FirstChoice Wholesale Investments - Colonial First State

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COLONIAL FIRST STATE - FIRSTCHOICE WHOLESALE INVESTMENT FUNDSNOTES TO THE FINANCIAL STATEMENTSFOR THE PERIOD ENDED 30 JUNE 20111. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)(p)Foreign Currency (continued)Foreign Currency Transactions (continued)Items included in the Fund's Financial Statements are measured using the currency of the primary economic environmentin which it operates ("the functional currency"). This is the Australian dollar, which reflects the currency of the economyin which the Funds competes for funds and is regulated. The Australian dollar is also the Funds presentation currency.The Funds do not isolate that portion of gains or losses on securities and derivative financial instruments (excludingForward Currency Contracts) that are measured at fair value through profit and loss and which is due to changes inforeign exchange rates from that which is due to changes in the market price of securities. Such fluctuations areincluded with the net gains or losses on financial instruments at fair value through profit and loss.(q)New Application of Accounting StandardsCertain new accounting standards and interpretations have been published that are not mandatory for 30 June 2011reporting periods. The impact of these new standards and interpretations is set out below:- AASB 9 Financial Instruments and AASB 2009-11 Amendments to Australian Accounting Standards arising fromAASB 9 (effective from 1 January 2013)AASB 9 Financial Instruments addresses the classification, measurement and derecognition of financial assetsand financial liabilities. The standard is not applicable until 1 January 2013 but is available for early adoption.AASB 9 permits the recognition of fair value gains and losses in other comprehensive income if they relate toequity investments that are not traded such as available-for-sale investments. The Funds will adopt AASB 9 from1 January 2013. Management does not expect this will have a significant impact on the Funds' financialstatements as the Funds do not hold any available-for-sale investments.- Revised AASB 124 Related Party Disclosures and AASB 2009-12 Amendments to Australian AccountingStandards (effective from 1 January 2011)In December 2009, the AASB issued a revised AASB 124 Related Party Disclosures. It is effective for accountingperiods beginning on or after 1 January 2011 and must be applied retrospectively. The amendment clarifies andsimplifies the definition of a related party and removes the requirement for government-related entities to disclosedetails of all transactions with the government and other government-related entities. The Funds will apply theamended standard from 1 July 2011. The amendments will not have any effect on the Funds' financial statements.- AASB 2010-6 Amendments to Australian Accounting Standards – Disclosures on Transfers of Financial Assets(effective for annual reporting periods beginning on or after 1 July 2011)In November 2010, the AASB issued AASB 2010-6 Disclosures on Transfers of Financial Assets which amendsAASB 1 First-time Adoption of Australian Accounting Standards and AASB 7 Financial Instruments: Disclosuresto introduce additional disclosures in respect of risk exposures arising from transferred financial assets. Theamendments will affect particularly entities that sell, factor, securitise, lend or otherwise transfer financial assetsto other parties. The amendments will not have any impact on the Funds' disclosures. The Funds intend to applythe amendment from 1 July 2011.Page 47
COLONIAL FIRST STATE - FIRSTCHOICE WHOLESALE INVESTMENT FUNDSNOTES TO THE FINANCIAL STATEMENTSFOR THE PERIOD ENDED 30 JUNE 20111. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)(q)New Application of Accounting Standards (continued)- Amendments to AASB 2010-4 Further Amendments to Australian Accounting Standards arising from the AnnualImprovements Project (effective for annual reporting periods beginning on or after 1 July 2010 / 1 January 2011)In June 2010, the AASB made a number of amendments to Australian Accounting Standards as a result of theIASB's annual improvements project. Management does not expect that any adjustments will be necessary as aresult of applying the revised rules.(r)ComparativesComparative figures are, where appropriate, reclassified so as to be comparable with the figures and presentation in thecurrent year.(t)Hedge AccountingThe Fund listed in Note 14 documents at the inception of the Fair Value Hedge, the relationship between hedginginstruments and hedged items, as well as its financial risk management objective and strategy for undertaking Fair ValueHedge accounting.On an ongoing basis the Fund documents its assessments, of whether the hedging instruments that are used in FairValue Hedging have been and will continue to be highly effective in offsetting changes in the foreign exchange portion thatis attributable to the fair value of the hedged items.The gains or losses relating to the over hedging portion of the hedging instruments will be recognised immediately in theStatement of Comprehensive Income as net foreign exchange gains or losses and will not be designated in the hedgingrelationship.The gains or losses relating to both effective and ineffective portions are recognised in the Statement of ComprehensiveIncome as changes in fair value of financial instruments held for trading and net foreign exchange gain/loss respectively.Detailed disclosures on Fair Value Hedge is presented in Note 14.2. AUDITOR'S REMUNERATIONAuditors' remuneration in respect of auditing the financial reports is fully paid by the Responsible Entity.Other services provided by the auditors are the audit of the compliance plan of the Funds and tax compliance services.The auditors' non-audit remuneration is not paid by the Funds.Page 48
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