11. Financial risk management (continued)
e. Credit risk Credit risk is the risk of financial loss to the Corporation if a customer or counterparty to a financial or derivative instrument fails to meet its contractual obligations. The Corporation is exposed to credit risk through cash, trade and other receivables, debt retirement funds and derivative instrument assets. Credit risk related to cash and debt retirement funds is minimized by dealing with institutions that have strong credit ratings and holding highly-rated financial securities. The Corporation extends credit to its customers in the normal course of business and is at risk of loss in the event of non-performance by counterparties on certain of the financial and derivative instruments. To reduce its credit risk, the Corporation has established policies and procedures to monitor and limit the amount of credit extended to its customers and counterparties and may require letters of credit and other forms of security. At year end, the maximum credit exposure to a single counterparty was $5 million (2013 – $4 million). The carrying amount of financial and derivative assets represents the maximum credit exposure as follows: (millions) 2014 2013 Cash $ 5 $ – Trade and other receivables 148 148 Debt retirement funds 93 78 Fair value of derivative instrument assets 21 28 $ 267 $ 254
The following reflects an aging summary of the Corporation’s trade and other receivables: (millions)
2014
2013
Current
$ 140
$ 138
30 - 59 days 60 - 89 days
5 2 2
6 2 6
Greater than 90 days
149
152
Allowance for doubtful accounts
(1)
(4)
$ 148
$ 148
The change in the allowance for doubtful accounts in respect of trade and other receivables was as follows: (millions) 2014
2013
Balance, beginning of year
$
2 – 1
$
1 3 – –
Provision
Recoveries Write-offs
(2)
Balance, end of year
$
1
$
4
56
Consolidated Financial Statements
Made with FlippingBook Ebook Creator