Home' Trinidad and Tobago Guardian : October 21st 2015 Contents B25
The Abercrombie TTD Monthly Fixed Income Fund
30 June 2015
(Expressed in Trinidad and Tobago Dollars)
3 Critical accounting estimates and judgments in applying accounting principles
a. Impairment losses on financial assets
The Fund reviews its investment portfolios to assess impairment at least on an annual basis. In
determining whether an impairment loss should be recorded in the statement of comprehensive
income, the Fund makes judgments as to whether there is any observable data indicating that there
is a measurable decrease in the estimated future cash flows from investment securities. This evidence
may include observable data indicating that there has been an adverse change in the payment status
of borrowers in a group, or national or local economic conditions that correlate with defaults on assets
in the group. The methodology and assumptions used for estimating both the amount and timing of
future cash flows are reviewed regularly to reduce any differences between loss estimates and actual
loss experience. If the Fund were to consider all available-for-sale investments valued below cost as
impaired with all other variables held constant, the impairment loss would be $10,206,086 (2014:
b. Fair value of financial assets
The fair values of financial assets that are not quoted in active markets are determined by using
valuation techniques. Where valuation techniques (for example, models) are used to determine fair
values, they are validated and periodically reviewed by qualified personnel independent of the area
that created them. To the extent practical, models use only observable data, however areas such as
credit risk (both own and counterparty), volatilities and correlations require management to make
estimates. If the yield curve were to shift by 100bp up or down with all other variables held constant,
the impact on comprehensive income would be $274,179 (2014: $228,563). Further analysis is
outlined in note 10b (ii).
4 Financial assets available-for-sale
Government debt securities
Corporate debt securities
Balance brought forward
Net fair value (losses)/gains recognised in equity during the year
5 Cash and cash equivalents
Balances with banks
Short term investments
6 Related party transactions
Parties are considered to be related if one party has the ability to control the other party or exercise
significant influence over the other party in making financial or operational decisions.
The Investment Manager of the Fund is First Citizens Asset Management Limited which receives in return
a fee based on the average net asset value of the Fund.
The Trustee of the Fund is First Citizens Trustee Services Limited which receives a fee based on the average
net asset value of the Fund.
First Citizens Bank Limited and First Citizens Asset Management Limited act as the Distribution Agents of
the Fund, and receive in return a fee based on the average net asset value of the Fund.
First Citizens Bank Limited acts as the Bank of the Fund with a banking relationship similar to that of any
All transactions with related parties have been executed at arms' length in the normal course of the
2 Summary of significant accounting policies (continued)
d. Impairment of financial assets (continued)
If any such evidence of impairment exists, the cumulative loss -- measured as the difference between
the acquisition cost and the current fair value, less any impairment loss on that financial asset
previously recognised in the income statement -- is removed from other comprehensive income and
recognised in the income statement.
If, in a subsequent period, the fair value of a debt instrument classified as available-for-sale increases
and the increase can be objectively related to an event occurring after the impairment loss was
recognised in the income statement, the impairment loss is reversed through the income statement.
e. Cash and cash equivalents
For the purpose of the statement of cash flows, cash and cash equivalents comprise of cash in hand,
deposits held at call with banks and other short term investments with original maturities of three
months or less.
Provisions are recognised when the Fund has a present legal or constructive obligation as a result
of past events, it is more likely than not that an outflow of resources will be required to settle the
obligation and the amount has been reliably estimated.
Provisions are measured at the present value of the expenditures expected to be required to settle
the obligation using a pre-tax rate that reflects current market assessments of the time value of
money and the risks specific to the obligation. The increase in the provision due to passage of time
is recognised as interest expense.
g. Net assets attributable to unitholders
The Fund issues one class of units. These are redeemable at the holder's option and are classified
as equity in accordance with IAS 1 (Amendment), 'Presentation of financial statements -- Puttable
financial instruments and obligations arising on liquidation'.
Redeemable units can be put back to the Fund at any time for cash equal to a proportionate share of
the Fund's net asset value calculated in accordance with the Fund's regulations.
The units are carried at the redemption amount that is payable at the statement of financial position
date if the holder exercises the right to put the unit back to the Fund. Units are issued and redeemed
at the holder's option at prices based on the Fund's net asset value per unit at the time of issue or
Should the redeemable units' terms and conditions change such that they do not comply with the
strict criteria contained in the amendment, the redeemable units would be reclassified to a financial
liability from the date the instrument ceases to meet the criteria. The financial liability would be
measured at the instrument's fair value at the date of reclassification. Any difference between the
carrying value of the equity instrument and fair value of the liability on the date of reclassification
would be recognised in equity.
h. Interest income
Interest income is recognised on a time-proportionate basis using the effective interest method and
is included in the income statement. It includes interest income from cash and cash equivalents and
on financial assets available-for-sale.
The effective interest method is a method of calculating the amortised cost of a financial asset or
financial liability and of allocating the interest income or interest expense over the relevant period.
The effective interest rate is the rate that exactly discounts estimated future cash payments or
receipts throughout the expected life of the financial instrument, or, when appropriate, a shorter
period, to the net carrying amount of the financial asset or financial liability. When calculating the
effective interest rate, the Fund estimates cash flows considering all contractual terms of the financial
instrument but does not consider future credit losses. The calculation includes all fees and points paid
or received between parties to the contract that are an integral part of the effective interest rate,
transaction costs and all other premiums or discounts.
Expenses are accounted for on the accrual basis.
j. Subscriptions and redemptions
Subscriptions and redemptions are accounted for on the accrual basis.
k. Offsetting financial instruments
Financial assets and liabilities are offset and the net amount reported in the balance sheet where
there is a legally enforceable right to set off the recognised amounts and there is an intention to
settle on a net basis, or realise the asset and settle the liability simultaneously.
Distributions are accounted for on the accrual basis when declared by the Trustee. These are
recognised in the statement of changes in equity.
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