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)
(q)
New Application of Accounting Standards
Certain new accounting standards and interpretations have been published that are not mandatory for 30 June 2013
reporting periods and have not been early adopted by the Fund. The director's assessment of the impact of these new
standards (to the extent relevant to the fund) and interpretations is set out below:
- AASB 9 Financial Instruments and AASB 2009-11 Amendments to Australian Accounting Standards arising from
AASB 9 and AASB 2010-7 Amendments to Australian Accounting Standards arising from AASB 9 (December 2010)
and AASB 2012-6 Amendments to Australian Accounting Standards - Mandatory Effective Date of AASB 9 and
Transition Disclosures (effective from 1 January 2015)
- AASB 9 Financial Instruments addresses the classification, measurement and derecognition of financial assets
and financial liabilities. The standard is not applicable until 1 January 2015 but is available for early adoption.
The directors do not expect this to have a significant impact on the recognition and measurement of the Fund's
financial instruments as they are carried at fair value through profit and loss.
- AASB 13 Fair Value Measurement and AASB 2011-8 Amendments to Australian Accounting Standards arising
from AASB 13 (effective from 1 January 2013)
- AASB 13 was released in September 2011. It explains how to measure fair value and aims to enhance fair value
disclosures. Application of the new standard will impact the type of information disclosed in the notes to the
financial statements. The Funds will adopt the new standard from its operative date, which means that it would
be applied in the annual reporting period ending 30 June 2014. The directors do not expect this to have a signficant
impact on the Fund.
(r)
Derivatives and Hedging Activities
Derivatives are initially recognised at fair value on the date the derivative contracts are entered into and are subsequently
remeasured to their fair value at the end of each reporting period. The accounting for subsequent changes in fair value
depends on whether the derivative is designated as a hedging instrument. The Responsible Entity designated those
derivatives as the only hedging instruments to hedge the foreign exchange fluctuation of the fair value of the recognised
assets, the hedged items. For this purpose, the derivatives are forward currency contracts.
The Responsible Entity documents at the inception of the Fair Value Hedge, the relationship between hedging instruments
and hedged items, as well as their financial risk management objective and strategy for undertaking Fair Value Hedge
Accounting. On an ongoing basis the Responsible Entity documents their assessments, of whether the hedging instruments
that are used in Fair Value Hedge have been and will continue to be highly effective in offsetting changes in the foreign
exchange portion that is attributable to the fair value of the hedged items.
Derivatives that are assessed to be highly effective will qualify for Hedge Accounting.
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