THE WAIKATO COMMUNITY TRUST INCORPORATED

NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS

For the year ended 31 March 2011

1. STATEMENT OF ACCOUNTING POLICIES

Reporting Entity

The Trust is a not for profit charitable Trust incorporated and domiciled in New Zealand. Its principal service is the provision of funds in the form of donations to community groups in the wider Waikato area. Accordingly, the Waikato Community Trust is designated as a Public Benefit Entity for the purposes of New Zealand Equivalents to International Financial Reporting Standards (NZ IFRS).

The financial statements were authorised for issue by the Trustees on 20 June 2011.

Statement of Compliance

The financial statements have been prepared in accordance with Generally Accepted Accounting Practice in New Zealand (NZ GAAP) and The Incorporated Societies Act 1908. 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.

Basis of Preparation

The financial statements have been prepared on the basis of historical cost, except for the revaluation of certain assets, as identified in the specific accounting policies below, which are stated at their fair value.

Critical Accounting Estimates and Judgements

The preparation of financial statements in conformity with NZ IFRS requires management of the use of certain critical accounting estimates, judgements and assumptions about carrying values of assets and liabilities that are not readily apparent from other sources. The estimates and 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 from these estimates.

The estimates and judgements are reviewed by management on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised. In the process of applying the Trust’s accounting policies management have made judgements regarding whether or not discretionary donations are payable at year end or if discretionary donations are contingent liabilities at year end. This potentially has a significant effect on the amounts recognised in the financial statements. Donations payable are discretionary donations where there are no significant conditions attached to the donation at balance date or where the significant conditions attached to the donation have been met at balance date. Donations that are classified as contingent liabilities at year end are discretionary donation obligations at balance date that are reliant on additional funding or have other significant conditions attached to them to go ahead with a specified project.

Refer to note 6 for the donations payable at 31 March and note 16 for the donation expense reconciliation.

In determining the fair value of the interest free loan to Sport Waikato, management have used the market rate for a five year fixed interest loan at the loan drawdown date in August 2008. The rate used affects the carrying value of the loan and the fair value adjustment reflected in the Statement of Comprehensive Income. Refer to note 12 for the carrying value of the loan at 31 March.