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Illustrative IFRS financial statements 2017Investment funds

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Illustrative IFRS financial statements 2017 Investment funds

Illustrative IFRS financial statements 2017 Investment funds

This publication provides an illustrative set of financial statements, prepared in accordance with InternationalFinancial Reporting Standards (IFRS), for a fictional open-ended investment fund (ABC Fund or the Fund).

ABC Fund is an existing preparer of IFRS financial statements; IFRS 1, First-time adoption of IFRS, is not applicable.It does not have any subsidiaries, associates or joint ventures. ABC shares are not traded in a public market.Guidance on financial statements for first-time adopters of IFRS is available at www.pwc.com/ifrs.

This publication is based on the requirements of IFRS standards and interpretations for the financial year beginningon 1 January 2017.

None of the standards that apply for the first time in 2017 required changes to the disclosures or accounting policiesin this publication. However, readers should consider whether any of the standards that are mandatory for the firsttime for financial years beginning 1 January 2017 could affect their own accounting policies. Appendix XV contains afull list of these standards (including those that have only a disclosure impact) as well as a summary of their keyrequirements.

Amendments to IAS 7 Statement of Cash Flows became effective for annual periods beginning on or after 1 January2017. These amendments require an entity to provide disclosures that enable users of financial statements toevaluate changes in liabilities arising from financing activities, including both changes arising from cash flows andnon-cash changes. The adoption of these amendments has had no material impact on ABC Fund (refer tocommentary detail in note 2.1). Appendix VI has been updated to provide further guidance on the requirements ofthese amendments.

Appendix XIV has been added this year and provides illustrative disclosures required if ABC Fund had early adoptedIFRS 9 Financial instruments for the financial year beginning 1 January 2017.

Commentary boxes are included throughout the publication to provide additional information where necessary.

We have attempted to create a realistic set of financial statements for an open-ended investment fund. However, bynecessity we illustrate disclosures that for many entities may be immaterial. Determining the level of disclosure isa matter of judgment, and naturally, disclosure of immaterial items is not required. Certain types of transactions havebeen excluded as they are not relevant to the Funds operations. Example disclosures for some of these additionalitems have been included in appendices.

The illustrative disclosures should not be considered the only acceptable form of presentation. The form and contentof each reporting entitys financial statements are the responsibility of the entitys management. Alternativepresentations to those proposed in this publication may be equally acceptable if they comply with the specificdisclosure requirements prescribed in IFRS.

These illustrative financial statements are not a substitute for reading the standards and interpretations themselves orfor professional judgement as to the fairness of presentation. They do not cover all possible disclosures that IFRSrequires, nor do they take account of any specific legal framework. Further specific information may be requiredin order to ensure fair presentation under IFRS. We recommend that readers refer to our most recent IFRS disclosurechecklist publication. Additional accounting disclosures may be required in order to comply with local laws and/orstock exchange regulations.

Format

The references in the left-hand margin of the financial statements represent the paragraph of the standard in whichthe disclosure appears for example, 8p40 indicates IAS 8 paragraph 40. The reference to IFRS appears in full forexample, IFRS13p66 indicates IFRS 13 paragraph 66. The designation DV (disclosure voluntary) indicates thatIFRS does not require the disclosure. Additional notes and explanations are shown in footnotes and commentaryboxes.

PwC Illustrative IFRS financial statements 2017 Investment funds i

ii PwC Illustrative IFRS financial statements 2017 Investment funds

ABC Fund financial statements

31 December 2017

PwC Illustrative IFRS financial statements 2017 Investment funds iii

iv PwC Illustrative IFRS financial statements 2017 Investment funds

Contents

Note Page

Statement of financial position .................................................................................................................................... 1Statement of comprehensive income by nature of expense ............................................................................... 2Statement of changes in net assets attributable to holders of redeemable shares ........................................... 3Statement of cash flows ............................................................................................................................................... 4Notes to the financial statements ............................................................................................................................... 51. General information ................................................................................................................................................. 52. Summary of significant accounting policies ........................................................................................................... 5

2.1 Basis of preparation .................................................................................................................................. 52.2 Foreign currency translation ...................................................................................................................... 62.3 Financial assets and financial liabilities at fair value through profit or loss ............................................... 72.4 Offsetting financial instruments ................................................................................................................. 92.5 Due from and due to brokers .................................................................................................................... 92.6 Cash and cash equivalents ....................................................................................................................... 92.7 Accrued expenses ..................................................................................................................................... 92.8 Redeemable shares .................................................................................................................................. 92.9 Interest income and dividend income ...................................................................................................... 102.10 Transaction costs .................................................................................................................................... 102.11 Distributions payable to holders of redeemable shares .......................................................................... 102.12 Increase/decrease in net assets attributable to holders of redeemable shares from operations ............ 102.13 Taxation .................................................................................................................................................. 102.14 Collateral ................................................................................................................................................. 10

3. Financial risks ........................................................................................................................................................ 103.1 Financial risk factors ............................................................................................................................... 10

3.1.1 Market risk .................................................................................................................................... 113.1.2 Liquidity risk .................................................................................................................................. 153.1.3 Credit risk ...................................................................................................................................... 163.1.4 Offsetting and amounts subject to master netting arrangements and similar agreements ........... 18

3.2 Capital risk management ........................................................................................................................ 193.3 Fair value estimation ............................................................................................................................... 19

4. Critical accounting estimates and judgements .................................................................................................... 264.1 Critical accounting estimates and assumptions ...................................................................................... 264.2 Critical judgements .................................................................................................................................. 26

5. Interest income ...................................................................................................................................................... 276. Financial assets at fair value through profit or loss ............................................................................................. 277. Financial liabilities at fair value through p