59
waikato-tainui
annual report 2014
2.2 Changes in accounting policy and disclosures
(a) Accounting standards framework
The Minister of Commerce has approved a new Accounting Standards Framework developed by the XRB. The Group is in the
process of working through the impact of this to the Group financial statements, along with a number of new standards,
amendments to standards and interpretations that become effective for annual periods beginning on or after 1 April 2014.
(b) New standards, amendments and interpretations issued but not effective for the financial year beginning 1 April 2013
and not early adopted
The following standard was published and is for accounting periods beginning on or after 1 January 2017. The Group has not
early adopted this standard:
•
NZ IFRS 9 ‘Financial Instruments’:
NZ IFRS 9 ‘Financial Instruments’ (effective from 1 January 2017) replaces part of NZ IAS
39 and establishes two primary measurement categories for financial assets: amortised cost and fair value, with classification
depending on an entity’s business model and the contractual cash flow characteristics of the financial asset. The Group is
currently in the process of evaluating the potential effect of this standard on its financial assets. There will be no impact on
the Group’s accounting for financial liabilities, as the new requirements only affect the accounting for financial liabilities that
are designated as at fair value through profit or loss and the Group does not have any such liabilities.
•
Comparatives:
Where necessary, certain comparative information has been reclassified in order to conform to changes in
presentation in the current year
(c) New standards first applied in the period
The Group has adopted External Reporting Board Standard A1 Accounting Standards Framework (For‑profit Entities Update) (XRB
A1). XRB A1 outlines which suite of accounting standards public benefit entities must follow. The Group is required to report in
accordance with NZ IFRS PBE. There is no impact on the current or prior year financial statements of transitioning to the new
Accounting Standards Framework.
2.3 Critical accounting estimates
The preparation of financial statements in conformity with NZ IFRS requires the use of certain critical accounting estimates.
It also requires management to exercise its judgement in the process of applying the Group’s accounting policies. The estimates
and judgements are reviewed by management on an ongoing basis. Revisions to accounting estimates are recognised in the
period in which the estimate is revised. The following are the critical estimates and judgements management has made in the
process of applying the Group’s accounting policies and that have the most significant impact on the amounts recognised in the
financial statements.
(a) Fair value of assets and liabilities
The Group records certain assets and liabilities at fair value in the statement of financial position as follows:
Other receivables (note 15) are valued using discounted cash flow techniques to determine fair value.
Farm and other properties (note 18), investment properties (note 19) and Te Wherowhero title properties (note 20) have been
valued by independent valuers as at 31 March 2014 and 31 March 2013 using a mixture of market evidence of transactional
prices for similar properties, direct comparison, capitalisation and discounted cash flow approaches.
Biological assets (note 13) comprise livestock and forests. Both are valued by independent valuers using current market prices
less point of sale costs (livestock) and expectation value method less point of sale costs (forests).
Other financial assets at fair value through profit or loss (note 16) include shares in unlisted companies held at fair value and call
option agreements for property. The fair value of these shares and call option agreements, in the absence of quoted prices, has
been determined using valuation techniques.
Interest rate swaps (note 24) are valued using discounted cash flow techniques.
The determination of fair value for each of the assets and liabilities above requires significant estimation and judgement which
have a material impact on the statement of comprehensive income and statement of financial position.
