NOTES TO THE FINANCIAL STATEMENTS CONTINUED FOR THE FINANCIAL YEAR ENDED 30 JUNE 2011 (a) Market Risk (i) Foreign Exchange Risk Note 3. Financial Risk Management  (continued) Foreign Exchange Sensitivity Analysis Karoon Gas Australia Ltd  Annual Report 2011 50 The sensitivity analysis is not fully representative of the inherent foreign exchange risk, as the financial year end exposure does  not necessarily reflect the exposure during the course of a financial year. These sensitivities should not be used to forecast the  future effect of movements in United States dollar exchange rates on future cash flows. The following table details the Group’s sensitivity to a 10.0% increase or decrease in the Australian dollar against the United  States dollar, with all other variables held constant. The sensitivity analysis includes only outstanding foreign currency denominated  amounts at the end of the financial year and adjusts their translation for a 10.0% change in the relevant foreign exchange rate. An analysis of the Group’s exposure to foreign exchange risk for financial instruments, expressed in Australian dollars, at the end  of the financial year is set out below: Foreign currency hedging transactions were not entered into during the financial year or previous financial year. Regular sensitivity analysis is conducted to evaluate the potential impact of unfavourable exchange rates on the Group’s future  financial position. The results of this evaluation are used to determine the most appropriate risk mitigation tool to be used. The  Group will hedge when it is deemed the most appropriate risk mitigation tool to be used. United States dollars are bought on the spot market in excess of immediate requirements. Where currencies are purchased in advance of requirements, these balances do not usually exceed three months’ requirements. The Group operates internationally and is exposed to foreign exchange risk arising from currency exposures to predominately  United States dollar expenditures and cash and deposits held in United States dollars. The Group manages foreign exchange risk  at the corporate level by monitoring forecast cash flows in currencies other than Australian dollars and ensuring that adequate  United States dollar cash balances are maintained. Foreign exchange risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes  in foreign exchange rates. Foreign exchange risk arises when future commercial transactions and recognised financial assets and  financial liabilities are denominated in a currency that is not the Company’s functional currency. 2011  2010 AUD  USD  REAL  Total AUD  USD  REAL  Total Consolidated $  $  $  $ $  $  $  $ Financial assets Cash and cash equivalents  192,445,470  73,556,394  837,280 266,839,144 63,389,400 22,987,761  745,675  87,122,836 Receivables  1,722,844  2,280,722  -  4,003,566 735,344  4,138,234  -  4,873,578 Security deposits  359,509  10,027,347 56,973,724  67,360,580 93,727  4,810,814 11,735,021  16,639,562 Total financial assets  194,527,823  85,864,463 57,811,004 338,203,290 64,218,471 31,936,809 12,480,696 108,635,976 Financial liabilities Trade and other payables  1,393,545  1,420,761  994,794  3,809,100 1,175,245 12,127,933  369,446  13,672,624 Total financial liabilities  1,393,545  1,420,761  994,794  3,809,100 1,175,245 12,127,933  369,446  13,672,624