GMHBA AnnuAL RepoRt 2010 - GMHBA Health Insurance

GMHBA Limited ABN 98 004 417 092
GMHBA Limited ABN 98 004 417 092
Notes to the Financial Statements for the year ended 30 June 2010 (continued)
1. Summary of significant accounting policies (continued)
(e) Use of estimates and judgements
The preparation of financial statements requires management to make judgements,
estimates and assumptions that affect the application of accounting policies and the reported
amounts of assets, liabilities, income and expenses. Actual results may differ from these
estimates. Estimates and underlying assumptions are reviewed on an ongoing basis.
Revisions to accounting estimates are recognised in the period in which the estimate is
revised and in any future periods affected.
In particular, information about significant areas of estimation uncertainty and critical
judgements in applying accounting policies that have the most significant effect on the
amount recognised in the financial statements are described in the following notes:
Claims outstanding, see note 1(n)
Liability Adequacy Test, see note 1(o)
Connect Reward benefits, see note 1(p)
Deferred Acquisition Costs, see note 1(q)
(f) Determination of fair values
A number of the Group’s accounting policies and disclosures require the determination of fair
value, for both financial and non-financial assets and liabilities. Fair values have been
determined for measurement and/or disclosure purposes based on the following methods
and where applicable, further information about the assumptions made in determining fair
values is disclosed in the notes specific to that asset or liability.
(i) Term Deposits, Debentures, Bank Bonds and Notes
The fair value of these investments is based on their listed market price, if available. If
a listed market price is not available, then fair value is estimated by discounting the
difference between the contractual forward price and the current forward price for the
residual maturity of the contract using a market interest rate (based on government
bonds). These investments are held for a set term and rolled over at maturity.
(ii) Equity investments and unit trusts
For securities listed in an active market, fair value is determined by reference to
published bid price quotations. For investments in unlisted investment trusts the fair
value is determined with reference to the quoted redemption price provided by the
Trustee. There were no equity investments or investments in unit trust in the period
ending 30 June 2010.
(iii) Land and buildings
The Company uses Landlink Property Group Pty Ltd, a valuations and advisory services
company which employs accredited independent valuers, to determine the fair value of its
land and buildings. Fair value is determined directly by reference to market based
evidence, which is the amounts for which the assets could be exchanged between a
knowledgeable willing buyer and a knowledgeable willing seller in an arm’s length
transaction as at the valuation date. The effective dates of the valuations were 30 June
2009 for the Geelong properties.
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