3 APRIL 2008 NEW ZEALAND GAZETTE, No. 69 1931

Associates

20. International Financial Reporting Standards

In December 2002, the New Zealand Accounting Standards Review Board announced that the New Zealand International Financial Reporting Standards (NZ IFRS) will apply to all New Zealand reporting entities for the periods commencing on or after 1 January 2007. Entities have the option to adopt NZ IFRS for periods beginning on or after 1 January 2005. The trust has decided to adopt IFRS effective from 1 April 2008.

The trust has started to assess the key differences in accounting policies between NZ IFRS and current NZ GAAP with a view to determining the impacts on the financial statements that are expected to arise on transition. As the trust has not yet completed an analysis of the differences between existing NZ GAAP and NZ IFRS, it is unable to reliably estimate the key differences in accounting policies or quantify the impacts to the financial statements that are expected to arise on transition to NZ IFRS.

21. Segmental Information

The trust’s specified area includes all of the areas of Invercargill City Council, Southland District Council, Gore District Council, the Heriot and Tapanui areas of Clutha District Council, and the Wakatipu Basin area of Queenstown Lake District Council. The trust’s principal activities are to invest the trust capital, both within the specified area and outside of the region, and to distribute grants for charitable, cultural, philanthropic, recreational and other purposes being purposes beneficial to the community principally within the trust’s specified area.

22. Financial Instruments

General

The group states its investments in managed funds at estimated market value. The trustees consider that the fair value of the financial assets is identical to the value in the statement of financial position.

Concentration of Credit Risk

The group from time to time has significant funds in trading bank deposits. The group limits risk by spreading the deposits over several trading banks. The group has not required collateral or other security to support its financial instruments. The group further limits risk through its policy of placing investment funds with five separate fund managers, with each fund manager having an investment mandate which requires that they diversify their investments on the group’s behalf. The group has sought and obtained the advice of professional financial advisors prior to making its investment allocation and placement decisions.

Interest Rate Risk

The bank deposits are sensitive to changes in interest rates, as are a proportion of the funds managed by the fund managers.

23. Related Parties

There were no related party transactions during the year (2006: Nil).

24. Subsequent Events

Following balance date, Invest South Limited received $105,066 from Bush Road Limited, being a pro rata share repurchase. Invest South Limited has also appointed John White as receiver of Woodlands Apiary Limited as at 8 May 2007. The financial effects of these events have not been recognised in the financial statements.

(2006: There were no significant events of which readers of the financial statements need to be aware).

Audit Report

To the Trustees of the Community Trust of Southland

We have audited the financial statements. The financial statements provide information about the past financial performance and financial position of the trust and the group as at 31 March 2007. This information is stated in accordance with the accounting policies set out.

Board of Trustees' Responsibilities

The board of trustees is responsible for the preparation, in accordance with New Zealand law and generally accepted accounting practice, of financial statements which give a true and fair view of the financial position of the Community Trust of Southland and group as at 31 March 2007 and of the results of operations and cash flows for the year ended on that date.

Auditors' Responsibilities

It is our responsibility to express an independent opinion on the financial statements presented by the board of trustees.

Basis of Opinion

An audit includes examining, on a test basis, evidence relevant to the amounts and disclosures in the financial statements. It also includes assessing:

• the significant estimates and judgements made by the board of trustees in the preparation of the financial statements;
• whether the accounting policies are appropriate to the trust’s and group’s circumstances, consistently applied and adequately disclosed.

We conducted our audit in accordance with New Zealand Auditing Standards. We planned and performed our audit so as to obtain all the information and explanations which we considered necessary in order to provide us with sufficient evidence to obtain reasonable assurance that the financial statements are free from material misstatements, whether caused by fraud or error. In forming our opinion, we also evaluated the overall adequacy of the presentation of information in the financial statements.