Statement of Accounting Policies

FOR THE YEAR ENDED 30 JUNE 2012

Standards and interpretation issued and adopted

Standards, amendments, and interpretations issued that are not yet effective and have not been early adopted by the group
NZ IFRS 9 Financial Instruments will eventually replace NZ IAS 39 Financial Instruments: Recognition and Measurement. NZ IAS 39 is being replaced through the following 3 main phases: Phase 1 Classification and Measurement, Phase 2 Impairment Methodology, and Phase 3 Hedge Accounting. Phase 1 on the classification and measurement of financial assets has been completed and has been published in the new financial instrument standard NZ IFRS 9. NZ IFRS 9 uses a single approach to determine whether a financial asset is measured at amortised cost or fair value, replacing the many different rules in NZ IAS 39. The approach in NZ IFRS 9 is based on how an entity manages its financial instruments (its business model) and the contractual cash flow characteristics of the financial assets. The financial liability requirements are the same as those of NZ IAS 39, except for when an entity elects to designate a financial liability at fair value through the surplus / (deficit). The new standard is required to be adopted for the year ended 30 June 2016. However, as a new accounting standards framework will apply before this date, there is no certainty when an equivalent standard to NZ IFRS 9 will be applied by Public Benefit Entities.

The Minister of Commerce has approved a new accounting standards framework (incorporating a tier strategy) developed by the External Reporting Board (XRB). Under this accounting standards framework, Far North District Council is classified as a Tier 1 reporting entity and it will be required to apply full Public Benefit Entity Accounting Standards (PAS). These standards are being developed by the XRB based on current International Public Sector Accounting Standards. The effective date for the new standards for public sector entities is expected to be for reporting periods beginning on or after 1 July 2014. This means Council expects to transition to the new standards in preparing its 30 June 2015 financial statements. As the PAS are still under development, Council is unable to assess the implications of the new accounting standards framework at this time.

Due to the change in the accounting standards framework for Public Benefit Entities, it is expected that all new NZ IFRS and amendments to existing NZ IFRS will not be applicable to Public Benefit Entities. Therefore, the XRB has effectively frozen the financial reporting requirements for Public Benefit Entities up until the new accounting standard framework is effective. Accordingly, no disclosure has been made about new or amended NZ IFRS that exclude Public Benefit Entities from their scope.

Standards, amendments, and interpretations issued that are not yet effective and have not been early adopted by Far North Holdings (FNHL)
These include the following standards and interpretations that are applicable to the business of the entity and may have an impact on future financial statements.

NZ IAS 1 (Amendment) Presentation of Items of Other Comprehensive Income
The amendments to NZ IAS 1 will be adopted by the Company for the first time for its financial reporting period ended 30 June 2013 (31 May 2014). The amendment requires the Company to group together items within Other Comprehensive Income (OCI) that may be reclassified to the profit or loss section of the Statement of Comprehensive Income. The amendment will merely require a change in presentation on the face of the Statement of Comprehensive Income.

NZ IAS 12 Income Taxes
The amendments to NZ IAS 12 will be adopted by FNHL for the first time for its financial reporting period ending 30 June 2013. The amendment provides a "rebuttable presumption" as an exception to the deferred tax general measurement principles for investment property measured using the fair value model in accordance with IAS 40, as well as investment property acquired during a business combination and accounted for in accordance with IFRS 3 Business Combinations - so long as the investment property is then subsequently measured using the fair value model.

NZ IAS 19 Employee Benefits
The amendments to NZ IAS 19 will be adopted by the company for the first time for its financial reporting period ended 30 June 2014 (31 May 2013). The amendments to IAS 19 will require the Company to determine whether an employee benefit is short term or long term based on when payment is expected and not when payment can be demanded.

In addition, where termination benefits include a future service obligation, these cannot be treated as termination benefits under NZ IAS 19 going forward.