FirstChoice Wholesale Investments part 2 - Colonial First State

COLONIAL FIRST STATE - FIRSTCHOICE WHOLESALE INVESTMENT FUNDS
NOTES TO THE FINANCIAL STATEMENTS
FOR THE REPORTING PERIOD ENDED 30 JUNE 2013
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(k)
Applications and Redemptions
Applications received for units in the Funds are recorded net of any entry fees payable (where applicable) prior to the
issue of units in the Funds. Redemptions from the Funds are recorded gross of any exit fees payable (where applicable)
after the cancellation of units redeemed.
(l)
Goods and Services Tax (GST)
Income, expenses and assets, with the exception of receivables and payables, are recognised net of the amount of GST
to the extent that the GST is recoverable from the taxation authority. Where GST is not recoverable, it is recognised as
part of the cost of acquisition of the asset or as part of the expense item as applicable.
Receivables and payables are stated inclusive of GST.
Reduced input tax credits (RITC) recoverable by the Funds from the Australian Taxation Office are recognised as
receivables in the Balance Sheets.
Cash flows are included in the Cash Flow Statements on a gross basis. The GST component of cash flows, which is
recoverable from, or payable to, the taxation authority is classified as operating cash flows.
(m) Expense Recognition
Expenses are recognised in the Statements of Comprehensive Income when the Funds have a present obligation (legal
or constructive) as a result of a past event that can be reliably measured. Expenses are recognised in the Statements of
Comprehensive Income if expenditure does not produce future economic benefits that qualify for recognition in the
Balance Sheets.
Dividend expenses on shares sold short are recognised when the Fund's have an obligation to pay the dividend. This is
generally when the dividend is declared by the Company whose shares have been sold short.
(n)
Use of Estimates
The Funds make estimates and assumptions that affect the reported amounts of assets and liabilities within the next
financial period. Estimates are continually evaluated and based on historical experience and other factors, including
expectations of future events that are believed to be reasonable under the circumstances.
For the majority of the Funds' financial instruments, quoted market prices are readily available. However, certain
financial instruments, for example, over-the-counter derivatives or unquoted securities are fair valued using valuation
techniques. Where valuation techniques (for example, pricing models) are used to determine fair values, they are
validated and periodically reviewed by experienced personnel of the Responsible Entity, independent of the area that
created them. Models are calibrated by back-testing to actual transactions to ensure that outputs are reliable.
The Funds invest in managed investment schemes which are also managed by the Responsible Entity. For the
majority of the financial instruments of these managed investment schemes, quoted market prices are readily available.
However, certain financial instruments, for example, over-the-counter derivatives or unquoted securities are fair valued
using valuation techniques. Where valuation techniques (for example, pricing models) are used to determine fair values,
they are validated and periodically reviewed by experienced personnel of the Responsible Entity, independent of the area
that created them. Models are calibrated by back-testing to actual transactions to ensure that outputs are reliable.
Models use observable data, to the extent practicable. However, areas such as credit risk (both own and counterparty),
volatilities and correlations require management to make estimates. Changes in assumptions about these factors could
affect the reported fair value of financial instruments.
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