NOTES TO THE FINANCIAL STATEMENTS AT 31ST DECEMBER, 2013
(continued)
19.
FINANCIAL RISK MANAGEMENT (continued)
Operational Risk:
Operational risk is the risk of direct or indirect loss arising from a wide variety of causes associated with the Credit Union’s
processes, personnel, technology and infrastructure, and from external factors other than credit, market and liquidity risks
such as those arising from legal and regulatory requirements and generally accepted standards of good corporate behaviour.
Operational risks arise from all of the Credit Union’s operations. The Credit Union’s objective is to manage operational risk so
as to balance the avoidance of financial losses and damage to the Credit Union’s reputation with overall cost effectiveness
and to avoid control procedures that restrict initiative and creativity. The primary responsibility for development and implementation of controls to address operational risk is assigned to senior management. This responsibility is supported by the
development of overall Credit Union standards for the management of operational risk in the following areas:
• Requirements for appropriate segregation of duties, including the independent authorization of transactions
• Requirements for the reconciliation and monitoring of transactions.
• Compliance with regulatory and other legal requirements
• Documentation of controls and procedures
• Requirements for the periodic assessment of operational risks faced, and the adequacy of controls and procedures to
address the risks identified
• Requirements for the reporting of operational losses and proposed remedial action
• Development of contingency plans
• Training and professional development
• Risk mitigation, including insurance where this is effective
20.
INCOME TAX
The Credit Union is exempt from the payment of Income Tax under Section 25(P) of the Income Tax Act 1994.
21.
COMMITMENT
As at the statement of financial position date un-disbursed loans committed amounted to approximately $3.7 million.
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