Home' Trinidad and Tobago Guardian : October 25th 2013 Contents A52
Guardian www.guardian.co.tt Friday, October 25, 2013
The El Tucuche Fixed Income Fund
30 June 2013
Notes to the Financial Statements (continued)
(Expressed in Trinidad and Tobago dollars)
2. Summary of Significant Accounting Policies (Cont'd):
(a) Basis of preparation (cont'd)
(iii) Standards, amendments and interpretations issued but not yet effective and not early adopted
by the Fund (although relevant to the Fund's operations) (cont'd):
(effective for 1 January 2013 and applicable to the Fund from 1 July 2013). These amendments
require an entity to disclose information about rights of set-off and related arrangements (e.g.,
collateral agreements). The disclosures would provide users with information that is useful
in evaluating the effect of netting arrangements on an entity's financial position. The new
disclosures are required for all recognised financial instruments that are set off in accordance
with IAS 32 Financial Instruments: Presentation. The disclosures also apply to recognised
financial instruments that are subject to an enforceable master netting arrangement or
'similar agreement', irrespective of whether they are set off in accordance with IAS 32.
2015 and applicable to the Fund from 1 July 2015). IFRS 9 was issued in November 2009
and replaces those parts of IAS 39 relating to the classification and measurement of financial
assets. Amendments to IFRS 9 Mandatory Effective Date of IFRS 9 and Transition Disclosures,
issued in December 2011, moved the mandatory effective date of both the 2009 and 2010
versions of IFRS 9 from 1 January 2013 to 1 January 2015. Key features are as follows:
Financial assets are required to be classified into two measurement categories: those to be
measured subsequently at fair value, and those to be measured subsequently at amortised
cost. The decision is to be made at initial recognition. The classification depends on the
entity's business model for managing its financial instruments and the contractual cash flow
characteristics of the instrument.
An instrument is subsequently measured at amortised cost only if it is a debt instrument and
both the objective of the entity's business model is to hold the asset to collect the contractual
cash flows, and the asset's contractual cash flows represent only payments of principal
and interest (that is, it has only 'basic loan features'). All other debt instruments are to be
measured at fair value through profit or loss.
All equity instruments are to be measured subsequently at fair value. Equity instruments
that are held for trading will be measured at fair value through profit or loss. For all other
equity investments, an irrevocable election can be made at initial recognition, to recognise
unrealised and realised fair value gains and losses through other comprehensive income
rather than profit or loss. There is to be no recycling of fair value gains and losses to profit
or loss. This election may be made on an instrument-by-instrument basis. Dividends are to
be presented in profit or loss, as long as they represent a return on investment. While the
new standard is expected to significantly impact the Fund's presentation of fair value changes
arising on financial assets available-for-sale, it is not expected to impact the net asset value
calculations. The Fund expects to adopt this standard on 1 July 2014.
Fund from 1 July 2013). This standard aims to improve consistency and reduce complexity
by providing a precise definition of fair value and a single source of fair value measurement
and disclosure requirements for use across IFRSs. The requirements, which are largely aligned
between IFRSs and US GAAP, do not extend the use of fair value accounting but provide
guidance on how it should be applied where its use is already required or permitted by other
standards within IFRSs or US GAAP. This new standard is not expected to significantly impact
the financial statements of the Fund.
1 January 2014 and applicable to the Fund 1 July 2014). This requires that "a financial asset
and a financial liability shall be offset ... when, and only when, an entity currently has a legally
enforceable right to set off the recognised amounts ..." The amendments clarify that rights
of set-off must not only be legally enforceable in the normal course of business, but must also
be enforceable in the event of default and the event of bankruptcy or insolvency of all of the
counterparties to the contract, including the reporting entity itself.
(iv) Standards, amendments and interpretations issued which are not yet effective and not relevant
to the fund:
a parent to present consolidated financial statements as those of a single economic entity,
replacing the requirements previously contained in IAS 27 Consolidation and Separate
Financial Statements and SIC-12 Consolidation - Special Purpose Entities.
amendments, dealing with loans received from governments at a below market rate of
interest, give first-time adopters of IFRSs relief from full retrospective application of IFRSs
when accounting for these loans on transition. This is the same relief as was given to existing
preparers of IFRS financial statements.
in Joint Ventures. The standard requires a party to a joint arrangement to determine the type
of joint arrangement in which it is involved by assessing its rights and obligations and then
account for those rights and obligations in accordance with that type of joint arrangement.
requires extensive disclosure of information that enables users of financial statements to
evaluate the nature of, and risks associated with, interests in other entities and the effects of
those interests on its financial position, performance and cash flows.
a number of amendments that range from fundamental changes to simple clarifications and
re-wording. The more significant changes include the following:-
For defined benefit plans, the ability to defer recognition of actuarial gains and losses (i.e., the
corridor approach) has been removed. As revised, actuarial gains and losses are recognised in
OCI as they occur. Amounts recorded in profit or loss are limited to current and past service
costs, gains or losses on settlements, and net interest income (expense). All other changes in
the net defined benefit asset (liability) are recognised in OCI with no subsequent recycling to
profit or loss.
Objectives for disclosures of defined benefit plans are explicitly stated in the revised standard,
along with new or revised disclosure requirements. These new disclosures include quantitative
information about the sensitivity of the defined benefit obligation to a reasonably possible
change in each significant actuarial assumption.
Termination benefits will be recognised at the earlier of when the offer of termination
cannot be withdrawn, or when the related restructuring costs are recognised under IAS 37
Provisions, Contingent Liabilities and Contingent Assets.
The distinction between short-term and other long-term employee benefits will be based
on the expected timing of settlement rather than the employee's entitlement to the
Standard requires that when an entity prepares separate financial statements, investments in
subsidiaries, associates and jointly controlled entities are accounted for either at cost, or in
accordance with IFRS 9 Financial Instruments.
2013). This Standard supersedes IAS 28 Investments in Associates and prescribes the
accounting for investments in associates and sets out the requirements for the application of
the equity method when accounting for investments in associates and joint ventures.
(b) Foreign currency transactions
Functional and presentation currency
The financial statements are presented in Trinidad and Tobago dollars which is the Fund's functional
and presentational currency.
Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates
prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the
settlement of such transactions and from the translation at year end exchange rates of monetary
assets and liabilities denominated in foreign currencies are recognised in the Statement of Net
(c) Financial assets available-for-sale
The Fund classifies its financial assets as available-for-sale. Management determines the classification
of its financial assets at initial recognition. Financial assets intended to be held for an indefinite
period of time, which may be sold in response to needs for liquidity or changes in interest rates, are
classified as available-for-sale.
All purchases and sales of financial assets available-for-sale are recognised on the trade date, that is,
the date on which the Fund commits to purchase or sell the financial asset. Financial assets available-
for-sale are derecognised when the rights to receive cash flows from the financial assets have expired
or the Fund has transferred substantially all risks and rewards of ownership.
Financial assets available-for-sale are initially recognised at fair value plus transaction costs.
Subsequent to initial recognition, financial assets available-for-sale are carried at fair value. Gains
and losses arising from changes in the fair value of financial assets available-for-sale are recognised
directly in the Investment Re-measurement Reserve, until the financial asset is de recognised or
impaired. At this time, the cumulative gain or loss previously recognised in the Investment Re-
measurement Reserve is recognised in the Statement of Net Investment Income.
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