13 - Fair Value Measurement - December 2012 (Principal) effective date 1 January 2013
- AASB 1055 - Budgetary Reporting - March 2013 (Principal) effective date 1 July 2014

Other new standards/revised standards/interpretations/amending standards that were issued prior to the sign-off date and are applicable to the future reporting period are not expected to have a future financial impact on the entity.

1.5 Revenue

Revenue from the sale of goods is recognised when:

  1. the risks and rewards of ownership have been transferred to the buyer;
  2. the TSRA retains no managerial involvement or effective control over the
  3. the revenue and transaction costs incurred can be reliably measured; and
  4. It is probable that the economic benefits associated with the transaction will flow to the TSRA.

Revenue from rendering of services is recognised by reference to the stage of completion of contracts at the reporting date. The revenue is recognised when:

  1. the amount of revenue, stage of completion and transaction costs incurred can be reliably measured; and
  2. the probable economic benefits associated with the transaction will flow to the entity.

The stage of completion of contracts at the reporting date is determined by reference to the proportion that costs incurred to date bear to the estimated total costs of the transaction.

Receivables for goods and services, which have 30 day terms, are recognised at the nominal amounts due less any impairment allowance account. Collectability of debts is reviewed as at end of the reporting period. Allowances are made when collectability of the debt is no longer probable.

Interest revenue is recognised using the effective interest method as set out in AASB 139 Financial Instruments: Recognition and Measurement .

Resources Received Free of Charge
Resources received free of charge are recoginised as revenue when, and only when, a fair value can be reliably determined and the services would have been purchased if they had not been donated. Use of those resources is recognised as an expense.

Resources received free of charge are recorded as either revenue or gains depending on their nature.

Contributions of assets at no cost of acquisition or for nominal consideration are recognised as gains at their fair value when the asset qualifies for recognition, unless received from another Government agency or authority as a consequence of a restructuring of administrative arrangements (this did not occur in 2012-13 or 2011-12).

Revenue from Government
Funding received or receivable from agencies (appropriated to the agency as a CAC Act body payment item for payment to TSRA) is recognised as Revenue from Government unless they are in the nature of an equity injection or a loan.

1.6 Gains

Resources Received Free of Charge
Resources received free of charge are recognised as gains when, and only when, a fair value can be reliably determined and the services would have been purchased if they had not been donated. Use of those resources is recognised as an expense.

Resources received free of charge are recorded as either revenue or gains depending on their nature.

Contributions of assets at no cost of acquisition or for nominal consideration are recognised as gains at their fair value when the asset qualifies for recognition, unless received from another Government entity as a consequence of a restructuring of administrative arrangements (this did not occur in 2012-13 or 2011-12).

Sale of Assets

Gains from disposal of assets are recognised when control of the asset has passed to the buyer.

1.7 Transactions with the Government as Owner

Equity Injections

Amounts appropriated which are designated as ‘equity injections' for a year (less any formal reductions) and Departmental Capital Budgets (DCBs) are recognised directly in contributed equity in that year.

Other Distributions to Owners
The FMOs require that distributions to owners be debited to contributed equity unless it is in the nature of a dividend.

1.8 Employee Benefits

Liabilities for 'short-term employee benefits' (as defined in AASB 119 Employee Benefits ) and termination benefits due within twelve months of the end of the reporting period are measured at their nominal amounts.

The nominal amount is calculated with regard to the rates expected to be paid on settlement of the liability. Other long-term employee benefits are measured as net total of the present value of the defined benefit obligation at the end of the reporting period minus the fair value at the end of the reporting period of plan assets (if any) out of which the obligations are to be settled directly.

Leave

The liability for employee benefits includes provision for annual leave and long service leave. A provision for personal leave payable also exists for a select number of staff as personal leave is vesting for these staff due to a clause in their employment agreement.

The leave liabilities are calculated on the basis of employees' remuneration at the estimated salary rates that will be applied at the time the leave is taken, including the TSRA's employer superannuation contribution rates to the extent that the leave is likely to be taken during service rather than paid out on termination.

The liability for long service leave has been determined by reference to the work of an actuary as at 30 June 2013. The estimate of the present value of the liability takes into account attrition rates and pay increases through promotion and inflation.

Separation and Redundancy

Provision is made for separation and redundancy benefit payments. The TSRA recognises a provision for termination when it has developed a detailed formal plan for the terminations and has informed those employees affected that it will carry out the terminations.

Superannuation

The TSRA's staff are members of the Commonwealth Superannuation Scheme (CSS), the Public Sector Superannuation Scheme (PSS) or the PSS accumulation plan (PSSap).

The CSS and PSS are defined benefit schemes for the Australian Government. The PSSap is a defined contribution scheme.

The liability for defined benefits is recognised in the financial statements of the Australian Government and is settled by the Australian Government in due course. This liability is reported in the Department of Finance and Deregulation's administered schedules and notes.

The TSRA makes employer contributions to the employee's superannuation scheme at rates determined by an actuary to be sufficient to meet the current cost to the Government. The TSRA accounts for the contributions as if they were contributions to defined contribution plans.

The liability for superannuation recognised as at 30 June represents outstanding contributions for the final fortnight of the year.

1.9 Leases

A distinction is made between finance leases and operating leases. Finance leases effectively transfer from the lessor to the lessee substantially all the risks and rewards incidental to ownership of leased assets. An operating lease is a lease that is not a finance lease. In operating leases, the lessor effectively retains substantially all such risks and benefits.

The TSRA does not have any finance leases.

Operating lease payments are expensed on a straight line basis which is representative of the pattern of benefits derived from the leased assets. In 2012-13, the TSRA leased three vehicles, office accommodation and equipment, commercial and residential property for the operation of the organisation.

1.10 Grants

Most grant agreements require the grantee to perform services, provide facilities, or to meet eligibility criteria. In these cases, the TSRA recognises grant liabilities only to the extent that the services required have been performed or the eligibility criteria have been satisfied by the grantee.

In cases where grant agreements are made without conditions to be monitored, liabilities are recognised on signing of the agreement.

1.11 Cash

Cash is recognised at its nominal amount. Cash and cash equivalents includes:

  1. cash on hand; and
  2. demand deposits in bank accounts with an original maturity of 3 months or less that are readily convertible to known amounts of cash and subject to insignificant risk of changes in value.
1.12 Financial Assets

The TSRA classifies its financial assets in the following categories:

  1. loans and receivables; and
  2. held-to-maturity investments.

The classification depends on the nature and purpose of the financial assets and is determined at the time of initial recognition.

Financial assets are recognised and derecognised upon trade date.

Effective Interest Method
The effective interest method is a method of calculating the amortised cost of a financial asset and of allocating interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset, or, where appropriate, a shorter period.

Income is recognised on an effective interest rate basis except for financial assets that are recognised at fair value through profit or loss.

Financial Assets at Fair Value Through Profit or Loss
Financial assets are classified as financial assets at fair value through profit or loss (FVTPL) where the financial assets:

  1. have been acquired principally for the purpose of selling in the near future;
  2. are derivatives that are not designated and effective as a hedging instrument.; or
  3. are parts of an identified portfolio of financial instruments that the TSRA manages together and has a recent actual pattern of short-term profit-taking.

Assets in this category are classified as current assets.

Financial assets at fair value through profit or loss are stated at fair value, with any resultant gain or loss recognised in profit or loss. The net gain or loss recognised in profit or loss incorporates any interest earned on the financial asset.

Available-for-Sale Financial Assets
Available-for-sale financial assets are non-derivatives that are either designated in this category or not classified in any of the other categories.

Available-for-sale financial assets are recorded at fair value. Gains and losses arising from changes in fair value are recognised directly in the reserves (equity) with the exception of impairment losses. Interest is calculated using the effective interest method and foreign exchange gains and losses on monetary assets are recognised directly in profit or loss. Where the asset is disposed of or is determined to be impaired, part (or all) of the cumulative gain or loss previously recognised in the reserve is included in surplus and deficit for the period.

Where a reliable fair value can not be established for unlisted investments in equity instruments, these instruments are valued at cost. The TSRA has no such instruments.

Held-to-Maturity Investments
Non-derivative financial assets with fixed or determinable payments and fixed maturity dates that the group has the positive intent and ability to hold to maturity are classified as held-to-maturity investments. Held-to-maturity investments are recorded at amortised cost using the effective interest method less impairment, with revenue recognised on an effective yield basis.

Loans and Receivables
Trade receivables, loans and other receivables that have fixed or determinable payments that are not quoted in an active market are classified as 'loans and receivables'. Loans and receivables are measured at amortised cost using the effective interest method less impairment. Interest is recognised by applying the effective interest rate.

Impairment of Financial Assets
Financial assets are assessed for impairment at the end of each reporting period.
Financial assets carried at amortised cost - if there is objective evidence that an impairment loss has been incurred for loans and receivables or held to maturity investments held at amortised cost, the amount of the loss is measured as the difference between the asset's carrying amount and the present value of estimated future cash flows discounted at the asset's original effective interest rate. The carrying amount is reduced by way of an allowance account. The loss is recognised in the Statement of Comprehensive Income.
Available for sale financial assets - if there is objective evidence that an impairment loss on an available-for-sale financial asset has been incurred, the amount of the difference between its cost, less principal repayments and amortisation, and its current fair value, less any impairment loss previously recognised in expenses, is transferred from equity to the Statement of Comprehensive Income.
Financial assets carried at cost - if there is objective evidence that an impairment loss has been incurred the amount of the impairment loss is the difference between the carrying amount of the asset and the present value of the estimated future cash flows discounted at the current market rate for similar assets.

1.13 Financial Liabilities

Financial liabilities are classified as either financial liabilities 'at fair value through profit and loss' or other financial liabilities. Financial liabilities are recognised and derecognised around trade date.

Financial Liabilities at Fair Value Through Profit or Loss
Financial liabilities at fair value through profit or loss are initially measured at fair value. Subsequent fair value adjustments are recognised in profit or loss. The net gain or loss recognised in profit or loss incorporates any interest paid on the financial liability.

Other Financial Liabilities
Other financial liabilities, including borrowings, are initially measured at fair value, net of transaction costs. These liabilities are subsequently measured at amortised cost using the effective interest method, with interest expense recognised on an effective yield basis.

The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments through the expected life of the financial liability, or, where appropriate, a shorter period.

Supplier and other payables are recognised at amortised cost. Liabilities are recognised to the extent that the goods or services have been received (and irrespective of having been invoiced).

1.14 Contingent Liabilities and Contingent Assets

Contingent liabilities and contingent assets are not recognised in the balance sheet but are reported in the relevant schedules and notes. They may arise from uncertainty as to the existence of a liability or asset or represent an asset or liability in respect of which the amount cannot be reliably measured. Contingent assets are disclosed when settlement is probable but not virtually certain and contingent liabilities are disclosed when settlement is greater than remote.

1.15 Acquisition of Assets

Assets are recorded at cost on acquisition except as stated below. The cost of acquisition includes the fair value of assets transferred in exchange and liabilities undertaken. Financial assets are initially measured at their fair value plus transaction costs where appropriate.

Assets acquired at no cost, or for nominal consideration, are initially recognised as assets and income at their fair value at the date of acquisition, unless acquired as a consequence of restructuring of administrative arrangements. In the latter case, assets are initially recognised as contributions by owners at the amounts at which they were recognised in the transferor's accounts immediately prior to the restructuring.

1.16 Property, Plant and Equipment

Asset Recognition Threshold
Purchases of property, plant and equipment are recognised initially at cost in the balance sheet, except for purchases costing less than $1,000, which are expensed in the year of acquisition (other than where they form part of a group of similar items which are significant in total). The initial cost of an asset includes an estimate of the cost of dismantling and removing the item and restoring the site on which it is located.

Revaluations

Fair values for each class of asset are determined as shown below:

Asset class Fair value measurement :
Land Market selling price
Buildings excluding leasehold improvements Market selling price
Leasehold improvements Depreciated replacement cost
Other Plant and equipment Depreciated replacement cost
Heritage and cultural assets Market selling price

Following initial recognition at cost, property, plant and equipment were carried at fair value less subsequent accumulated depreciation and accumulated impairment losses. Valuations were conducted with sufficient frequency to ensure that the carrying amounts of assets did not differ materially from the assets' fair values as at the reporting date. The regularity of independent valuations depended upon the volatility of movements in market values for the relevant assets.

Revaluation adjustments were made on a class basis. Any revaluation increment was credited to equity under the heading of asset revaluation reserve except to the extent that it reversed a previous revaluation decrement of the same asset class that was previously recognised in the surplus/deficit. Revaluation decrements for a class of assets were recognised directly in the surplus/deficit except to the extent that they reversed a previous revaluation increment for that class.

Any accumulated depreciation as at the revaluation date was eliminated against the gross carrying amount of the asset and the asset was restated to the revalued amount.

Depreciation
Depreciable property, plant and equipment assets are written-off to their estimated residual values over their estimated useful lives to the TSRA using, in all cases, the straight-line method of depreciation.

Depreciation rates (useful lives), residual values and methods are reviewed at each reporting date and necessary adjustments are recognised in the current, or current and future reporting periods, as appropriate.

Depreciation rates applying to each class of depreciable asset are based on the following useful lives:

2013 2012
Buildings on freehold land 40 years 40 years
Leasehold improvements Lease term Lease term
Other Plant and Equipment 3 to 5 years 3 to 5 years

All heritage and cultural assets have indefinite useful lives and are not depreciated

Impairment

All assets were assessed for impairment at 30 June 2013. Where indications of impairment exist, the asset's recoverable amount is estimated and an impairment adjustment made if the asset's recoverable amount is less than its carrying amount.

The recoverable amount of an asset is the higher of its fair value less costs to sell and its value in use. Value in use is the present value of the future cash flows expected to be derived from the asset. Where the future economic benefit of an asset is not primarily dependent on the asset's ability to generate future cash flows, and the asset would be replaced if the TSRA were deprived of the asset, its value in use is taken to be its depreciated replacement cost.

Derecognition

An item of property, plant and equipment is derecognised upon disposal or when no further economic benefits are expected from its use or disposal.

Heritage and Cultural Assets

The TSRA has a limited collection of 21 (2012 : 21) distinct Cultural and Heritage assets with an aggregated fair value of $60,000 (2012: $60,000). Cultural assets are comprised of artworks, carvings, and traditional headdresseses. Heritage assets consist of models of two (2012 : 2) sailing vessels and a brass Pearl Diver's helmet (2012 : 1) each of which has historical significance to the region. The assets are on display at the TSRA's main office and the Gab Titui Cultural Centre. The conservation and preservation of TSRA's cultural heritage assets is achieved by a variety and combination of means including: the provision of education and awareness programs; asset management planning; professional training and development; research; and the provision of appropriate storage and display environments.

1.17 Taxation / Competitive Neutrality

The TSRA is exempt from all forms of taxation except Fringe Benefits Tax (FBT) and the Goods and Services Tax (GST).

Revenues, expenses and assets are recognised net of GST except:

  1. where the amount of GST incurred is not recoverable from the Australian Taxation Office; and
  2. for receivables and payables.

TORRES STRAIT REGIONAL AUTHORITY
Notes to and forming part of the financial statements
for the period ended 30 June 2013

Note 2: Events After the Reporting Period

There was no subsequent event that had the potential to significantly affect the ongoing structure and financial activities of the TSRA.

TORRES STRAIT REGIONAL AUTHORITY

Notes to and forming part of the financial statements for the period ended 30 June 2013

Note 3: Expenses

2013
$'000
2012
$'000
Note 3A: Employee Benefits
Wages and salaries (10,999) (9,322)
Superannuation
   Defined contribution plans (949) (944)
   Defined benefit plans (477) (335)
Leave and other entitlements (1,376) (1,445)
Total employee benefits (13,801) (12,046)
Note 3B: Suppliers
Goods and services
Consultants and professional fees (5,419) (3,635)
Travel (2,607) (2,318)
Repairs and maintenance (859) (439)
Other staff costs (966) (953)
Office running costs (1,210) (1,232)
Media, advertising, public relations (280) (412)
Other (3,760) (4,262)
Total goods and services (15,101) (13,251)
Goods and services are made up of:
Provision of goods – external parties (576) (536)
Rendering of services – external parties (14,525) (12,715)
Total goods and services (15,101) (13,251)
Other supplier expenses
Operating lease rentals - external parties:
   Minimum lease payments (645) (648)
Workers compensation expenses (65) (30)
Total other supplier expenses (710) (678)
Total supplier expenses (15,811) (13,929)
Note 3C: Grants
Public sector:
   Australian Government entities (related Entities) (700) -
   State and Territory Governments (48) (6)
   Local Governments (6,654) (9,977)
Private sector:
   Non-profit organisations (9,489) (18,994)
   For-profit organisations - (61)
Total grants (16,891) (29,038)

TORRES STRAIT REGIONAL AUTHORITY
Notes to and forming part of the financial statements
for the period ended 30 June 2013

2013
$'000
2012
$'000
Note 3D: Depreciation
Depreciation:
   Buildings (656) (662)
   Plant and equipment (612) (459)
Total depreciation (1,268) (1,121)
Note 3E: Finance Costs
Finance costs:
   Write down of loans to net present value (132) (157)
Total finance costs (132) (157)

Finance costs are comprised of amortisation charges for new loan advances and amortisation charges as a result of revaluations to the total concessional loan portfolio using current market interest rates.

Note 3F: Write-Down and Impairment of Assets
Asset writedowns and impairments from:
   Receivables goods and services - external parties provided for as impaired (77) (47)
Total write-down and impairment of assets (77) (47)

TORRES STRAIT REGIONAL AUTHORITY
Notes to and forming part of the financial statements for the period ended 30 June 2013

Note 4: Income

2013
$'000
2012
$'000
OWN-SOURCE REVENUE
Note 4A: Sale of Goods and Rendering of Services
Provision of goods - external parties 105 250
Rendering of services - external parties 279 256
Total sale of goods and rendering of services 384 506
Note 4B: Interest
Loans 369 388
Deposits 2,003 1,389
Total interest 2,372 1,777
Note 4C: Other Revenue
Rent 12 67
Other Government contributions 5,387 13,672
Total other revenue 5,399 13,739
GAINS
Note 4D: Sale of Assets
Proceeds from sale - 14
Net gains from sale of assets - 14
Note 4E: Reversals of Previous Asset Write-Downs and Impairments
Reversal of losses from remeasuring loans and receivables 96 301
Reversal of impairment losses 48 19
Total reversals of previous asset write-downs and impairments 144 320
REVENUE FROM GOVERNMENT
Note 4F: Revenue from Government
Department of Families, Housing, Community Services and Indigenous Affairs
CAC Act body payment item 45,680 50,454
Total revenue from Government 45,680 50,454

TORRES STRAIT REGIONAL AUTHORITY
Notes to and forming part of the financial statements
for the period ended 30 June 2013

Note 5: Financial Assets

2013
$'000
2012
$'000
Note 5A: Cash and Cash Equivalents
Cash on hand or on deposit 931 21,231
Cash on hand or on deposit - TSRA Housing Fund 545 181
Total cash and cash equivalents 1,476 21,412

TSRA's financial performance and balance sheet must be read in the context of its enabling legislation, the Aboriginal and Torres Strait Islander Act 2005 (ATSI Act) and the impact of accounting standards on the valuation of financial assets.

The ATSI Act requires that funds available under the TSRA Housing Fund, including interest earnings, are to be used exclusively for housing loans. Consequently, income earned on the TSRA Housing Fund is not available for operational expenses but is directed back into new loans.

Note 5B: Trade and Other Receivables
Goods and services
   Goods and services - external parties 1,235 1,729
Total receivables for goods and services 1,235 1,729
Other receivables:
   GST receivable from the Australian Taxation Office 1,681 -
   Loans - external parties 5,319 5,185
Total other receivables 7,000 5,185
Total trade and other receivables (gross) 8,235 6,914
Less impairment allowance account:
   Goods and services - external parties (65) (57)
   Loans - external parties (115) (123)
Total impairment allowance account (180) (180)
Total trade and other receivables (net) 8,055 6,734
Receivables are expected to be recovered in:
   No more than 12 months 3,524 2,377
   More than 12 months 4,531 4,357
Total trade and other receivables (net) 8,055 6,734
Receivables are aged as follows:
   Not overdue 8,030 6,511
   Overdue by:
   0 to 30 days 18 16
   61 to 90 days 8 5
   31 to 60 days 7 7
   More than 90 days 172 375
Total receivables (gross) 8,235 6,914
The impairment allowance account is aged as follows:
   Overdue by:
   More than 90 days (180) (180)
Total impairment allowance account (180) (180)

Credit terms for goods and services were within 30 days (2012: 30 days).

TSRA holds a portfolio of concessional loans that are provided for business development and home ownership programs.

The values of these loans as at 30 June 2013 are as follows:

Concessional loans - nominal value 5,761 5,638
Less: unexpired discount (442) (453)
Concessional loans - carrying value 5,319 5,185

Loans to individuals and businesses were made under the Business Funding Scheme for periods up to 10 years and Home Loans for periods up to 32 years. In relation to the housing loans, TSRA holds mortgages as sole mortgagor over the houses for which the loans are provided. TSRA receives market advice from a qualified valuer or market expert on the value of a property prior to the loan being approved. In relation to Business Funding Scheme loans, from 2007-08 TSRA has required that inexperienced business owner(s) successfully complete an approved business course and submit a business plan prior to the loan being approved. Security is not required for Business Funding Scheme loans. Principal is repaid in full at maturity. Interest rates for Business Funding Scheme loans were fixed in accordance with the loan contracts. Housing Loan interest rates were varied on 1 January 2013 in accordance with the loan contracts. Effective interest rates average 4.17% (2012: 3.57%) for Business Funding Scheme loans and 5.29% (2012: 5.76%) for Housing loans.

TORRES STRAIT REGIONAL AUTHORITY
Notes to and forming part of the financial statements
for the period ended 30 June 2013

Reconciliation of the impairment allowance account:

Movements in relation to 2013

Goods and services
$'000
Loans
$'000
Total
$'000
Opening balance (57) (123) (180)
   Amounts written off - 3 3
   Amounts recovered and reversed - 5 5
   Increase recognised in net surplus (8) - (8)
Closing balance (65) (115) (180)

Movements in relation to 2012

Goods and services
$'000
Loans
$'000
Total
$'000
Opening balance - (246) (246)
   Amounts written off - 104 104
   Amounts recovered and reversed - 19 19
   Increase recognised in net surplus (57) - (57)
Closing balance (57) (123) (180)
2013
$'000
2012
$'000
Note 5C: Other Investments
Term deposits 30,000 19,168
Term deposits - TSRA Housing Fund 6,800 3,130
Total other investments 36,800 22,298
Other investments are expected to be recovered in:
No more than 12 months 36,800 22,298
Total other investments 36,800 22,298

Term deposits were invested at 30 June 2013 for $6,000,000 (4.15% interest rate maturing on 12 October 2013), $14,000,000 (4.18% interest rate maturing on 18 October 2013), $8,000,000 (4.2% interest rate maturing on 21 October 2013) and $8,800,000 (4.20% interest rate maturing on 28 October 2013).

TORRES STRAIT REGIONAL AUTHORITY
Notes to and forming part of the financial statements
for the period ended 30 June 2013

Note 6: Non-Financial Assets

2013
$'000
2012
$'000
Note 6A: Land and Buildings
Land:
   Land at fair value 9,360 9,185
Total land 9,360 9,185
Buildings on freehold land:
   Work in progress 175 482
   Fair value 22,641 18,237
Total buildings on freehold land 22,816 18,719
Leasehold Improvements:
   Fair value - 34
Total leasehold improvements - 34
Total land and buildings 32,176 27,938

No indicators of impairment were found for land and buildings.
No land or buildings were expected to be sold or disposed of within the next 12 months.

Note 6B: Plant and Equipment
Heritage and cultural:
   Artifacts and artworks
   Fair value 60 60
Total heritage and cultural 60 60
Other plant and equipment:
   Fair value 3,517 3,008
   Accumulated depreciation (1,937) (1,325)
Total other plant and equipment 1,580 1,683
Total plant and equipment 1,640 1,743

No indicators of impairment were found for plant and equipment.
No plant or equipment is expected to be sold or disposed of within the next 12 months.

Revaluations of non-financial assets
All revaluations are conducted in accordance with the revaluation policy stated at Note 1. In 2012-13, an independent valuer, Neil Teves- AAPI Registered Valuer No. 382, conducted the revaluations as at 30 June 2013.

There was a revaluation increment recorded for land of $175,000 (2012: Nil). There were no revaluation increments or decrements recorded for plant and equipment (2012: Nil). Revaluation increments were recorded for buildings on freehold land of $235,711 (2012: $732,796) and have been credited to the asset revaluation surplus by asset class and included in the equity section of the balance sheet and the other comprehensive income section of the statement of comprehensive income.

TORRES STRAIT REGIONAL AUTHORITY
Notes to and forming part of the financial statements
for the period ended 30 June 2013

Note 6: Non-Financial Assets

Note 6C: Reconciliation of the opening and closing balances of property, plant and equipment 2013

Item Land
$'000
Buildings
$'000
Total land & buildings
$'000
Heritage 1 & cultural
$'000
Other plant & equipment
$'000
Total
$'000
As at 1 July 2012
Gross book value 9,185 18,753 27,938 60 3,008 31,006
Accumulated depreciation and impairment - - - - (1,325) (1,325)
Net book value 1 July 2012 9,185 18,753 27,938 60 1,683 29,681
Additions:
By purchase - 4,483 4,483 - 509 4,992
Revaluations and impairments recognised in other comprehensive income 175 236 411 - - 411
Reclassification Depreciation expense (656) (656) (612) (1,268)
Net book value 30 June 2013 9,360 22,816 32,176 60 1,580 33,816
Net book value as of 30 June 2013 represented by:
Gross book value 9,360 22,816 32,176 60 3,517 35,753
Accumulated depreciation and impairment - - - - (1,937) (1,937)
Net book value 30 June 2013 9,360 22,816 32,176 60 1,580 33,816

Note 6C (Cont'd): Reconciliation of the opening and closing balances of property, plant and equipment 2012

Land $'000 Buildings
$'000
Total land & buildings
$'000
Heritage 1 & cultural
$'000
Other plant & equipment
$'000
Total
$'000
As at 1 July 2011
Gross book value 9,185 18,264 27,449 41 2,394 29,884
Accumulated depreciation and impairment (24) (24) (870) (894)
Net book value 1 July 2011 9,185 18,240 27,425 41 1,524 28,990
Additions:
By purchase 442 442 19 618 1,079
Revaluations and impairments recognised in other comprehensive income 733 733 733
Depreciation expense (662) (662) (459) (1,121)
Net book value 30 June 2012 9,185 18,753 27,938 60 1,683 29,681
Net book value as of 30 June 2012 represented by:
Gross book value 9,185 18,753 27,938 60 3,008 31,006
Accumulated depreciation and impairment (1,325) (1,325)
Net book value 30 June 2012 9,185 18,753 27,938 60 1,683 29,681

1 Land, buildings and other plant and equipment that met the definition of a heritage and cultural item were disclosed in the heritage and cultural asset class.

TORRES STRAIT REGIONAL AUTHORITY
Notes to and forming part of the financial statements
for the period ended 30 June 2013

Note 7: Payables

2013
$'000
2012
$'000
Note7A: Suppliers
Trade creditors and accruals (5,491) (9,205)
Total suppliers payables (5,491) (9,205)
Suppliers payables expected to be settled within 12 months:
   External parties (5,491) (9,205)
Total (5,491) (9,205)
Settlement was usually made within 30 days.
Note7B: Grants
Public sector:
   State and Territory Governments (900) -
Local Governments (714) (297)
Private sector: -
   Non-profit organisations (214) (4,141)
Total grants (1,828) (4,438)
Total grant payables are expected to be settled in:
   No more than 12 months (1,828) (4,438)
Total grant payables (1,828) (4,438)
Note 7C: Other Payables
Wages and salaries (340) (258)
Superannuation (38) (32)
GST payable - (177)
Total other payables (378) (467)
Total other payables are expected to be settled in:
   No more than 12 months (378) (467)
Total other payables (378) (467)
Settlement was usually made within 30 days. (2012: 30 days)

TORRES STRAIT REGIONAL AUTHORITY
Notes to and forming part of the financial statements
for the period ended 30 June 2013

Note 8: Provisions

2013
$'000
2012
$'000
Note 8A: Employee provisions
Long Service Leave (1,367) (1,293)
Annual Leave (1,414) (1,443)
Personal Leave (94) (114)
Total employee provisions (2,875) (2,850)
Employee provisions are expected to be settled in:
   No more than 12 months (709) (449)
   More than 12 months (2,166) (2,401)
Total employee provisions (2,875) (2,850)

TORRES STRAIT REGIONAL AUTHORITY
Notes to and forming part of the financial statements
for the period ended 30 June 2013

Note 9: Cash Flow Reconciliation

2013
$'000
2012
$'000
Reconciliation of cash and cash equivalents as per Balance Sheet to Cash Flow Statement
Cash and cash equivalents as per:
Cash flow statement 1,476 21,412
Balance sheet 1,476 21,412
Difference - -
Reconciliation of net cost of services to net cash from operating activities:
   Net cost of services (39,681) (39,982)
   Add revenue from Government 45,680 50,454
Adjustments for non-cash items
   Depreciation 1,268 1,121
   Net writedown of financial assets 107 114
   Interest on concessional loans (45) (83)
   Reversal of previous loan writedowns and impairments (144) (320)
Changes in assets / liabilities
(Increase) / decrease in net receivables (1,416) 702
Increase / (decrease) in employee provisions 25 720
Increase / (decrease) in supplier payables (3,714) 7,124
Increase / (decrease) in grants payable (2,610) 4,202
Increase / (decrease) in other payable 89 (210)
Net cash from operating activities (441) 23,842

TORRES STRAIT REGIONAL AUTHORITY
Notes to and forming part of the financial statements
for the period ended 30 June 2013

Note 10: Contingent Assets and Liabilities

Quantifiable Contingencies
There are no contingent assets or contingent liabilities as at 30 June 2013 (2011-12: Nil).

Unquantifiable Contingencies
There are no unquantifiable contingencies as at 30 June 2013 (2011-12 : Nil).

Significant Remote Contingencies
There are no significant remote contingencies as at 30 June 2013 (2011-12 : Nil).

TORRES STRAIT REGIONAL AUTHORITY
Notes to and forming part of the financial statements
for the period ended 30 June 2013

Note 11: Directors Remuneration

2013
No.
2012
No.
The number of non-executive directors of the TSRA included in these figures are shown below in the relevant remuneration bands:
   $0 to $29,999 31 19
   $30,000 to $59,999 2 -
   $60,000 to $89,999 1 -
   $150,000 to $179,999 1 -
   $270,000 to $299,999 - 1
Total 35 20
$ $
Total remuneration received or due and receivable by directors of the TSRA: 461,723 424,508

The TSRA Board consists of 20 elected members who are Torres Strait Islander or Aboriginal people living within a ward in the region. In accordance with the Aboriginal and Torres Strait Islander Act 2005 (Cth) the 2012 election was the first time all Members were directly elected to the TSRA board. The Australian Electoral Commission conducted the TSRA Board Member Elections on 15 September 2012.
They will now be elected every four years from 2012 with previous terms being three years. All Torres Strait Islander and Aboriginal people living within contested TSRA wards who are 18 years of age and over were eligible to vote. The directors other than the chairperson receive sitting fees when undertaking business of the TSRA.
Remuneration of senior executives is included in Note 13: Senior Executive Remuneration.

TORRES STRAIT REGIONAL AUTHORITY
Notes to and forming part of the financial statements
for the period ended 30 June 2013

Note 12A: Related Party Disclosures

Loans to Directors and Director-Related Entities
Loans were made to the following directors and director-related entities. They were approved under normal terms and conditions applying to the TSRA's loan schemes. The directors involved took no part in the relevant decisions of the TSRA.

TSRA Director Name Council Relationships
Mr Wayne Guivarra Torres Strait Island Regional Council
Mr Donald Banu Torres Strait Island Regional Council
Mr Phillemon Mosby Torres Strait Island Regional Council
Mr Kenny Bedford Torres Strait Island Regional Council
Mr Torenzo Elisala Torres Strait Island Regional Council
Mrs Nancy Pearson Torres Strait Island Regional Council
Mr David Bosun Torres Strait Island Regional Council
Mr Keith Fell Torres Strait Island Regional Council
Mr Ron Day Torres Strait Island Regional Council
Mr Ron Enosa Torres Strait Island Regional Council
Mrs Florianna Bero Torres Strait Island Regional Council
Mr John Toshie Kris Torres Strait Island Regional Council
Mr Ted Fraser Nai Torres Strait Island Regional Council
Mr Walter Makie Torres Strait Island Regional Council
Mr Eric Peter Torres Strait Island Regional Council
Mr Marjo Sabatino Torres Strait Island Regional Council
Mr Getano Lui Torres Strait Island Regional Council
Mr Reginald Williams Northern Peninsula Area Regional Council
Mr Jeffrey Aniba Northern Peninsula Area Regional Council
Mr Joseph Elu Northern Peninsula Area Regional Council
Ms Napcia Bin Tahal Torres Shire Council
Mr John Abednego Torres Shire Council
Mr Yen Loban Torres Shire Council

The table below outlines the loan holder/s and the TSRA director with whom a related party connection exists.

Loans
Anthony Titasey
- Mr Keith Fell - TSRA Board Member
Ruth Doolah
- Mr Keith Fell and Mr Mario Sabatino - TSRA Board Members
Triple A Family Values
- Mr Keith Fell and Mr Mario Sabatino - TSRA Board Members
Robert Sagigi
- Mr John Abednego - TSRA Board Member
Elthies Alion Bowie
- Mr John Kris - TSRA Board Member
Mica Newie
- Mr John Kris and Mrs Nancy Pearson - TSRA Board Members
Derek Brank
- Mrs Nancy Pearson and Mr Mario Sabatino - TSRA Board Members
James Mills
- Mr Keith Fell and Mr Mario Sabatino - TSRA Board Members
Quintin Mills
- Mr Keith Fell and Mr Mario Sabatino - TSRA Board Members
Seisia Island Council
- Mr Jeffrey Aniba and Mr Joseph Elu - TSRA Board Members
Loban Marine
- Mr Yen Loban - TSRA Board Member
Seisia Community Torres Strait Islander Corporation
- Mr Joseph Elu - TSRA Board Member
Harry Nona
- Mr Maluwap Nona and Mrs Romina Fujii - TSRA Board Members
Thomas Fujii
- Mr Maluwap Nona and Mrs Romina Fujii - TSRA Board Members
Yen Loban
- TSRA Board Member
Bonita Yamashita and Kevin Sabatino
- Mario Sabatino - TSRA Board Member
Nicholas Charles Loban
- Mr Yen Loban - TSRA Board Member
Michael Paul Mills
- Mr Keith Fell and Mr Mario Sabatino - TSRA Board Members
Samuel Lewin
- Mr Yen Loban and Mr Mario Sabatino - TSRA Board Members

2013 2012
$ $
Loans to current Directors outstanding at year-end: 10,563 5,324
Loan repayments during the year: 12,000 -
Loans to current Director-related Entities outstanding at year-end: 1,159,106 1,239,833
Loans to current Director-related Entities during the year: 421,234 361,524
Loan repayments during the year: 265,576 261,980
Interest revenue included in operating result from loans to current Directors/Director-related Entities: 76,003 90,461
Related party loans for current Directors provided for as doubtful debts: - 5,324
Related party loans written off: 5,369 104,066

The TSRA has adopted AASB 139 Financial Instruments - Recognition and Measurement , and treated loans outstanding at year end as Loans and Receivables valued at amortised cost using the effective interest rate method.

TORRES STRAIT REGIONAL AUTHORITY
Notes to and forming part of the financial statements
for the period ended 30 June 2013

Note 12B: Related Party Disclosures

Other Transactions with Directors or Director-Related Entities

Grants were made to the following Director-related entities. They were approved under normal terms and conditions applying to the TSRA's grant programs. The directors involved took no part in the relevant decisions of the TSRA.

Directors' Name Council Grants Received
2013
$
Grants Received
2012
$
* Torres Shire Council 254,000 1,035,000
* Torres Strait Island Regional Council 5,967,536 8,721,266
* Northern Peninsula Area Regional Council 476,850 287,755
A Noah Andrew Passi 5,000 -
M Nona & W Guivarra Badhulgaw Kuthinaw Mudh (Torres Strait Islanders) Corporation 25,000 65,000
M Nona Badu Art Centre 124,000 -
M Nona & W Guivarra Badu Island Foundation Ltd 101,440 408,417
F Pearson & P Mosby Buthu Lagau Saral (Torres Strait Islanders) Corporation 45,000 21,730
M Sabatino & N Pearson Ceferino Sabatino 10,000 -
K Lui & S Savage Community Enterprises Australia Ltd 4,608,204 -
S Maka & T Elisala Dauanalgaw 10,000 -
M Sabatino & N Pearson Edwin Turner 10,500 -
K Bedford Erub Erwer Meta (TSI) Corporation 60,000 85,000
K Bedford Erub FisheriesManagement Association 9,460 -
K Bedford Erubam Le Traditional Land and Sea Owners Corporation Registered Native Title Body Corporate - 18,000
F Pearson & P Mosby Fred David 5,000 -
K Bedford Ged Erub Trading Homeland Enterprise (Torres Strait Islander) - 35,000
Corporation
G Lui (Jnr) & W Makie Iama Mura Mabaigal (Torres Strait Islanders) Corporation 15,000 20,000
T F Nai Kailag Enterprise Ltd - 96,000
K Lui & J Kris Kaziw Asesered Le Association 21,615 -
J Stephen & F Bero Kos and Abob Fisheries (Torres Strait Islanders) Corporation 30,000 125,000
H Mosby, J Mosby, W Kulkalgal (central Islands) Development Association Inc 12,712 -
Makie, P Mosby & W
Lui
R Day Mer, Dowar & Waier Torres Strait Islanders Corporation For Fisheries - 100,000
A Noah & R Day Mer Gedkem Le 39,000 70,100
M Nona & W Guivarra Mura Badulgal (Torres Strait Islanders) Corporation Registered Native 14,000 11,500
  Title Body Corporate
R Fujii & N Pearson Mura Kosker Sorority Inc 697,000 372,000
S Savage & D Bosun Ngalmun Lagu Minaral (Torres Strait Islanders) Corporation 50,000 50,000
R Fujii Port Kennedy Association 790,500 -
F Pearson & P Mosby Porumalgal 14,000 -
P Mosby Power of the Spirit Ltd - 113,773
J Abednego Relationships Australia Queensland 98,000 -
C Aniba & R Enosa Saibai Community Development (Torres Strait Islanders) Corporation 7,700 123,500
J Elu Seisia Community (TSI) Corporation 39,000 -
W Lui Tony Harry 5,000 -
J Abednego & A Noah Torres Strait Islanders Media Association 1,347,636 -
K Fell & W Guivarra Torres Strait Youth and Recreation Sporting Association Inc 1,183,000 450,000
K Lui & JT Kris Wug Danalaig Incorporated 30,000 20,000

* Please refer to Note 12A for information regarding Director relationships with these entities.

TORRES STRAIT REGIONAL AUTHORITY

Notes to and forming part of the financial statements for the period ended 30 June 2013

Note 13: Senior Executive Remuneration

Note 13A: Senior Executive Remuneration Expense for the Reporting Period

2013 $ 2012 $
Short-term employee benefits:
   Salary 954,775 911,947
   Annual leave accrued 110,153 96,763
   Performance bonuses - 19,694
   Other allowances 156,682 130,409
Total short-term employee benefits 1,221,610 1,158,813
Post-employment benefits:
   Superannuation 165,052 109,891
Total post-employment benefits 165,052 109,891
Other long-term employee benefits:
   Long-service leave 38,484 60,634
Total other long-term employee benefits 38,484 60,634
Total senior executive remuneration expenses 1,425,146 1,329,338

Notes

1. Note 13A is prepared on an accrual basis.

2. Note 13A excludes acting arrangements and part-year service where remuneration expensed as a senior executive was less than $180,000.

TORRES STRAIT REGIONAL AUTHORITY

Notes to and forming part of the financial statements
for the period ended 30 June 2013

Note 13B: Average Annual Reportable Remuneration Paid to Substantive Senior Executives during the Reporting Period

Average annual reportable remuneration paid to substantive senior executives in 2013

Average annual reportable remuneration 1
Substantive senior executives
No.
Reportable salary 2
$
Contributed superannuation 3
$
Reportable allowances 4
$
Bonus paid 5
$
Total reportable remuneration
$
Total reportable remuneration (including part-time arrangements):
less than $180,000 5 115,381 17,971 - - 133,352
$180,000 to $209,999 1 161,788 28,665 - - 190,453
$210,000 to $239,999 1 188,138 22,588 - - 210,726
$240,000 to $269,999 1 208,744 32,484 - - 241,228
Total number of substantive senior executives 8

Average annual reportable remuneration paid to substantive senior executives in 2012

Average annual reportable remuneration 1
Substantive senior executives
No.
Reportable salary 2
$
Contributed superannuation 3
$
Reportable allowances 4
$
Bonus paid 5
$
Total reportable remuneration
$
Total reportable remuneration (including part-time arrangements):
less than $180,000 4 119,485 14,500 - 6,220 140,205
$180,000 to $209,999 1 162,830 20,244 - 12,514 195,588
$210,000 to $239,999 1 196,455 22,480 - 6,427 225,362
Total number of substantive senior executives 7
Notes:
  1. This table reports substantive senior executives who received remuneration during the reporting period. Each row is an averaged figure based on headcount for individuals in the band.
  2. 'Reportable salary' includes the following:
    1. gross payments (less any bonuses paid, which are separated out and disclosed in the 'bonus paid' column);
    2. reportable fringe benefits (at the net amount prior to 'grossing up' to account for tax benefits);
    3. exempt foreign employment income; and
    4. salary sacrificed benefits
  3. The 'contributed superannuation' amount is the average actual cost to the entity for the provision of superannuation benefits to substantive senior executives in that reportable remuneration band during the reporting period.
  4. 'Reportable allowances' are the average actual allowances paid as per the 'total allowances' line on individuals' payment summaries.
  5. 'Bonus paid' represents average actual bonuses paid during the reporting period in that reportable remuneration band. The 'bonus paid' within a particular band may vary between financial years due to various factors such as individuals commencing with or leaving the entity during the financial year.
  6. Various salary sacrifice arrangements were available to senior executives including superannuation, motor vehicle and expense payment fringe benefits. Salary sacrifice benefits are reported in the 'reportable salary' column, excluding salary sacrificed superannuation, which is reported in the 'contributed superannuation' column.

Note 13C: Other Highly Paid Staff

There were no other employees where total remuneration exceeded $180,000.

TORRES STRAIT REGIONAL AUTHORITY
Notes to and forming part of the financial statements
for the period ended 30 June 2013

Note 14: Remuneration of Auditors

2013 2012
$'000 $'000
Financial statement audit services were provided by the Australian
National Audit Office (ANAO).
Fair value of the services provided
   Financial statement audit services 46 44
Total 46 44

No other services were provided by the ANAO

TORRES STRAIT REGIONAL AUTHORITY
Notes to and forming part of the financial statements
for the period ended 30 June 2013

Note 15: Financial Instruments

2013
$'000
2012
$'000
Note 15A: Categories of Financial Instruments
Financial Assets
Held-to-maturity
  Term deposits 36,800 22,298
Total 36,800 22,298
Loans and receivables
  Cash and cash equivalents 1,476 21,412
  Receivables for goods and services 1,170 1,672
  Loans receivable 5,204 5,062
Total 7,850 28,146
Carrying amount of financial assets 44,650 50,444
Financial Liabilities
At amortised cost:
  Trade creditors and accruals (5,491) (9,205)
  Grant liabilities (1,828) (4,438)
Total (7,319) (13,643)
Carrying amount of financial liabilities (7,319) (13,643)

TSRA holds a portfolio of concessional loans that are provided for business development and home ownership programs.

The values of these loans as at 30 June 2013 are as follows:
Concessional loans - nominal value 5,761 5,638
Less: unexpired discount (442) (453)
Less: impairment allowance (115) (123)
Concessional loans - carrying value 5,204 5,062
2013
$'000
2012
$'000
Note 15B: Net Income and Expense from Financial Assets
Loans and receivables
Interest revenue (see note 4B) 2,372 1,777
Impairment (see note 4E) 48 19
Reversal of losses from remeasuring loans and receivables (see note 4E) 96 301
Write down of loans to Net Present Value (see note 3E) (132) (157)
Receivables Goods and services - external parties provided for as impaired (see note 3F) (77) (47)
Net gain from loans and receivables 2,307 1,893
Net gain from financial assets 2,307 1,893

The net income from financial assets not at fair value from profit or loss is $2,307,000 (2012: $1,893,000)

Note 15C: Net Income and Expense from Financial Liabilities

There is no income or expense from financial liabilities for the year ending 30 June 2013 (2012: $Nil)

TORRES STRAIT REGIONAL AUTHORITY
Notes to and forming part of the financial statements
for the period ended 30 June 2013

Note 15D: Fair Value of Financial Instruments

The carrying amount of financial instruments matches their fair value in 2012-13 as in 2011-12.

Note 15E: Credit risk

TSRA was exposed to minimal credit risk as the majority of loans and receivables and all held-to- maturity fancial instruments are cash or high quality trade receivables. TSRA also holds a portfolio of concessional loans that are provided for business development and home ownership programs. The maximum exposure to credit risk is the risk that arises from potential default of a trade debtor or a concessional loan holder. This amount is equal to the total amount of trade and loan receivables (2013: $6,374,000 and 2012: $6,734,000)

In relation to the housing loans, TSRA holds mortgages as sole mortgagor over the houses for which the loans are provided. TSRA receives market advice from a qualified valuer or market expert on the value of a property prior to the loan being approved. In relation to Business Funding Scheme loans, from 2007-08 TSRA has required that inexperienced business owner(s) successfully complete an approved business course and submit a business plan prior to the loan being approved. These policies mitigate against credit risk for the TSRA's loans portfolio.

TSRA has assessed the risk of the default on payment and has allocated $179,945 in 2013 (2012: $180,031) to an allowance for impairment. Security underpinning this impairment includes a 5 bedroom house, which was independently valued in June 2011 at an estimated total value of $546,000.

Credit quality of financial instruments not past due or individually determined as impaired

Not past
due nor
impaired
2013
$'000
Not past
due nor
impaired
2012
$'000
Past due
or
impaired
2013
$'000
Past due
or
impaired
2012
$'000
Cash and cash equivalents 1,476 21,412 - -
Receivables for goods and services 1,084 ,383 151 346
Loans receivable 5,150 5,005 169 180
Term Deposits 36,800 22,298 - -
Total 44,510 50,098 320 526

Ageing of financial assets that were past due but not impaired for 2013

0 to 30
days
$'000
31 to 60
days
$'000
61 to 90
days
$'000
90+
days
$'000
Total
$'000
Receivables for goods and services 5 - 2 79 86
Loans receivable 13 7 6 28 54
Total 18 7 8 107 140

Ageing of financial assets that were past due but not impaired for 2012

0 to 30
days
$'000
31 to 60
days
$'000
61 to 90
days
$'000
90+
days
$'000
Total
$'000
Receivables for goods and services 2 - - 287 289
Loans receivable 14 7 5 31 57
Total 16 7 5 318 346

Note 15F: Liquidity Risk

TSRA's financial liabilities were trade creditors and accruals and grant liabilities. The exposure to liquidity risk was based on the notion that TSRA will encounter difficulty in meeting its obligations associated with financial liabilities. This was highly unlikely due to Government funding and mechanisms available to TSRA and internal policies and procedures put in place to ensure there were appropriate resources to meet its financial obligations.

Maturities for non-derivative financial liabilities 2013

On
demand
$'000
within 1
year
$'000
1 to 2
years
$'000
2 to 5
years
$'000
>5
years
$'000
Total
$'000
Trade creditors and accruals - (5,491) - - - (5,491)
Grant liabilities - (1,828) - - - (1,828)
Total - (7,319) - - - (7,319)

Maturities for non-derivative financial liabilities 2012

On
demand
$'000
within 1
year
$'000
1 to 2
years
$'000
2 to 5
years
$'000
>5
years
$'000
Total
$'000
Trade creditors and accruals - (9,205) - - - (9,205)
Grant liabilities - (4,438) - - - (4,438)
Total - (13,643) - - - (13,643)

TSRA receives funding from its Portfolio Department. TSRA manages its budgeted funds to ensure it has adequate funds to meet payments as they fall due. In addition, the TSRA has policies in place to ensure timely payments are made when due and has no past experience of default.

The entity has no derivative financial liabilities in either 2013 or 2012.

Note 15G: Market Risk

TSRA holds basic financial instruments that did not expose TSRA to certain market risks such as 'currency risk' and 'other price risk'.

The interest-bearing items on the balance sheet are cash at bank, loans and term deposits. Interest earned on cash at bank and term deposits after they mature may be effected by changes in market interest rates. The following table represents the effect to the statement of comprehensive income (and corresponding effect to the cash value in the balance sheet) when the current market interest rate is varied by 1.20%. 1.20% is anticipated to be a reasonable estimate of the maximum movement in market interest rates in financial year 2013-14.

Value $'000 Effect on Statement of Comprehensive Income Income (Expense) $'000
Anticipated interest earned for 2013-14 financial year at current market
interest rate 1,738 0
Decrease of 1.20% in market interest rate 2,269 531
Increase of 1.20% in market interest rate 1,207 (531)

The value of concessional loans is derived by applying the amortised cost using the effective interest method. Because the loan portfolio is valued at net present value using market interest rates, movements in market interest rates will impact on the value of the loan portfolio and the income statement. The following table represents the effect to the income statement (and corresponding effect to the loan portfolio value in the balance sheet) when the current market interest rate is varied by 1.20%. 1.20% is anticipated to be a reasonable estimate of the maximum movement in market interest rates in financial year 2013-14.

Value $'000 Effect on Statement of Comprehensive Income Income (Expense) $'000
Net Present Value of Loans 30 June 2013 5,319 -
Increase of 1.20% in market interest rate 4,905 (414)
Decrease of 1.20% in market interest rate 5,800 481

Assets past due and impaired are represented by loans individually assessed to be at high risk of default.

TORRES STRAIT REGIONAL AUTHORITY
Notes to and forming part of the financial statements
for the period ended 30 June 2013

Note 16: Financial Assets Reconciliation

2013
$'000
2012
$'000
Financial assets Notes
Total financial assets as per balance sheet 46,331 50,444
Less: non-financial instrument components
  Other receivables 5B 1,681 -
Total not-financial instrument components 1,681 -
Total financial assets as per financial instruments note 44,650 50,444

TORRES STRAIT REGIONAL AUTHORITY
Notes to and forming part of the financial statements
for the period ended 30 June 2013

Note 17: Compensation and Debt Relief

2013
$'000
2012
$'000
Compensation and Debt Relief
No payments were made during the reporting period. (2012: No payments made). - -

TORRES STRAIT REGIONAL AUTHORITY Notes to and forming part of the financial statements
for the period ended 30 June 2013

Note 18: Assets Held in Trust