4.1 Contingent Assets and Liabilities

ASPI had no contingent assets or contingent liabilities as at 30 June 2020. (2019: Nil)

Accounting policy

Contingent liabilities are not recognised in the statement of financial position but are reported in the notes. They may arise from uncertainty as to the existence of a liability or represent a liability in respect of which the amount cannot be reliably measured. Contingent liabilities are disclosed when settlement is greater than remote.

4.2 - Financial Instruments

4.2A - Categories of financial instruments

Financial assets

Financial assets measured at amortised cost

Cash at bank

Cash on hand

Receivables for goods and services

Total financial assets measured at amortised cost

Financial liabilities

Financial liabilities measured at amortised cost

Trade creditors

Accrued supplier expenses

Total financial liabilities measured at amortised cost

4.2B - Net gains or losses on financial assets

Financial assets measured at amortised cost

Interest revenue

Net gains on financial assets measured at amortised cost

Net gains on financial assets

Accounting policy

Financial Assets

ASPI classifies its financial assets in accordance to AASB 9 Financial Instruments in the following categories:

a) financial assets at fair value through profit or loss;

b) financial assets at fair value through other comprehensive income; and

c) financial assets measured at amortised cost

Accoridng to AASB 9, the classification depends on both ASPI's business model for managing the financial assets and contractual cash flow characteristics at the time of initial recognition. Financial assets are recognised when ASPI becomes a party to the contract and, as a consequence, has a legal right to receive or a legal 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. ASPI's trade receivables that do not contain a significant financing component, for which ASPI has applied the practical expedient are measured at the transaction price.

Derecognition of Financial Assets

Financial assets are assessed for write-off at the end of each reporting period.

If there is objective evidence or no reasonable expectations of recovering a financial asset in its entirety or a portion thereof, the gross carrying amount of the financial asset will be reduced through profit or loss.

Financial Liabilities

Financial liabilities are recognised and derecognised based upon trade date. All financial liabilities are measured at amortised cost, which is determined using the effective interest method, with interest expense recognised on an effective interest basis. Supplier and other payables are recognised to the extent that the goods or services have been received (and irrespective of having been invoiced).

There has been no reclassification of financial instruments during the period (2019: none).

4.2C - Credit risk

ASPI has exposure to credit risk in respect to receivables for services rendered. The financial assets consist of cash and receivables. The maximum exposure to credit risk is the risk that arises from potential default of a debtor.

This amount is equal to the total amount of receivables for services (2019-2020: $1,000,942 and 2018-2019: $1,193,210). ASPI has assessed the risk of default on payment as negligible.

ASPI holds no collateral to mitigate against credit risk.

ASPI manages its credit risk by entering into contractual arrangements for supplies where the monetary consideration is significant, and through adoption of policy and procedures guiding debt recovery techniques.

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

Cash at bank

Cash on hand

Trade and other receivables

Total

Ageing of financial assets for 2019-2020

Trade and other receivables

Total

Ageing of financial assets for 2018-2019

Trade and other receivables

Total

Australian Strategic Policy Institute Ltd

MANAGING UNCERTAINTIES

This section analyses how ASPI manages financial risks

within its operating environment.

4.2D - Liquidity risk

ASPI's financial liabilities consist only of payables.

It is highly unlikely that ASPI will encounter difficulty in meeting obligations associated with its financial liabilities as it is substantially funded under a funding agreement with the Department of Defence. ASPI supplements its funding with revenue from contracts with customers. In addition, ASPI has adopted internal procedures to ensure there are appropriate resources to meet financial obligations and timely payments are made.

ASPI has no past experience of default.

ASPI's financial liabilities for 2020 - other than the lease liability and make-good provision are all payable within 1 year. ASPI's financial liabilities for 2019 were all payable within 1 year.

4.2E - Market risk

ASPI holds basic financial instruments that do not expose it to certain market risks. ASPI has very minor exposure to 'currency risk' or 'other price risk'. In addition, ASPI has no interest bearing financial liabilities.

ASPI has an interest bearing financial asset, being cash at bank. Cash at bank is subject to a floating interest rate. It is considered that the impact of changes in the market interest rate would have an immaterial effect on ASPI's profit and loss. No assets have been pledged or are held as collateral (2019: nil)