Equity instruments are not subject to impairment under AASB 9. Other financial assets mandatorily measured or designated at fair value through net result are not subject to impairment assessment under AASB 9. While cash and cash equivalents are also subject to the impairment requirements of AASB 9, the identified impairment loss was immaterial.

###### Contractual receivables at amortised cost

DJPR applies AASB 9 simplified approach for all contractual receivables to measure expected credit losses using a lifetime expected loss allowance based on the assumptions about risk of default and expected loss rates. DJPR has grouped contractual receivables on shared credit risk characteristics and days past due and select the expected credit loss rate based on DJPR’s receipting trends for the six months, existing market conditions, as well as forward-looking estimates at the end of the financial year. On this basis, DJPR determines there is minimal change required to the impairment assessment as a result of the credit loss analysis. Credit loss allowance is classified as other economic flows in the net result. Contractual receivables are written off when there is no reasonable expectation of recovery and impairment losses are classified as a transaction expense. Subsequent recoveries of amounts previously written off are credited against the same line item. Previously, a provision for doubtful debts was recognised when there is objective evidence that the debts may not be collected and bad debts are written off when identified. A provision is made for estimated irrecoverable amounts from the sale of goods when there is objective evidence that an individual receivable is impaired. Bad debts considered as written off by mutual consent.

###### Statutory receivables and debt investments at amortised cost

DJPR’s non-contractual receivables arising from statutory requirements are not financial instruments. However, they are nevertheless recognised and measured in accordance with AASB 9 requirements as if those receivables are financial instruments. Both the statutory receivables and investments in debt instruments are considered to have low credit risk, taking into account the counterparty’s credit rating, risk of default and capacity to meet contractual cash flow obligations in the near term. As the result, the loss allowance recognised for these financial assets during the period was limited to six months expected losses.

###### Financial instruments: Liquidity risk

Liquidity risk is the risk that DJPR would be unable to meet its financial obligations as and when they fall due. DJPR operates under the government fair payments policy of settling financial obligations within 30 days and in the event of a dispute, making payments within 30 days from the date of resolution. DJPR's maximum exposure to liquidity risk is the carrying amounts of financial liabilities as disclosed in the balance sheet. DJPR manages its liquidity risk by: close monitoring of its short-term and long-term borrowings by senior management, including monthly reviews on • current and future borrowing levels and requirements maintaining an adequate level of uncommitted funds that can be drawn at short notice to meet its short-term obligations • holding investments and other contractual financial assets that are readily tradeable • in the financial markets careful maturity planning of its financial obligations based on forecasts of future • cash flows a high credit rating for the State of Victoria (Moody's Investor Services & Standard & Poor's triple-A), which assists in • accessing debt market at a lower interest rate. DJPR's exposure to liquidity risk is deemed insignificant based on current assessment of risk. Cash for unexpected events is generally sourced from liquidation of financial investments. Maximum exposure to liquidity risk is the carrying amounts of financial liabilities as disclosed in the balance sheet.

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DJPR Annual Report 2018–19