BARBADOS PUBLIC WORKERS’ CO-OPERATIVE CREDIT UNION LIMITED | NON-CONSOLIDATED ANNUAL REPORT 2020 85 BARBADOS PUBLIC WORKERS' CO-OPERATIVE CREDIT UNION LIMITED Notes to the Non-consolidated Financial Statements For the year ended March 31, 2020 (Expressed in Barbados dollars) 68 23. Financial Risk Management, continued Credit risk, continued 2020 Stage 1 Stage 2 Stage 3 Total Balance at beginning of year 822,065 1,468,067 22,381,377 24,671,509 Transfer to Stage 1 (296,826) - - (296,826) Transfer to Stage 2 - (1,236,996) - (1,236,996) Transfer to Stage 3 - - 3,022,987 3,022,987 Net remeasurement of loss allowance (8,299) 1,211,714 3,385,236 4,588,651 Amounts Charged-off - - (6,922,218) (6,922,218) Balance at March 31 516,940 1,442,785 21,867,382 23,827,107 2019 Stage 1 Stage 2 Stage 3 Total Balance at beginning of year 933,583 1,460,328 21,349,370 23,743,281 Transfer to Stage 1 227,555 - - 227,555 Transfer to Stage 2 - 630,392 - 630,392 Transfer to Stage 3 - - 492,862 492,862 Net remeasurement of loss allowance (339,073) (622,653) 3,557,125 2,595,399 Amounts Charged-off - - (3,017,980) (3,017,980) Balance at March 31 822,065 1,468,067 22,381,377 24,671,509 Liquidity risk and funding management Liquidity risk is defined as the risk that the Credit Union will encounter difficulty in meeting obligations associated with financial liabilities that are settled by delivering cash or another financial asset. Liquidity risk arises because of the possibility that the Credit Union might be unable to meet its payment obligations when they fall due under both normal and stressed circumstances. To limit this risk, management has arranged diversified funding sources in addition to its core deposit base, and adopted a policy of managing assets with liquidity in mind and of monitoring future cash flows and liquidity on a daily basis. The Credit Union has developed internal control processes and contingency plans for managing liquidity risk. This incorporates an assessment of expected cash flows and the availability of high grade collateral which could be used to secure additional funding if required. The Credit Union maintains a portfolio of highly marketable and diverse assets that are assumed to be easily liquidated in the event of an unforeseen interruption of cash flow. The Credit Union also has committed lines of credit that it can access to meet liquidity needs.
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