The American Club 2020/2021 Annual Report

52 PAGE

NOTES TO FINANCIAL STATEMENTS 30 June 2021

4. FINANCIAL INSTRUMENTS, FINANCIAL RISKS AND CAPITAL MANAGEMENT (cont’d) (b) Financial risk management policies and objectives The Club’s principal financial instruments, other than derivative financial instruments and investment securities, comprise cash and short term deposits. The Club has various other financial assets and liabilities such as amounts due from members and trade payables, which arise directly from its operations. Risk management is carried out by the Club’s investment advisor under policies approved by the General Committee. Compliance with policies and exposure limits are reviewed by the Investment Sub-committee and reported to the General Committee on a regular basis. The Club is exposed to financial risks arising from its operations and the use of financial instruments. The main risks arising from the Club’s financial instruments are foreign currency risk, interest rate risk, credit risk, market price risk and liquidity risk. The General Committee reviews and agrees to policies for managing these risks as indicated below: (i) Foreign exchange risk management Foreign exchange risk sensitivity analysis The following table details the sensitivity to a 3% increase or decrease in the foreign currency against the functional currency of the Club. 3% is the sensitivity rate used when reporting foreign currency risks internally to key management personnel and represents managements’ assessment of the possible change in foreign exchange rates. The sensitivity analysis includes only outstanding foreign currency denominated monetary items and adjusts their translation at the period end for a 3% change in foreign currency rates.

Liabilities $

Assets $

2021

United states dollar

4,900,000 6,244,595

British pound

- - - - -

263,014

232,776

Hongkong dollar

Euro

213,107

Australian dollar

167,614

Swiss franc

76,865

If the relevant foreign currency strengthens by 3% against the functional currency of the Club, loss for the year will increase (decrease) by: Profit and loss

$

$

2021

(40,338) (7,890) (6,983) (6,393) (5,028) (2,306)

United states dollar

40,338

British pound

7,890

Hongkong dollar

6,983 6,393 5,028 2,306

Euro

Australian dollar

Swiss franc

THE AMERICAN CLUB SINGAPORE