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Financial instruments | 12 Months Ended
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Sep. 30, 2022
Financial Instruments [Abstract] |
Financial instruments | Financial instruments FAIR VALUE MEASUREMENTS Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Valuation techniques used to value financial instruments are as follows: - The fair value of the 2014 U.S. Senior Notes, the 2021 U.S. Senior Notes, the 2021 CAD Senior Notes, the unsecured committed revolving credit facility, the unsecured committed term loan credit facility and the other long-term debt is estimated by discounting expected cash flows at rates currently offered to the Company for debts of the same remaining maturities and conditions; - The fair value of long-term bonds included in funds held for clients and in long-term investments is determined by discounting the future cash flows using observable inputs, such as interest rate yield curves or credit spreads, or according to similar transactions on an arm's-length basis; - The fair value of foreign currency forward contracts is determined using forward exchange rates at the end of the reporting period; - The fair value of cross-currency swaps is determined based on market data (primarily yield curves, exchange rates and interest rates) to calculate the present value of all estimated cash flows; - The fair value of c ash, cash equivalents and cash included in funds held for clients and short-term investments included in current financial assets is determined using observable quotes; and - The fair value of deferred compensation plan assets within long-term financial assets is based on observable price quotations and net assets values at the reporting date. As at September 30, 2022, there were no changes in valuation techniques. The following table presents the financial liabilities included in the long-term debt (Note 14) measured at amortized cost categorized using the fair value hierarchy.
|  | As at September 30, 2022 | As at September 30, 2021
| Level | Carrying amount | Fair value | Carrying amount | Fair value
|  | $ | $ | $ | $
2014 U.S. Senior Notes | Level 2 | 550,177 |  | 539,752 |  | 888,307 |  | 936,084 |
2021 U.S. Senior Notes | Level 2 | 1,361,974 |  | 1,127,739 |  | 1,253,226 |  | 1,255,055 |
2021 CAD Senior Notes | Level 2 | 595,900 |  | 503,227 |  | 595,331 |  | 585,506 |
Other long-term debt | Level 2 | 71,278 |  | 68,991 |  | 31,169 |  | 30,345 |
|  | 2,579,329 |  | 2,239,709 |  | 2,768,033 |  | 2,806,990 |
For the remaining financial assets and liabilities measured at amortized cost, the carrying values approximate the fair values of the financial instruments given their short term maturity. During the year ended September 30, 2022, the Company entered into Canadian dollar to euro fixed for fixed cross-currency swap agreements for a notional amount of $600,000,000, related to the 2021 CAD Senior Notes, which has a maturity date of September 2028. The cross-currency swaps were designated as hedging instruments on the Company’s net investment in European operations. 31. Financial instruments (continued) FAIR VALUE MEASUREMENTS (CONTINUED) The following table presents financial assets and liabilities measured at fair value categorized using the fair value hierarchy:
| Level | As at September 30, 2022 | As at September 30, 2021
|  | $ | $
Financial assets |  |  |  |  |
FVTE |  |  |  |  |
Cash and cash equivalents | Level 2 |  | 966,458 |  |  | 1,699,206
Cash included in funds held for clients (Note 5) | Level 2 |  | 504,726 |  |  | 456,525
Deferred compensation plan assets (Note 11) | Level 1 |  | 71,863 |  |  | 81,633
|  |  | 1,543,047 |  | 2,237,364
Derivative financial instruments designated as hedging instruments |  |  |  |  |
Current derivative financial instruments included in current financial assets | Level 2 |  |  |  |
Cross-currency swaps |  |  | 8,740 |  |  | 4,146
Foreign currency forward contracts |  |  | 18,934 |  | 12,745
Interest rate swaps |  |  | — |  |  | 1,043
Long-term derivative financial instruments (Note 11) | Level 2 |  |  |  |
Cross-currency swaps |  |  | 222,246 |  | 24,347
Foreign currency forward contracts |  |  | 15,631 |  | 9,231
|  |  | 265,551 |  | 51,512
FVOCI |  |  |  |  |
Short-term investments included in current financial assets | Level 2 |  | 6,184 |  |  | 1,027
Long-term bonds included in funds held for clients (Note 5) | Level 2 |  | 94,113 |  |  | 136,629
Long-term investments (Note 11) | Level 2 |  | 16,826 |  |  | 19,354
|  |  | 117,123 |  | 157,010
Financial liabilities |  |  |  |  |
Derivative financial instruments designated as hedging instruments |  |  |  |  |
Current derivative financial instruments | Level 2 |  |  |  |
Cross-currency swaps |  |  | — |  |  | 5,762
Foreign currency forward contracts |  |  | 5,710 |  |  | 735
Long-term derivative financial instruments | Level 2 |  |  |  |
Cross-currency swaps |  |  | 1,685 |  |  | 39,918
Foreign currency forward contracts |  |  | 4,795 |  |  | 1,866
|  |  | 12,190 |  | 48,281
There have been no transfers between Level 1 and Level 2 for the years ended September 30, 2022 and 2021. 31. Financial instruments (continued) MARKET RISK Market risk incorporates a range of risks. Movements in risk factors, such as interest rate risk and currency risk, affect the fair values of financial assets and liabilities. Interest rate risk During the year ended September 30, 2022, the Company had interest rate swaps whereby the Company received a fixed rate of interest and paid interest at a variable rate of its 2011 U.S. Senior Note. These swaps were being used to hedge the exposure to changes in the fair value of the debt. In December 2021, the Company repaid the last tranche of the 2011 U.S. Senior Note and settled the related interest rate swaps (Note 14). The following table summarizes the fair value of these swaps.
|  |  |  |  | As at September 30, 2022 | As at September 30, 2021
Interest rate swaps | Notional amount | Receive Rate | Pay Rate | Maturity | Fair value | Fair value
|  |  |  |  | $ | $
Fair value hedges of 2011 U.S. Senior Note | U.S.$250,000 | 4.99% | LIBOR 1 month +3.26% | December 2021 | — |  | 1,043 |
In addition, the Company designates cross-currency interest rate swaps as cash flow hedges for changes in both interest rates and foreign exchange rates of foreign currency denominated long-term debt as described below. The Company is also exposed to interest rate risk on its unsecured committed revolving credit facility carrying amount. The Company analyzes its interest rate risk exposure on an ongoing basis using various scenarios to simulate refinancing or the renewal of existing positions. Based on these scenarios, a change in the interest rate of 1% would not have had a significant impact on net earnings. Currency risk The Company operates internationally and is exposed to risk from changes in foreign currency exchange rates. The Company mitigates this risk principally through foreign currency denominated debt and derivative financial instruments, which includes foreign currency forward contracts and cross-currency swaps. The Company hedges a portion of the translation of the Company’s net investments in its U.S. operations into Canadian dollar, with Senior U.S. unsecured notes. As of September 30, 2022, the Senior U.S. unsecured notes of a carrying value of $1,547,617,000 and a nominal amount of $1,547,680,000 have been designated as hedging instruments to hedge portions of the Company’s net investments in its U.S. operations. The Company also hedges a portion of the translation of the Company’s net investments in its European operations with cross-currency swaps. 31. Financial instruments (continued) MARKET RISK (CONTINUED) Currency risk (continued) The following tables summarize the cross-currency swap agreements that the Company had entered into in order to manage its currency:
|  |  |  |  | As at September 30, 2022 | As at September 30, 2021
Receive Notional | Receive Rate | Pay Notional | Pay rate | Maturity | Fair value | Fair value
|  |  |  |  | $ | $
Hedges of net investments in European operations
$759,400 | From 1.62% to 3.81% | €521,337 | From (0.14)% to 2.51% | From September 2023 to 2028 | 78,647 |  | 12,859
$136,274 | From 3.57% to 3.63% | £75,842 | From 2.67% to 2.80% | September 2024 | 24,247 |  | 9,814
$58,419 | From 3.57% to 3.68% | kr371,900 | From 2.12% to 2.18% | September 2024 | 12,625 |  | 5,820
Hedges of net investments in European operations and cash flow hedges on unsecured committed term loan credit facility
US$500,000 | LIBOR 1 month + 1.00% | €443,381 | From 1.13% to 1.17% | December 2023 | 104,330 |  | (27,819) |
Cash flow hedges of 2014 U.S Senior Notes
US$265,000 | From 3.74% to 4.06% | $354,093 | From 3.45% to 3.81% | From September 2023 to 2024 | 9,452 |  | (17,861) |
Total |  |  |  |  | 229,301 |  | (17,187) |
During the year ended September 30, 2022, the Company settled cross-currency swaps with a notional amount of $69,300,000 for a net amount of $6,258,000. The related amounts recognized in accumulated other comprehensive income will be transferred to earnings when the net investment is disposed of. The Company enters into foreign currency forward contracts to hedge the variability in various foreign currency exchange rates on future revenues. Hedging relationships are designated and documented at inception and quarterly effectiveness assessments are performed during the year. As at September 30, 2022, the Company held foreign currency forward contracts to hedge exposures to changes in foreign currency, which have the following notional, average contract rates and maturities:
|  | Average contract rates | As at September 30, 2022 | As at September 30, 2021
Foreign currency forward contracts | Notional | Less than one year | More than one year | Fair value | Fair value
|  |  |  | $ | $
USD/INR | US$227,289 | 80.99 | 83.17 | (7,803) |  | 4,002
CAD/INR | $302,557 | 62.40 | 64.41 | 7,865 |  | 882
EUR/INR | €67,895 | 96.28 | 95.93 | 11,690 |  | 6,650
GBP/INR | £61,686 | 106.91 | 105.62 | 12,753 |  | 2,390
SEK/INR | kr49,908 | 9.04 | 7.40 | 1,047 |  | (10) |
EUR/GBP |  |  |  | — |  | 1,033 |
EUR/MAD | €22,190 | 11.00 | 10.70 | (201) |  | 2,064
EUR/CZK | €7,082 | 26.80 | 26.87 | 611 |  | 758 |
EUR/SEK | €7,241 | 10.77 | 10.36 | (148) |  | 1,396
Others | $65,935 |  |  | (1,754) |  | 210 |
Total |  |  |  | 24,060 |  | 19,375 |
31. Financial instruments (continued) MARKET RISK (CONTINUED) Currency risk (continued) The following table details the Company's sensitivity to a 10% strengthening of the Swedish krona, the U.S. dollar, the euro and the British pound foreign currency rates on net earnings and comprehensive income. The sensitivity analysis on net earnings presents the impact of foreign currency denominated financial instruments and adjusts their translation at period end for a 10% strengthening in foreign currency rates. The sensitivity analysis on other comprehensive income presents the impact of a 10% strengthening in foreign currency rates on the fair value of foreign currency forward contracts designated as cash flow hedges and on net investment hedges.
|  |  |  | 2022 |  |  |  | 2021
| euro impact | U.S. dollar impact | British pound impact | Swedish krona impact | euro impact | U.S. dollar impact | British pound impact | Swedish krona impact
| $ | $ | $ | $ | $ | $ | $ | $
Increase in net earnings | 2,835 |  | 3,604 |  | 622 |  | 883 |  | 1,294 |  | 1,416 |  | 1,227 |  | 171 |
Decrease in other comprehensive loss | (183,986) |  | (179,780) |  | (31,700) |  | (8,577) |  | (83,334) |  | (187,587) |  | (25,622) |  | (8,287) |
LIQUIDITY RISK Liquidity risk that an entity will encounter difficulty in meeting obligations associated with financial liabilities that are settled by delivering cash or another financial assets. The Company’s activities are financed through a combination of the cash flows from operations, borrowing under existing unsecured committed revolving credit facility, the issuance of debt and the issuance of equity. One of management’s primary goals is to maintain an optimal level of liquidity through the active management of the assets and liabilities as well as the cash flows. The Company regularly monitors its cash forecasts to ensure it has sufficient flexibility under its available liquidity to meet its obligations. 31. Financial instruments (continued) LIQUIDITY RISK (CONTINUED) The following tables summarize the carrying amount and the contractual maturities of both the interest and principal portion of financial liabilities. All amounts contractually denominated in foreign currency are presented in Canadian dollar equivalent amounts using the period-end spot rate or floating rate.
As at September 30, 2022 | Carrying amount | Contractual cash flows | Less than one year | Between one and three years | Between three and five years | Beyond five years
| $ | $ | $ | $ | $ | $
Non-derivative financial liabilities |  |  |  |  |  |
Accounts payable and accrued liabilities | 1,016,407 |  | 1,016,407 |  | 1,016,407 |  | — |  | — |  | — |
Accrued compensation and employee-related liabilities | 1,130,726 |  | 1,130,726 |  | 1,130,726 |  | — |  | — |  | — |
2014 U.S. Senior Notes | 550,177 |  | 591,467 |  | 90,680 |  | 500,787 |  | — |  | — |
2021 U.S. Senior Notes | 1,361,974 |  | 1,537,370 |  | 24,623 |  | 49,246 |  | 862,639 |  | 600,862 |
2021 CAD Senior Notes | 595,900 |  | 675,600 |  | 12,600 |  | 25,200 |  | 25,200 |  | 612,600 |
Unsecured committed term loan credit facility | 687,705 |  | 721,807 |  | 27,053 |  | 694,754 |  | — |  | — |
Lease liabilities | 709,201 |  | 808,445 |  | 182,815 |  | 295,017 |  | 166,848 |  | 163,765 |
Other long-term debt | 71,278 |  | 80,324 |  | 25,843 |  | 11,919 |  | 42,557 |  | 5 |
Clients’ funds obligations | 604,431 |  | 604,431 |  | 604,431 |  | — |  | — |  | — |
Derivative financial liabilities |  |  |  |  |  |
Cash flow hedges of future revenue | 10,505 |  |  |  |  |  |
Outflow |  | 304,698 |  | 110,827 |  | 193,871 |  | — |  | — |
(Inflow) |  | (311,446) |  | (109,319) |  | (202,127) |  | — |  | — |
Cross-currency swaps | 1,685 |  |  |  |  |  |
Outflow |  | 168,213 |  | 74,902 |  | 93,311 |  | — |  | — |
(Inflow) |  | (167,586) |  | (74,762) |  | (92,824) |  | — |  | — |
| 6,739,989 |  | 7,160,456 |  | 3,116,826 |  | 1,569,154 |  | 1,097,244 |  | 1,377,232 |
As at September 30, 2021 | Carrying amount | Contractual cash flows | Less than one year | Between one and three years | Between three and five years | Beyond five years
| $ | $ | $ | $ | $ | $
Non-derivative financial liabilities |  |  |  |  |  |
Accounts payable and accrued liabilities | 891,374 |  | 891,374 |  | 891,374 |  | — |  | — |  | — |
Accrued compensation and employee-related liabilities | 1,084,014 |  | 1,084,014 |  | 1,084,014 |  | — |  | — |  | — |
2011 & 2014 U.S. Senior Notes | 888,307 |  | 955,768 |  | 410,738 |  | 545,030 |  | — |  | — |
2021 U.S. Senior Notes | 1,253,226 |  | 1,439,360 |  | 22,690 |  | 45,380 |  | 805,940 |  | 565,350 |
2021 CAD Senior Notes | 595,331 |  | 688,269 |  | 12,669 |  | 25,200 |  | 25,200 |  | 625,200 |
Unsecured committed term loan credit facility | 633,623 |  | 649,498 |  | 7,043 |  | 642,455 |  | — |  | — |
Lease liabilities | 776,940 |  | 877,498 |  | 192,750 |  | 318,993 |  | 180,593 |  | 185,162 |
Other long-term debt | 31,169 |  | 32,071 |  | 13,133 |  | 18,337 |  | 595 |  | 6 |
Clients’ funds obligations | 591,101 |  | 591,101 |  | 591,101 |  | — |  | — |  | — |
Derivative financial liabilities |  |  |  |  |  |
Cash flow hedges of future revenue | 2,601 |  |  |  |  |  |
Outflow |  | 163,162 |  | 55,039 |  | 103,373 |  | 4,750 |  | — |
(Inflow) |  | (171,282) |  | (55,756) |  | (110,294) |  | (5,232) |  | — |
Cross-currency swaps | 45,680 |  |  |  |  |  |
Outflow |  | 1,128,791 |  | 91,667 |  | 1,037,124 |  | — |  | — |
(Inflow) |  | (1,088,240) |  | (85,776) |  | (1,002,464) |  | — |  | — |
| 6,793,366 |  | 7,241,384 |  | 3,230,686 |  | 1,623,134 |  | 1,011,846 |  | 1,375,718 |
31. Financial instruments (continued) LIQUIDITY RISK (CONTINUED) As at September 30, 2022, the Company held cash and cash equivalents, funds held for clients, short-term investments and long-term investments of $1,588,307,000 ($2,312,741,000 as at September 30, 2021). The Company also had available $1,495,730,000 in unsecured committed revolving credit facility ($1,493,372,000 as at September 30, 2021). As at September 30, 2022, trade accounts receivable amounted to $1,106,187,000 (Note 4) ($938,417,000 as at September 30, 2021). Given the Company’s available liquid resources as compared to the timing of the payments of liabilities, management assesses the Company’s liquidity risk to be low. CREDIT RISK The Company takes on exposure to credit risk, which is the risk that a counterparty will be unable to pay amounts in full when due. Financial instruments that potentially subject the Company to concentrations of credit risk consist of cash and cash equivalents, accounts receivable, work in progress, long-term investments and derivative financial instruments with a positive fair value. The maximum exposure of credit risk is generally represented by the carrying amount of these items reported on the consolidated balance sheets. The Company is exposed to credit risk in connection with long-term investments through the possible inability of borrowers to meet the terms of their obligations. The Company mitigates this risk by investing primarily in high credit quality corporate and government bonds with a credit rating of A- or higher. The application of the low credit exemption had no material impact on the Company's consolidated financial statements. The Company has accounts receivable derived from clients engaged in various industries including government; financial services; manufacturing, retail & distribution; communications & utilities; and health that are not concentrated in any specific geographic area. These specific industries may be affected by economic factors that may impact trade accounts receivable. However, management does not believe that the Company is subject to any significant credit risk in view of the Company’s large and diversified client base and that any single industry or geographic region represents a significant credit risk to the Company. Historically, the Company has not made any significant write-offs and had low bad debt ratios. The application of the simplified approach to measure expected credit losses for trade accounts receivable and work in progress had no material impact on the Company's consolidated financial statements. The following table sets forth details of the age of trade accounts receivable that are past due:
|  |  | 2022 | 2021
|  |  | $ | $
Not past due |  |  | 950,928 |  | 818,520 |
Past due 1-30 days |  |  | 81,000 |  | 47,702 |
Past due 31-60 days |  |  | 25,694 |  | 21,582 |
Past due 61-90 days |  |  | 12,142 |  | 7,402 |
Past due more than 90 days |  |  | 39,883 |  | 46,939 |
|  |  | 1,109,647 |  | 942,145 |
Allowance for doubtful accounts |  |  | (3,460) |  | (3,728) |
|  |  | 1,106,187 |  | 938,417 |
In addition, the exposure to credit risk of cash, cash equivalents and cash included in funds held for clients and derivatives financial instruments is limited given that the Company deals mainly with a diverse group of high-grade financial institutions and that derivatives agreements are generally subject to master netting agreements, such as the International Swaps and Derivatives Association, which provide for net settlement of all outstanding contracts with the counterparty in case of an event of default.

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