The American Club 2021/2022 Annual Report

PAGE 75 THE AMERICAN CLUB SINGAPORE ANNUAL REPORT 2021 / 2022

NOTES TO FINANCIAL STATEMENTS 30 JUNE 2022

4. FINANCIAL INSTRUMENTS, FINANCIAL RISKS AND CAPITAL MANAGEMENT (cont’d)

The Club mitigates its credit risks through its various credit evaluation processes, credit policies, credit control and collection procedures. There is no concentration of credit exposure to any one particular member.

All due from members that are neither past due nor impaired relate to members that the Club has assessed to be creditworthy, based on the credit evaluation process performed by management.

The maximum exposure to credit risk in the event that members fail to perform their obligations as at the end of the financial year in relation to each class of recognised financial assets is the carrying amount of those assets stated in the statement of financial position.

Further details of credit risks on due from members and other receivables are disclosed in Notes 7 and 8 respectively.

(iv) Market price risk management Market price risk refers to the risk that the fair value or future cash flows of the Club’s financial instruments will fluctuate because of changes inmarket prices (other than interest or exchange rates). The Club is not exposed to market price risk. Specific investment guidelines are used to monitor the risk in the Club’s investments.

No sensitivity analysis is prepared as the Club does not expect any material effect on the Club’s profit and loss arising from the effects of reasonably possible changes to market price on fair value of financial instruments at the end of the reporting period.

(v) Liquidity risk management Liquidity risk arises from the possibility that the Club is unable to meet its obligations towards other counterparties.

The Club aims to maintain flexibility in funding by maintaining sufficient cash and bank balances, and internally generated cash flows to finance its activities.

All financial liabilities in 2022 and 2021 are repayable on demand or due within 1 year from the end of the reporting period. The effective interest rates, where applicable, are disclosed in the respective notes to the financial statements.