Page 127 - Suncorp_Review

Suncorp Group Limited Annual Report 2010/11 125

32.2 Contingent liabilities

Contingent liabilities for which no provisions are included in these fnancial statements are as follows: –– The Suncorp Group has given guarantees and

undertakings in the ordinary course of business in respect to credit facilities and rental obligations. Note 31 sets out details of these guarantees.

–– Certain subsidiaries act as trustee for various trusts. In this capacity, the subsidiaries are liable for the debts of the trusts and are entitled to be indemnifed out of the trust assets for all liabilities incurred on behalf of the trusts. –– In the ordinary course of business the Suncorp Group enters into various types of investment contracts that can give rise to contingent liabilities. It is not expected that any signifcant liability will arise from these types of transactions as any losses or gains are offset by corresponding gains or losses on the underlying exposures.

–– Certain subsidiaries are potentially exposed to the Buyer of Last Resort (BOLR) clauses in certain advisor contracts. For the BOLR to be exercised, the following key conditions should be met by the advisor: (i) must retire from the industry, (ii) must have good compliance histories and reasonable systems and processes relative to business scale to get a full multiple, and (iii) must have tried to sell externally for a period of six months or more. The maximum potential commitments (all BOLR exercised at once) would be $31 million (2010: $44 million). –– Suncorp Mortgage Company NZ Limited (SMCNZ), a subsidiary of the Group, has indemnifed the Guardian CashPlus Mortgage Units Fund (GIF 35) for any capital losses on its investment of $14 million (2010: $20 million) in the Guardian Mortgage Fund (GIF 2). As at 30 June 2011, SMCNZ has provided $4 million (2010: $3 million) for losses occurring under this indemnity. This provision was previously made by The New Zealand Guardian Trust Company Limited.

33. Signifcant accounting policies

The Suncorp Group’s signifcant accounting policies set out below have been consistently applied by all Group entities to all periods presented in these consolidated fnancial statements except for the following change in accounting policy: –– The Suncorp Group has elected to early adopt AASB 2010–4 Further Amendments to Australian Accounting Standards arising from the Annual Improvements Project for amendments to AASB 101 Presentation of Financial Statements which removed the requirement to show each item of other comprehensive income in the statement of changes in equity and rather permit such analysis and disclosure to be shown in the notes. This change has been retrospectively applied and the comparatives have been represented to refect this change. As this change only affects presentation, it has no impact on earnings per share.

The Suncorp Group’s signifcant accounting policies are presented as follows:

–– Note 33.1 describes the signifcant accounting policies applicable to all Suncorp Group entities (including Banking)

–– Note 33.2 describes the signifcant accounting policies specifcally applicable to General Insurance

–– Note 33.3 describes the signifcant accounting policies specifcally applicable to Life; and

–– Note 33.4 details the new accounting standards and interpretation not yet adopted.

33.1 Signifcant accounting policies applicable to all Group entities

The following signifcant accounting policies are applicable to all Suncorp Group entities.

33.1.1 Basis of consolidation

The Suncorp Group’s consolidated fnancial statements are fnancial statements of the Company and all its subsidiaries presented as those of a single economic entity. Intra-group transactions and balances are eliminated on consolidation. (a) Subsidiaries

Subsidiaries are entities controlled by the Suncorp Group which includes companies, managed funds and trusts. Subsidiaries are consolidated from the date that control commences until the date that control ceases. Control is the power, directly or indirectly, to govern the fnancial and operating policies of an entity so as to obtain benefts from its activities.