SANDYPORT HOMEOWNERS ASSOCIATION LIMITED

NOTES TO THE AUDITED FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2022

(Expressed in Bahamian Dollars)

21. FINANCIAL RISK MANAGEMENT (CONTINUED)

b. Credit risk

Credit risk is the risk that a counterparty to a financial instrument will fail to discharge an obligation or commitment that it has entered into with the Homeowners Association. Credit risk is generally higher when a nonexchange-traded financial instrument is involved, as the counterparty is not backed by an exchange clearing house.

The carrying amount of financial assets best represents the maximum credit risk exposure at the reporting date.

At the reporting date the Homeowners Association’s financial assets exposed to credit risk amounted to the following:

At December 31, 2022 substantially, all transactions were cleared through First Caribbean International Bank (Bahamas) Ltd and Scotiabank (Bahamas) Limited.

Bankruptcy or insolvency of the custodians may cause the Homeowners Association’s rights with respect to cash at bank to be delayed or limited. The Homeowners Association regularly monitors its risk by monitoring the credit quality of the custodians.

There is no credit rating available for the custodians mentioned above.

c. Liquidity risk

Liquidity risk is the risk that the entity will encounter difficulty in meeting obligations associated with its financial liabilities.

The table below summarizes the maturity profile of the Homeowners Association’s financial instruments based on undiscounted contractual payments.

SANDYPORT HOMEOWNERS ASSOCIATION LIMITED

NOTES TO THE AUDITED FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2022

(Expressed in Bahamian Dollars)

21. FINANCIAL RISK MANAGEMENT (CONTINUED) c. Liquidity risk (Continued)