IFRS for Guernsey Funds

1
IFRS for Guernsey Funds

• General impact, periods beginning 1/1/05
• Components of financial statements
• Measurement
• Disclosures
• First time adoption
• What you need to be doing now

2
Components of financial statements, IAS1

• Balance sheet
• Income statement
• Statement of changes in equity
• Cash flow statement
• Accounting policies and explanatory notes

3
Measurement IAS39

• Fair value
• Bid price for assets
• Offer price for liabilities
• All derivatives on-balance sheet
• Cash flow hedges (to reserves, conditions)
• Fair value hedges

4
Measurement financial assets
5
Measurement financial liabilities
6
Measurement

• Dividends payable, IAS10 PBSEs
• only declared pre-year end on balance sheet
• dont shown in income statement
• Foreign currency, IAS21
• Functional currency (not free choice)
• Presentation currency

7
Measurement

• Costs of equity issue, IAS32.37
• Investment properties, IAS40
• Revaluation optional, to PL
• Now available to long-leaseholds

8
Disclosures

• IAS1 Transactions in own shares
• IAS14 Segment reporting
• IAS24 Related party disclosures
• IAS32/39
• Risk management
• Interest rate risk/ credit risk
• Fair value disclosures

9
IAS32 Puttable instruments

• Redeemable preference shares
• Debt under IAS32
• Treat as liabilities
• Treat distributions as expenses
• Possible future exception to allow certain
  instruments to be classified as equity?
• Illustrative examples included in IAS32 (IE32)

10
IAS32 Puttable instruments
11
IAS32 Puttable instruments
12
First time adoption, IFRS1

• General rule excluding IAS39
• Restate comparatives
• Reconcile 1/1/04 balance sheet
• Reconcile 31/12/04 balance sheet
• Reconcile 31/12/04 IS, SOCIE, CFS

13
First time adoption, IFRS1

• IAS39 specifically
• Reconcile 31/12/04 closing balance sheet to
  1/1/05 opening balance sheet
• Single line adjustment to 1/1/05 reserves/SOCIE

14
What you need to be doing now

• Dual valuations of 31/12/04 financial instruments
• Strip out transaction costs (FVPL) from 1/1/05
• Record transactions in functional currency

• Revisit comparatives for non-IAS39 items (eg FX)
• Review NAV-based agreements, eg fees, covenants,
  prospectus
• Consult your auditors and systems people