CCS Annual Report 2015-2016

NOTES TO FINANCIAL STATEMENTS

31 MARCH 2016

FINANCIAL INSTRUMENTS

- Financial assets andfinancial liabilities are recognisedon theCommission’s statement

of financial position when the Commission becomes a party to the contractual provisions of the instrument.

Effective interest method

The effective interest method is a method of calculating the amortised cost of a financial instrument and of

allocating interest income or expense over the relevant period. The effective interest rate is the rate that exactly

discounts estimated future cash receipts or payments (including all fees on points paid or received that form

an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the

expected life of the financial instrument, orwhere appropriate, a shorter period. Income and expense is recognised

on an effective interest basis for debt instruments.

FINANCIAL ASSETS

Other receivables

Other receivables aremeasured at amortised cost using the effective interest method less impairment. Interest

is recognised by applying the effective interest method, except for short-term receivables when the recognition

of interest would be immaterial.

Impairment of financial assets

Financial assets are assessed for indicators of impairment at the end of each reporting period. Financial assets

are impaired where there is objective evidence that, as a result of one or more events that occurred after the

initial recognition of the financial asset, the estimated future cash flows of the investment have been impacted.

For financial assets carried at amortised cost, the amount of the impairment is the difference between the

asset’s carrying amount and the present value of estimated future cash flows, discounted at the original effective

interest rate.

The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets with

the exception of receivables where the carrying amount is reduced through the use of an allowance account.

When a receivable is uncollectible, it is written off against the allowance account. Subsequent recoveries of

amounts previously written off are credited against the allowance account. Changes in the carrying amount of

the allowance account are recognised in income or expenditure.

If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related

objectively to an event occurring after the impairment loss was recognised, the previously recognised

impairment loss is reversed through profit or loss to the extent the carrying amount of the financial assets

at the date the impairment is reversed does not exceed what the amortised cost would have been had the

impairment not been recognised.

Derecognition of financial assets

The Commission derecognises a financial asset only when the contractual rights to the cash flows from the

asset expire, or it transfers the financial asset and substantially all the risks and rewards of ownership of the

asset to another entity. If the Commission neither transfers nor retains substantially all the risks and rewards

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(CONT’D)

CCS ANNUAL REPORT 2015-2016

FINANCIAL STATEMENTS