3482 NEW ZEALAND GAZETTE, No. 126 17 AUGUST 2011

Financial Assets

Financial instruments are recognised in the balance sheet when the Foundation becomes party to a financial contract. They include cash balances, investments, deposits, bank overdraft, bills payable, receivables, payables and intercompany balances.
All assets that are financial instruments are recognised in the Balance Sheet.
All investments are initially recognised at fair value, being the fair value of consideration paid. After initial recognition, financial assets designated at fair value through profit or loss are revalued to fair value at each reporting date.
For investments that are actively traded in organised financial markets, fair value is determined by reference to exchange quoted market bid prices at the close of business on the Statement of Financial Position date.
All realised and unrealised gains or losses on investments are recognised in the Income Statement.
Investments in pooled funds are valued at the unit exit price determined by the Fund Manager at the close of business on the Balance Sheet date.
Investment transactions are recorded by Fund Managers on a transaction date basis.
Financial assets are managed and have their performance evaluated on a fair value basis in accordance with risk management and investment strategies of the Foundation, as disclosed in Note 9.
The Foundation uses financial instruments to reduce exposure to fluctuations in foreign currency denominated assets. Forward exchange contracts are entered into to hedge foreign currency denominated assets. 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.
The Foundation ceases to recognise a financial asset when and only when the contractual rights to the cash flows from the financial asset expire.
The nature of investments is that the value will fluctuate over time. The passive strategy of the Whanganui Community Foundation means that fluctuations will be in line with overall market movements. The value of global equities and bonds at 30 June 2011 was $28,046,021 (2010, $25,644,047)

Impairment

If the recoverable amount of an item of property, plant and equipment is less than its carrying amount, the item is written down to its recoverable amount. The write down of an item recorded at historical cost is recognised as an expense in the income statement. When a revalued item is written down to recoverable amount, the write down is recognised as a downward revaluation to the extent of the corresponding revaluation reserve, and any balance recognised in the income statement.
The carrying amount of an item of property, plant and equipment that has previously been written down to recoverable amount is increased to the revised estimate of its recoverable amount if there has been a change in the estimates used to determine the amount of the write down. The increased carrying amount of the item will not exceed the carrying amount that would have been determined if the write down to recoverable amount had not occurred.
Reversals of impairment write downs are accounted for as follows:

• On property, plant and equipment that are not revalued, the reversal is recognised in the income statement; and
• On revalued property, plant and equipment, the reversal is recognised as an upward revaluation.
  There were no impairment allowances at year end.

Taxation

The Income Tax Act 1994 provides exemption from income tax for Community Trusts established under the Trustee Banks Restructuring Act 1988. The amendment applied from the 2005 income year, and consequently no taxation has been provided for in these financial statements. The Whanganui Charitable Foundation Ltd is a limited liability company registered as a charitable entity under the Charities Act 2005 (CC21727)

Goods and Services Tax

The financial statements have been prepared on a GST exclusive basis except for the amounts included for accounts receivable and accounts payable.

Accounts Receivable and Payable

Receivables and payables are initially recorded at fair value and subsequently carried at amortised cost using the effective interest method. Due allowance is made for impaired receivables (doubtful debts). All accounts receivable are considered to be receivable in full and therefore there has been no requirement to provide for doubtful debts.

Employee benefits

Liabilities for annual leave, sick leave and long-service leave are accrued and recognised in the balance sheet.
Annual leave and sick leave are recorded at the undiscounted amount expected to be paid for the entitlement earned. For sick leave this is based on the unused entitlement accumulated at balance date and expected to be utilised in the future.
For long-service leave the liability is equal to the present value of the estimated future cash outflows as a result of employee services provided at balance date.

Changes in accounting policies

There have been no changes in accounting policies

2. Grants

3 Trust Funds and Reserves

Trust Capital

The Original Capital of the Foundation arose from the sale of shares in Trust Bank Limited. The Original Capital and the Capital Maintenance Reserve form the Trust Capital. Trustees have resolved to preserve the Trust Capital for the benefit of present and future generations. This is achieved by settling aside each