4.1 CONTINGENT ASSETS AND LIABILITIES

Unquantifiable contingencies

At 30 June 2020, ASIO had a number of legal claims against it. ASIO has denied liability and is defending the claims. It is not possible to estimate the amounts of any eventual payments that may be required in relation to these claims.

Accounting policy

Contingent liabilities and contingent assets are not recognised in the statement of financial position 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 existing liability or asset in respect of which the amount cannot be reliably measured. Contingent assets are reported when settlement is probable, but not virtually certain, and contingent liabilities are recognised when settlement is greater than remote.

4.2 FINANCIAL INSTRUMENTS

4.2.A Categories of financial instruments

The net fair values of the financial assets and liabilities are at their carrying amounts. ASIO derived no interest income from financial assets in either the current or prior year.

There was no net gain or loss from financial assets or liabilities through profit or loss for the period ending 30 June 2020 (2019 :Nil).

Accounting policy

Financial assets

ASIO classifies its financial assets as ʻmeasured at amortised costʼ. Financial assets included in this category must meet two criteria:

• the financial asset is held in order to collect the contractual cash flows; and
• the cash flows are solely payments of principal and interest on the principal outstanding amount.

Amortised cost is determined using the effective interest method with income recognised on an effective interest rate basis.

Financial assets are recognised when ASIO becomes party to a contract and, as a consequence, has a legal right to receive or obligation to pay cash and derecognised when the contractual rights to the cash flows from the financial asset expire or are transferred upon trade date.

Financial assets are assessed for impairment at the end of each reporting period. Allowances are made when collectability of the debt is no longer probable.

Financial assets are assessed for impairment at the end of each reporting period based on an amount equal to the lifetime expected credit losses. A write-off directly reduces the gross carrying amount of the financial asset.

Financial liabilities

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). Supplier and other payables are derecognised on payment.