Page 157 - DUT Annual Report 2020

DURBAN UNIVERSITY OF TECHNOLOGY
NOTES TO THE CONSOLIDATED ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2020
22. RISK MANAGEMENT (continued) 22.4 Fair value estimation
When the fair values of financial assets and financial liabilities recorded in the statement of financial position or disclosed in the financial statements cannot be measured based on quoted prices in active markets, the fair value is measured using valuation techniques including the discounted cash flow model. The inputs to these models are taken from observable markets where possible, but where this is not feasible, a degree of judgement is required in establishing fair values. Judgements include considerations of inputs such as liquidity risk, credit risk and volatility. Changes in assumptions about these factors could affect the reported fair value of financial instruments.
The fair value of the financial assets and liabilities is included at the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale.
Management have assessed that cash, short-term deposits, trade receivables, lease liabilities, trade, payables, and other current liabilities approximate their fair value largely due to the short-term maturities of these instruments. Where necessary, student loans and trade receivable are discounted to approximate their fair value on initial recognition.
The following methods and assumptions were used to estimate the fair values:
Long-term fixed-rate borrowings are evaluated by the University based on parameters such as interest rates, specific country risk factors, credit risk and the risk characteristics of the financed project (where applicable).
The fair value of financial instruments traded in active markets (such as quoted equity securities, quoted bonds and unit trusts) is based on quoted market prices at the reporting date. The quoted market price used for financial assets held by the University is the current bid price at year-end.
Fair value hierarchy
The University uses the following hierarchy for determining and disclosing the fair value of financial instruments:
Level 1 Level 2
Level 3
Quoted (unadjusted) prices in active markets for identical assets or liabilities.
Other techniques for which all inputs which have a significant effect on the recorded fair
values are observable, either directly or indirectly.
Techniques which use inputs which have a significant effect on the recorded fair value
that are not based on observable market data.
The following table presents the fair value measurement hierarchy of the University’s assets and liabilities measured at fair value:
DURBAN UNIVERSITY OF TECHNOLOGY ANNUAL REPORT 2020
Reconciliation of levels 1 -3 financial assets: Investments - 2020
Total
Level 1 Level 2 Level 3
Local listed shares Local unlisted shares Bonds
Unit trusts
Money market Foreign investments Total
211 991 61 84 766 92 26 922 123 349
211 991 -
84 766 - - 123 349 420 106
- - - 61 - -
92 - 26 922 - - - 27 014 61
447 181
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