Page 24 University of Technology, Jamaica Notes to the Financial Statements 31 March 2020 (expressed in Jamaican dollars unless otherwise indicated) 3. Financial Risk Management (Continued) (a) Credit risk (continued) Assets written off Financial assets are written off when there is no reasonable expectation of recovery, such as a debtor failing to engage in a repayment plan with the University. The University categorises a receivable for write off when a debtor fails to make contractual payments, even after several attempts at enforcement and/or recovery efforts. Where receivables have been written off, the University continues to engage in enforcement activity to attempt to recover the receivable due. Where recoveries are made, these are recognised in the statement of comprehensive income. A summary of the assumptions underpinning the University’s expected credit loss model is as follows: Category Definition Basis for recognition of expected credit loss provision Performing Customers have a low risk of default and a strong capacity to meet contractual cash flows 12 month expected losses. Where the expected lifetime of an asset is less than 12 months, expected losses are measured at its expected lifetime. Underperforming Receivables for which there is a significant increase in credit risk; as significant increase in credit risk is presumed if the arrears is aged beyond 30 days Lifetime expected losses Non-performing Receivables is aged beyond 90 days and management has suspended the ability to conduct transactions Lifetime expected losses Write-off There is no reasonable expectation of recovery. Asset is written off University of Technology, Jamaica 140
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