NOTES TO THE FINANCIAL STATEMENTS AT 31ST DECEMBER, 2013
(continued)
19.
RISK MANAGEMENT (continued)
Analysis of individually impaired financial assets:
Carrying
Value
Members’ loans
Accounts receivable and prepayments
Provision
Net Book Value
$
13,677,186
$
4,057,366
2013
$
9,619,820
2012
$
11,322,092
4,692,336
4,692,336
-
-
Write off Policy
The Credit Union writes off a loan when it determines that the loan is uncollectible after considering information such
as the occurrence of significant changes in the borrower’s financial position and the orrower can no longer meet the
b
obligation, and that proceeds from collateral will not be sufficient to ecover the entire exposure.
r
Collateral
The Credit Union employs the use of collateral as a risk mitigation tool hence maintaining its credit risk exposure within
acceptable levels. The Credit Union holds collateral against loans in the form of registered mortgages over property, bill
of sales on motor vehicles and other assets, liens or deposit on shares, guarantees and promissory notes. Estimates of fair
value are based on the value of the collateral at the time of borrowing and are generally not updated except when a loan
78
is individually assessed as impaired. The Credit Union has the right to dispose of repossessed properties the proceeds of
which are used to repay the outstanding loan balances.
Liquidity Risk:
Liquidity risk is the risk that the Credit Union will encounter difficulty in meeting the obligations associated with its financial
liabilities that are settled by delivering cash or another financial asset.