Page 73 - Annual Report 2010

71

Financial Statements

2. SIGNIFICANT

ACCOUNTING POLICIES AND BASIS OF PREPARATION

2.1 Basis of preparation

2.1.1 Statement of compliance

The Fund’s financial statements have been prepared in ac-cordance with International Financial Reporting Standards (IFRS), as issued by the International Accounting Standards Board (IASB), as endorsed by the European Union.

The Fund’s financial statements have been authorised for issue by the Board of Directors on 9 March 2011.

2.1.2 Basis of measurement

The financial statements have been prepared on an his-torical cost basis except for the following material items in the statement of financial position:

„„ available-for-sale financial assets which are meas-ured at fair value

„„ financial instruments at fair value through profit or loss which are measured at fair value

„„ the defined benefit obligation is recognised as the present value of the defined benefit obligation less the net total of the plan assets, plus unrecognised actuarial gains, less unrecognised past service cost and unrecognised actuarial losses.

2.1.3 Use of estimates and judgments

The preparation of financial statements in accordance with IFRS requires the use of certain critical accounting es-timates. It also requires management to exercise its judg-ment when applying the Fund’s policies. Use of available information and application of judgment are inherent in the formation of estimates. Actual results in the future could dif fer from such estimates and the dif ferences may be material to the financial statements.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are

recognised in the period in which the estimates are re-vised and in any future periods affected.

Information about significant areas of estimation uncertainty and critical judgments in applying accounting policies that have the most significant effect on the amounts recognised in the financial statements are described in notes 2.3 and 3.

Judgments and estimates are principally made in the fol-lowing areas:

„„ Impairment of available-for-sale equity investments;

„„ Determination of fair values of equity investments;

„„ Determination of provisions and liabilities for finan-cial guarantees;

„„ Actuaries’ assumptions related to the measurement of pension liabilities and post-retirement benefits.

2.1.4 Changes in accounting policies and

presentation

The accounting policies adopted have been applied con-sistently with those used in the previous year.

The Fund has adopted the new and amended IFRS and IFRIC interpretation during the year. Adoption of these revised standards and interpretations did not have any ef-fect on the financial performance or position of the Fund. They did however give rise to additional disclosures.

2.1.5 Foreign currency translation

The Euro (EUR) is the functional and presentation currency.

Depending on the classification of a non-monetary finan-cial asset, exchange differences are either recognised in the profit or loss or within equity.

Non-monetary items, which include “Equipment” and “Intangible assets” denominated in a foreign currency, are reported using the exchange rate at the date of the transaction (historical cost). Exchange differences on non-monetary financial assets are a component of the change in their fair value. Non-monetary items measured at fair value in a foreign currency are translated using the ex-change rates at the date when the fair value is determined.