BARBADOS PUBLIC WORKERS’ CO-OPERATIVE CREDIT UNION LIMITED | CONSOLIDATED ANNUAL REPORT 2020 42 BARBADOS PUBLIC WORKERS’ CO-OPERATIVE CREDIT UNION LIMITED Notes to the Consolidated Financial Statements For the year ended March 31, 2020 (Expressed in Barbados dollars) 25 2. Accounting Policies, continued (p) Expected credit losses and impairment, continued (i) Non derivative financial assets, continued Credit impaired financial assets A financial asset is credit impaired when one or more events that have a detrimental impact on the estimated future cash flows of the financial asset have occurred. Evidence that a financial asset is credit impaired includes the following observable data: • Significant financial difficulty of the borrower or issuer • A breach of contract such as default or past due event • The restructuring of a loan or advance by the Group on terms that the Group would not otherwise consider • The disappearance of an active market for a security because of financial difficulties A loan that has been renegotiated due to the deterioration in the borrower’s condition is usually considered to be credit-impaired unless there is evidence that the risk of not receiving contractual cash flows has reduced significantly and there are no other indicators of impairment. In addition, a loan that is overdue for 90 days or more is considered credit-impaired. The Group considers the following when assessing whether sovereign debt is credit-impaired: • The market’s assessment of credit worthiness as reflected in the bond yields • The rating agencies’ assessment of creditworthiness • The country’s ability to access the capital markets for new debt issuance • The probability of debt being restructured, resulting in holders suffering losses through voluntary or mandatory debt forgiveness. Write-off Loans and debt securities are written off when there is no reasonable expectation of recovering a financial asset in its entirety or a portion thereof. This is generally the case when the Group determines that the borrower does not have the assets or source of income that could generate sufficient cash flows to repay the amounts subject to the write off. This assessment is carried out at the individual asset level. Recoveries of amounts previously written off are included in impairment losses on financial instruments in the consolidated statement of income and consolidated statement of comprehensive income. Financial assets that are written off are still subject to enforcement activities in order to company with the Group’s procedures for recovery of amounts due.
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