10 MARCH 2009 NEW ZEALAND GAZETTE, No. 29 765

THE COMMUNITY TRUST OF SOUTHLAND

NOTES TO & FORMING PART OF THE FINANCIAL STATEMENTS

For the Year Ended 31 March, 2008

STATEMENT OF ACCOUNTING POLICIES

Reporting Entity

The Community Trust of Southland was formed under the Trustee Banks Restructuring Act 1988 and is incorporated under the Charitable Trusts Act 1957. The financial statements represented are those for the Community Trust of Southland group (“Group”). The Group consists of The Community Trust of Southland (“Trust”), its wholly owned subsidiary companies and the Trust’s interest in associates.

The financial statements comply with the Financial Reporting Act 1993 and the Community Trusts Act 1999.

Statement of Compliance

The financial statements have been prepared in accordance with Generally Accepted Accounting Practice in New Zealand (NZ GAAP). They comply with the New Zealand Equivalents to International Financial Reporting Standards (NZ IFRS) and other applicable Financial Reporting Standards as appropriate for public benefit entities.

These are the first financial statements of the Trust to be prepared in accordance with NZ IFRS.

The transition to NZ IFRS is accounted for in accordance with NZ IFRS-1 First Time Adoption of New Zealand Equivalent to International Financial Reporting Standards, with 1 April, 2006 as the date of transition. An explanation of the transition to NZ IFRS is discussed in Note 22.

Basis of Preparation

The financial statements have been prepared on the basis of historical cost, except for the revaluation of certain financial assets which are stated at their fair value.

The accounting policies set out below have been applied in preparing the financial statements for the year ended 31 March, 2008, the comparative information presented in these financial statements for the year ended 31 March, 2007 and in the preparation of the opening NZ IFRS Balance Sheet at 1 April, 2006, the Trust’s date of transition.

Critical Accounting Estimates & Judgements

In the application of NZ IFRS management is required to make judgements, estimates and assumptions about carrying values of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstance, the results of which form the basis of making the judgements. Actual results may differ to these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revisions affects only that period or in the period of the revision and future periods if the revision affects both current and future periods.

Basis of Consolidation

The consolidated financial statements incorporate the financial statements of the Trust and entities controlled by the Trust (its subsidiaries). Control is achieved where the Trust has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities.

The results of subsidiaries acquired or disposed of during the year are included in the Group Statement of Financial Performance from the effective date of acquisition or up to the effective date of disposal, as appropriate.