2238 NEW ZEALAND GAZETTE No. 85

Specific Accounting Policies

Income

Income from managed funds includes both realised and unrealised income and is recorded gross of fund management expenses.

Interest is recognised on an accrual basis.

Donations

Donations are accounted for once they have been approved by the trustees.

Foreign Currencies

All amounts denominated in foreign currencies are converted to New Zealand dollars at balance date. All realised and unrealised gains and losses are recognised in the statement of financial performance.

Taxation

Income tax is recognised on the surplus after distribution, adjusting for differences between taxable and accounting income. Future tax benefits are not recognised unless realisation of the asset is virtually certain.

Fixed Assets

Fixed assets are recorded at cost less accumulated depreciation.

Depreciation

Depreciation has been charged to the financial statement using rates which will write off the cost of assets less their estimated residual value over their estimated economic lives. The depreciation rates used are:

• Buildings: 4%
• Office furniture and equipment: 12-48%

G.S.T.

Subsidiaries of The Community Trust of Otago, being Fillmor House Limited and The Community Trust District Improvement Company Limited, are registered for G.S.T.

Accordingly, their financial performance and financial position have been consolidated within the accounts on a G.S.T. exclusive basis.

Subject to the above, the trust is not registered for G.S.T. purposes and, therefore, the financial statements have been prepared on a G.S.T. inclusive basis.

Basis of Consolidation

The Community Trust of Otago, Otago Community Trust Charities Limited, Fillmor House Limited, The District Improvement Company Limited and The Community Trust Amateur Sports Company Limited have been consolidated using the purchase method of consolidation.

Capital Maintenance Reserve

The capital maintenance reserve represents the additional amount necessary to preserve the real value of the capital allowing for inflation as measured by the Consumers' Price Index (C.P.I.).

Investments

Investments are valued at year end market value. All realised and unrealised gains and losses are recognised in the statement of financial performance.

Hedging Instruments

The trust, through its investment managers, enters into hedging instruments such as futures, options and forward exchange contracts. These are converted to the New Zealand dollar rate at balance date with all realised and unrealised gains and losses being recognised in the statement of financial performance as income from managed funds.

Statement of Cashflows

Cash comprises cash at bank and call deposits but does not include cash or deposits held by the fund managers.

Financial Instruments

Financial instruments all relate to cash, accounts receivable and accounts payable, and all revenues and expenses relating to these are recognised in the statement of financial performance in the period that any gain or loss becomes certain.

Cash and investments are stated at cost. Receivables are stated at net realisable value.

Payables are stated at amounts owed to those entities at balance date.

The maximum exposure to credit risk is represented by the carrying value of each of the financial assets and liabilities in the statement of financial position.

Income Tax

Income tax expense is recognised on the surplus available for distribution before taxation, adjusting for differences between taxable and accounting income.

Changes in Accounting Policies

During the year there was a change in the way the trust accounted for donations approved and not paid. All donations once approved are now included as donations payable. This has the effect of reducing equity by $5,380,000 in this financial year. Last year, committed donations were $5,188,000. There have been no other material changes in accounting policies during this accounting period.