Separate Annual Report 2021

101 BARBADOS PUBLIC WORKERS’ CO-OPERATIVE CREDIT UNION LIMITED | SEPARATE FINANCIAL STATEMENTS 2021 BARBADOS PUBLIC WORKERS' CO-OPERATIVE CREDIT UNION LIMITED Notes to the Separate Financial Statements For the year ended March 31, 2021 (Expressed in Barbados dollars) 81 23. Financial Risk Management, continued Credit risk, continued 2021 Stage 1 Stage 2 Stage 3 Total Balance at beginning of year $ 516,940 1,442,785 21,867,382 23,827,107 Transfer to Stage 1 523,305 - - 523,305 Transfer to Stage 2 - 232,130 - 232,130 Transfer to Stage 3 - - 504,069 504,069 Net remeasurement of loss allowance 1,013,913 (214,855) 7,242,814 8,041,872 Balance at March 31 $ 2,054,158 1,460,060 29,614,265 33,128,483 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 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.