Accounting Policy and Procedures

ACCOUNTING POLICY AND PROCEDURES

PFG FOREX PTY LTD

ABN 94 152 941 510

Document No
No- FX0602
Version 1.0,Date: 6 May, 2016
PFG Forex Pty Ltd is registered with Australian
Securities and Investment Commission (ASIC) and
licensed by AUSTRAC

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Accounting Policy and Procedures

Table of Contents
Contents

ACCOUNTING POLICY AND PROCEDURES ............................................................................................... 4

1 Objective .......................................................................................................................................... 4
2 Scope ................................................................................................................................................ 4
3 Definitions ........................................................................................................................................ 4
4 Corporate Requirements ................................................................................................................. 5
5 Policy Statement .............................................................................................................................. 5
6 Application of Policy......................................................................................................................... 5
7 Roles & Responsibilities ................................................................................................................... 5
8 General Ledger & Chart of Accounts ............................................................................................... 5
9 General Financial Transactions ........................................................................................................ 6
9.1. Accounting/Bookkeeping ......................................................................................................... 6
9.2. Foreign Exchange Transactions ................................................................................................ 7
9.3Cash Activities ............................................................................................................................ 9
9.4 Accounts with Banks & Correspondents ................................................................................... 9
9.5 Bank Reconciliation ................................................................................................................. 10
9.6 Investment .............................................................................................................................. 10
9.7 Debtors.................................................................................................................................... 11
9.8 Debt Collection ........................................................................................................................ 11
9.9 Provision for Doubtful Debts .................................................................................................. 12
9.10 Bad Debts/Write Offs ............................................................................................................ 12
9.11 Credit Cards........................................................................................................................... 12
9.12 Income Accounts ................................................................................................................... 13
9.13 Expenses Accounts ............................................................................................................ 13
9.14 Loans/Borrowings ................................................................................................................. 14
9.15 Fringe Benefits Tax ................................................................................................................ 14
9.16 Goods and Services Tax ......................................................................................................... 14
9.17 Auditor Policy ........................................................................................................................ 15
9.18 Annual Budget/Annual Business Plan ................................................................................... 15
10 Salaries and Wages ...................................................................................................................... 15
10.1 Payroll ................................................................................................................................... 15
11 Computing/Electronic Accounting ............................................................................................... 16
11.1 Security ................................................................................................................................. 16
11.2 System Integrity .................................................................................................................... 16
12 Long Term Financial Plan ............................................................................................................. 17

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13 Financial Statements .................................................................................................................... 17

13.1. Basis of Preparation ............................................................................................................. 17
13.2. Revenue Recognition ........................................................................................................... 18
13.3. Cash, Cash Equivalents and other Financial Instruments .................................................... 18
13.4. Infrastructure, Property, Plant & Equipment....................................................................... 18
13.5. Payables ............................................................................................................................... 18
13.6. Borrowings ........................................................................................................................... 18
13.7. Employee Benefits ............................................................................................................... 18
13.8. Leases ................................................................................................................................... 19
13.9. Comparative Information..................................................................................................... 19
13.10. Procedures for the Certification of the Annual Financial Statements ............................... 19
14 Review .......................................................................................................................................... 19

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Accounting Policy and Procedures

ACCOUNTING POLICY AND PROCEDURES

1 Objective

The Accounting Policies and Procedures Manual documents the Internal Control adopted by PFG
Forex Pty Ltd (PFGFX) to safeguard assets, secure the accuracy and reliability of accounting data and
financial reporting and to promote operational efficiency.

This manual is produced with the intention of providing basic accounting procedures and controls
which should be implemented to lay a foundation for a system of internal accounting controls. As
the business grows, PFGFX will need expanded internal controls which transcend the scope of this
document.

2 Scope

The Manual covers transaction processing, accounting, financial reporting and financial governance
activities of PFGFX.

3 Definitions

The following terms are used in this document with the meanings specified:

Closing rate is the spot exchange rate at the end of the reporting period.

Exchange difference is the difference resulting from translating a given number of units of one
currency into another currency at different exchange rates.

Exchange rate is the ratio of exchange for two currencies.

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an
orderly transaction between market participants at the measurement date.

Foreign currency is a currency other than the functional currency of the entity.

Functional currency is the currency of the primary economic environment in which the entity
operates.

Monetary items are units of currency held and assets and liabilities to be received or paid in a fixed
or determinable number of units of currency.

Presentation currency is the currency in which the financial statements are presented.

Spot exchange rate is the exchange rate for immediate delivery.

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4 Corporate Requirements

This Manual is to be read and implemented in conjunction with PFGFX’s other relevant policies,
strategies and documents, including:

a) Operations Manual
b) Risk Management Policy
c) Treasury Management Policy
d) AML/CTF Program

5 Policy Statement

It is PFGFX policy to implement and maintain a system of internal controls which;

a) Promote high level of compliance with Australian Accounting Standards (AASB) and with
PFGFX policies and procedures.
b) Assist PFGFX to carry out its activities in an efficient and orderly manner, safeguard PFGFX’s
assets and financial sustainability and secure the accuracy and reliability of its records.

6 Application of Policy

This policy supports internal control procedures which emphasis the following:

a) Separation of roles and functions performed by staff

b) Rules and procedures for transaction processing
c) Record and reconciliation of financial records
d) Detection and correction of irregularities
e) Security of computer programs, cash, assets and other PFGFX resources
f) Sound Budget Management including review
g) Controlling risk exposures to an acceptable level
h) Prudent Financial Governance

7 Roles & Responsibilities

a) Chief Financial Officer will be responsible for implementation of this policy.

b) Accounts team will be responsible for the recording and reconciliation of Accounting data.
c) Accountant will be responsible for the review and lodgements with the ATO and ASIC.

8 General Ledger & Chart of Accounts

The General Ledger (G/L) accumulates all accounting activity for an accounting period. The
importance of the G/L system becomes apparent considering a twofold objective that:

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• All transactions are properly accumulated, classified and recorded in the accounts and
• Financial transactions and reports accurately reflect the details of all operations.

As evidenced by the objective, the activities of a G/L system are varied, ranging from the preparation
of journal entries (JEs) to the production of the final financial statements. The basic flow of events
for a G/L system is simple, revolving mainly around the journal entry and bank transactions.
Transactions are posted to the G/L. Reports are generated from the G/L, reviewed for accuracy and
any variances are explained. Finally, financial statements are produced from the final general ledger.
Because of the impact of the G/L system, the following key controls are imperative:

• Approval of all Transactions by a designated officer before posting.

• Reconciliation of the various sub-ledgers (such as accounts receivable, fixed assets, accounts
payable, etc.) to the G/L on a timely basis and investigation and correction of any
discrepancies.
• Review of financial statements by managers, including prompt explanation of any variances.
• Final review by the accountant to ensure compliance with tax laws.

The different accounting activities which give rise to journal entries are as follows:

• Cash activities
• Operating activities
o Accounts Payable
o Accounts Receivable
o Payroll
o Depreciation/Amortization/Revaluation

After posting the approved Transactions to the G/L, following reports are generated.

• Trial Balance and G/L accounts with ending balances.

• Financial Statements Balance Sheet & Income Statement.
• Business Activity Statements.
• Payroll Activity Statements.
• Cash flow statements.

Financial statements are available to all officers and managers who have control over costs and have
the ability to make financial decisions. The statements should be reviewed and unusual items
identified and investigated.

The chart of accounts is the foundation of the accounting system. It lists all the individual accounts
(assets, liabilities, equity, revenue and expense) of the company and is shown in Appendix I.

9 General Financial Transactions

9.1. Accounting/Bookkeeping

a) PFGFX accounting records will be maintained on a full accrual basis using up to date
methods of electronic data processing with effect from 01/07/2016.

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b) The following accounting records will be maintained:

(1) General Ledger, (2) Subsidiary Ledgers, (3) General Journals and
(4) Other records necessary to fully document and explain the financial transaction of PFGFX
as required to comply with the Corporations Act, 2001 (“the Act”) and Regulations in
relation to other financially expressed obligations, (for example, budgeting and annual
reporting) (5) Asset register (6) Employee Payroll register.

c) PFGFX will adopt multi- currency accounting principles to maintain foreign currency
accounts.

d) There will be adequate and appropriate supervision of employees with sufficient employee
backup to ensure that requisite accounts and ledgers are maintained.

e) The Accountant to review all journals, receipts, payments, transaction bookings, forex
calculations, trade confirmations, cancellations, reversals and alterations to parameters of
the accounting and transaction processing system.

f) Employees working within the accounting function will have the capabilities and training,
commensurate with their responsibilities.

g) Accountant to organise regular Training seminars for new activities and procedures for the
accounts team.

9.2. Foreign Exchange Transactions

PFGX will undertake various foreign exchange transactions as part of its remittance business process.
Transactions in foreign currencies will be translated to the Functional Currency (AUD) using an
appropriate exchange rate.

9.2.1.
9.2.1. Customer Transactions
Transactions submitted by affiliates and customers in foreign currencies will be booked and
confirmed by Treasury Back-Office Team.

Simultaneously, accounting entries are generated in the respective foreign currencies as well as in
equivalent AUD by the system as per PFGFX’s ‘Accounting Rules’.

a) AUD amounts due from affiliates/customers, including fee will be accounted and controlled
using separate affiliate-wise accounts under Trade Debtors.
b) FCY amounts payable to beneficiaries will be computed using the Customer Rate applicable
to the transaction and the transaction amount excluding the transaction fee.
c) FCY amounts payable to beneficiaries will be accounted and controlled using separate,
correspondent-wise and currency-wise accounts under Accounts Payable, by debit to
respective Currency Position Accounts. AUD equivalent will be computed using the current
market rates as per the system.

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d) Fee and Forex income receivable will be computed for each transaction and accounted
under Unearned Revenue.
e) Back end charge of overseas correspondent is calculated for each transaction and where the
amount is to be paid along with the transaction, it is included in the ‘FCY amount payable’
against each transaction by debit to respective ‘Bank Charges’ account.
f) Exchange rates used for AUD computation of forex income and bank charges for each
transaction shall also be the current market rates as per the system.
g) Upon sighting the respective customer funds in our bank accounts, the deals are marked as
payment-ready and the customer dues are squared off by debit to the AUD bank account.
h) As and when the payments are released, the foreign currency amounts with AUD
equivalents are credited to the respective ‘Nostro’ account by debit to the Payable account.
i) If a payment is released in advance, i.e. before receipt of customer funds from affiliate,
instead of closing out the payable account, the transaction is controlled using a separate
account under a set of accounts similar to the Deals Payable accounts. As and when the dues
are cleared, the advance is closed by debit to the payable account
j) Unearned revenue is accounted at this point and Fee and forex income are posted to P/L
when the dues are cleared by the customer/affiliate.

Failed or cancelled payments are accounted as below.

a) Cancellation of a customer transaction is treated as purchase of a foreign currency.

b) Accordingly, a market related rate is applied for the reversal trade and the resultant shortfall
if any in AUD is claimed from the customer.
c) Surpluses if any will be accounted under ‘other FX income’ andare not paid to customers.
d) Upon sighting the returned FCY funds in the Nostro Accounts, foreign currency positions are
updated by debit to the Nostro account. Corresponding AUD amounts are repaid to the
customers/affiliates account by debit to the Nostro account.
e) If the cancellation and refund is to be accounted prior to sighting the returned funds in our
Nostro account, the payment shall be controlled under a separate ‘Cancellation A/c’
maintained correspondent-wise and currency-wise.
f) In either case, the reversal transaction is routed through the Cancellation Account.
g) Entries in ‘Cancellation Accounts’ are to be strictly followed up and washed off promptly.

9.2.2.
9.2.2. Own/Proprietary Trades
a) To manage the foreign currency payments, PFG Forex undertakes various foreign exchange
trades with banks and other market entities. PFGFX primarily sells AUD to buy FCY for
funding our FCY accounts with overseas banks and correspondents.
b) Trade transactions booked by the Dealer in the system will be verified and confirmed by
Treasury Back-Office Team. Simultaneously, accounting entries are generated in the
respective foreign currencies as well as in equivalent AUD by the system as per PFGFX’s
‘Accounting Rules’.
c) Since the trades are normally done for Spot Value Date, the amounts are immediately
accounted in the respective FCY Nostro accounts maintained in our books. FCY amounts are
debited to the bank accounts by credit to respective Currency Position account and
equivalent AUD amounts are transferred from the AUD bank account to the FCY Nostro
account.

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d) When the trade is between two FCYs, similar transfer entries are posted between the two
Nostro accounts and simultaneously, both the Currency Position accounts are updated.

9.3Cash Activities

PFGFX Staff shall not receive or make any payments in the form of Cash or Cheques.

9.3.1. Petty Cash:

a) Petty cash is a revolving fund maintained at a constant (imprest) amount to cover the
small cash expenditures such as postage, minor office supplies, travel advances, etc.
b) The cash float for petty cash purposes of Tullamarine Office will be $ 1,000
c) Cash payments may be made from the petty cash account for expense reimbursement
only.
d) Cash advances are not permitted.
e) Petty cash transactions shall be recorded and supported by petty cash receipts (or
statutory declaration where receipts cannot be provided).
f) The vouchers should indicate the amount and purpose of the expenditures.
g) A cash reimbursement cannot, in respect of any particular voucher, exceed $100
h) Replenish the petty cash when it is nearly depleted ( i.e Below 200$).
i) The cash on hand plus the non-reimbursed petty cash vouchers should always total the
constant (imprest) amount per the general ledger.
j) An audit of petty cash floats will be undertaken at least annually.

9.4 Accounts with Banks & Correspondents

a) Accounts with Banks and Correspondents can only be opened with the approval of the
Board.
b) Bank accounts will be operated exclusively for the purpose of conducting PFGFX business
and all accounts will be in the name of PFG Forex Pty Ltd.
c) Authorised bank signatories are required to authorise disbursements from bank accounts in
Australia. Additional Signatories can only be added by the board; Those presently approved
are :
• Director
• Chief Financial Officer
• Accountants
d) Bank Accounts with overseas correspondents will be operated as per the agreement terms
with each correspondent.
e) Proper record of rights and privileges assigned to different users shall be maintained in a
register maintained at the Operations office.
f) Statements of bank accounts will be obtained on a regular basis, verified for correctness and
the balances reconciled.
g) Any irregularity observed in the account operations shall be followed up and if not resolved
immediately, will be escalated to the CFO.

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h) Banking trends and costs will be monitored by the Accountant and account relationships
reviewed annually.
i) All bank transactions originated by PFGFX, including transfer of funds from one bank account
to another shall be immediately posted to the bank accounts.
j) Entries not originated by PFGFX, like bank charges, interest etc. shall be accounted on
receipt of the information without delay.
k) FCY Nostro Accounts, will be maintained in dual currencies and posting of single currency
entries in the account is generally not allowed. Such entries shall be posted only with the
approval of Accountant or CFO.

9.5 Bank Reconciliation

The bank reconciliation process is an important element in the internal control as it reconciles the
differences between the general ledger balance (books) and the bank statement balance.

It is essential that the reconciliation be prepared by someone other than the person who actually
processes the receipts and disbursements. The procedures for preparation of a reconciliation report
are as follows:

a. Establish the accuracy of the bank statement, i.e. ensure that the beginning balance in
the bank statement agrees to the ending balance of the prior bank statement.
b. Check off each entry in the bank statement against corresponding entry in our books
and unchecked items in both the statements are to be listed out.
c. Examine the bank statement for additional debit or credit items such as:
a. Fund transfers - If it is an interbank transfer, the offsetting bank account must
also show the transfer.
b. Bank Charges - These amounts should be recorded as an expense.
c. Interest or fee rebate received - These amounts should be accounted as income.
d. The reconciliation report must be submitted to the CFO, at least on a monthly basis.

9.6 Investment

The Board of Directors should formally define authority limits in terms of the types and amounts of
investments which may be purchased, and the persons authorized to carry out investment
transactions.

a. PFGFX must avoid investments that are speculative.

b. PFGFX may invest in fixed income securities, bank deposits etc.
c. PFGFX is permitted to obtain independent and impartial advice concerning investment
and/or the management of investments
d. PFGFX must review the performance of their investments at least annually
e. PFGFX must not directly acquire shares or equities in a company. PFGFX are not however,
precluded from investing money in managed funds which invest in shares, with Board
approval.

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f. Investment of surplus funds will only be with any one of the four major banks or APRA
regulated Authorised Deposit-taking Institutions (ADIs) in Australia.
g. Investment performance will be reviewed at the end of each financial year, and the outcome
will be reported to Board.

9.7 Debtors

PFGFX provides a range of remittance services which are used by varying individuals and corporates,
either directly or through an affiliate. Income is received after the service is provided. It remains a
debt to PFGFX up to the time it is paid or written off.

a) If the Money Transfer Request is submitted through an affiliate :

• PFGFX will issue a Transaction Receipt to the customer immediately
• The amount becomes due and payable immediately to PFGFX through the affiliate.
• No separate invoices will be raised on the customer.
• PFGFX will account the dues as a debt of the affiliate
b) If the Money Transfer Request is submitted directly to PFGFX:
• PFGFX will issue a Transaction Confirmation to the customer immediately
• The amount becomes due and payable immediately to PFGFX.
• No separate invoices will be raised on the customer.
• PFGFX will account the dues as a debt of the customer
c) Transaction Reference Numbers will be system generated and unique to a transaction.
d) Records shall be maintained for all debtors and transactions relating thereto.
e) Debtors have ONE business day from the date of the transaction before the amount is
considered “overdue”.

9.8 Debt Collection

a) PFGFX will apply prudent debt management practices. Outstanding debtor balances shall be
reviewed every day and appropriate action initiated to recover debts. This will include:

Schedule Actions
1st Day T+1 First Reminder text message / email or phone call.
2nd Day T+2 Second and Final Notice requesting immediate payment, followed by
cancellation notice to agent/customer.
3rd Day T+3 Cancellation of the transaction, with advise to agent/customer
In exceptional cases the cancellation may be deferred with approval of
Accountant
One T+7 Debtors that fail to respond to PFGFX will be referred to Operations
Week Department for initiating further action as considered appropriate.
Suspend Agent/Customer and cancel all transactions.
Two T+14 Serve advance notice of possible legal action
Weeks
One T+30 Debtors that fail to respond to PFGFX will be referred to Legal Dept by
Month Operations Dept for initiating recovery proceedings.

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b) PFGFX must ensure that debt is managed in a way which is fair and equitable to the debtor
and efficient for both parties. Should the debtor fail to meet the payment terms without
having made contact with PFGFX regarding difficulties, PFGFX will invoke its standard debt
recovery procedures to ensure a consistent approach to all debt follow up.
c) Status of each such case, including progress and outcome is to be reported to CFO, every
month.

9.9 Provision for Doubtful Debts

a) A provision for doubtful debts will be established for aged debts greater than 60days, taking
into account the size and nature of the debt and the debtor in question
b) Aged debts less than 60 days may be provided for if the recovery is known to be unlikely.
c) Outstanding debtor balances shall be reviewed annually towards the end of each financial
year to ensure doubtful debts are adequately provided for.

9.10 Bad Debts/Write Offs

a) Debts shall be written off only when all reasonable attempts at recovery have been taken
and failed. Recommendation for write off shall be made by the Accounts Department
following discussion with Operations Dept to the board.
b) Debts that are considered irrecoverable, or where the cost of recovery is uneconomic, shall
be written off as a bad debt.
c) The power to write off such debts not exceeding $5000 is delegated to the Chief Financial
Officer.

9.11 Credit Cards

a) The Chief Executive Officer, Directors and Authorised Officers may maintain PFGFX owned
credit cards.
b) The corporate credit card recipient must comply with the conditions of use and expenditure
on credit cards will be subject to limits and all Credit Card Statements must be approved by
the Chief Executive Officer.
c) Credit card expenditure must be signed by the card holder and supported by the appropriate
documentation and be submitted to the Accounts Payable Officer for reconciliation with the
statement of account.
d) In the event the cardholder is unable to produce a valid tax invoice / receipt, a statutory
declaration must be submitted by the cardholder.
e) The credit card will not be used for personal purposes
f) The cardholder will not permit use of the card by another person except for work related
expenses incurred with prior approval.
g) Where a credit card is lost or stolen, the cardholder must immediately report to the Bank for
cancellation and inform the accounts department of PFGFX.

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h) The cardholder must return the card should they cease to be an employee of PFGFOREX or
when so directed by the CFO.

9.12 Income Accounts

9.12.1.
9.12.1. FX Income
PFGFX undertakes overseas remittance transactions on behalf of customers. Customers remit AUD
amounts, which are remitted overseas in different foreign currencies. The FCY equivalent payable
overseas is arrived at based on the Customer Exchange Rates quoted by PFGFX. To cover these
transactions, PFGFX undertakes wholesale trades with market entities and correspondents. The
difference between the AUD cash flows for these matching transactions accrue as Forex Income.

PFGFX calculates the Forex Income for each transaction at the time of booking. The income is posted
to P/L when the customer funds for the transaction are received in the bank account.

Marginal variations in the exchange rates used for computation of income on a transaction by
transaction basis versus the actual rate applied for the cover trades, accrue in the respective FCY
Nostro accounts. This amount is extracted out of the Nostro account during the marking-to-market
valuations done periodically and posted to P/L as per accounting policy.

9.12.2.
9.12.2. Customer Fee
PFGFX charges customers for each remittance transaction as well as for other services like
cancellations, historic statements, copy of SWIFT payment message etc. All such amounts are
collected in AUD and posted in P/L by debit to the respective bank accounts.

9.12.3.
9.12.3. Fee Rebate
PFXFX may receive rebates or reimbursements from overseas correspondents as per the business
agreement. Such amounts shall be computed and accounted on a monthly basis, by debit to Rebate
Receivable accounts. When realised, the amounts in receivable accounts are washed off by debit to
the respective bank account and currency positions are promptly updated.

9.12.4.
9.12.4. Interest
PFGFX may earn interest on the balances and deposits it maintains in its accounts with banks and
correspondents. Such income if received in FCY, has to be converted to AUD at ongoing rates and
accounted by debit to the respective account.

9.13 Expenses Accounts

9.13.1. General
All accounts for payment shall be certified or verified by an Authorised Officer as to:

1. The receipt of the goods and services being in accordance with the relevant invoice
2. The prices charged being fair and reasonable
3. The calculations and additions being correct
4. The allocation of the payment to the correct ledger account
5. The payment has been approved by a competent authority

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a) A payment on behalf of PFGFX must be made by Electronic Funds Transfer (EFT), Direct Debit
or cheque drawn on PFGFX’s bank.

b) All disbursements shall be authorised by any of the following:

1. Director
2. Chief Financial Officer
3. Accountants

9.13.2.
9.13.2. Commission Payments
PFGFX has revenue sharing arrangements with Super Agents and Direct Agents. Based on the agreed
terms, FX commission share and Fee share are calculated and paid periodically. The amounts are
charged to the Commission Paid account and remitted to the Agents bank account.

9.13.3 Delegated Authority for expenses

Position Per TxnLimit
Accountant $ 250
Chief Financial Officer $ 2500

9.14 Loans/Borrowings

PFGFX has determined as policy that there will be no loans or borrowings unless authorised by
Board. Loans will be separately accounted for and be identifiable in the accounting records.

9.15 Fringe Benefits Tax

Fringe Benefits Tax (FBT) is paid on benefits in place of, or in addition to, salary or wages of
employees.

Fringe benefits provided are also required to be reported on employee’s annual PAYG payment
summaries. As the FBT year is not aligned with the financial year, the benefits reported on payment
summaries relate to the preceding FBT year, which runs from 1st April to 31st March.

9.16 Goods and Services Tax

The Goods and Services Tax (GST) is a broad-based consumption tax of 10 per cent on most supplies
of goods and services consumed in Australia.

PFGFX’s remittance services do not attract GST and are treated as GST-free.

For purchases of goods and services which attract GST, PFGFX must obtain a complying Tax Invoice.

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9.17 Auditor Policy

The Board has determined that the company is not a reporting entity and does not require to get an
Independent Audit done; if required then The Management Committee is responsible for monitoring
the performance of PFGFX’s Auditor and making recommendations to PFGFX as required regarding
the appointment or termination of the Auditor.

9.18 Annual Budget/Annual Business Plan

a) PFGFX will adopt an Annual Budget after 31 May and before 30th June for the ensuing
financial year.
b) As part of the budget process PFGFX will prepare an “Annual Business Plan” which will
address the activities PFGFX intends to undertake in the ensuing year to achieve its
objectives and the key performance indicators that PFGFX will use to assess its performance
against its objectives.
1. The following budget principles will underpin the budget development:
2. Honest & Accountable - with a framework of reporting that is open and transparent
3. Strategic Approach - to the delivery of PFGFX services within PFGFX’s strategic priorities
4. Realistic Budgeting - based on best available information at the time of budget
preparation
5. Affordability - balanced against meeting PFGFX objectives and the business’s ability to
generate income
6. New Initiatives - fully costed and evaluated in terms of meeting PFGFX’s strategic
priorities
7. Financial Control - to minimise PFGFX’s exposure to risk
c) The budget performance will be reviewed each year by the Management Committee
d) The CFO will present to PFGFX, a report that compares budgeted performance to actual
performance with explanations for significant budget variances.
e) The Board is solely responsible for approving any change to PFGFX’s budget.
f) The Board will consider Budget Carry Overs at the Annual Budget Review to ensure their
consideration for inclusion in the Original Budget for the following year.

10 Salaries and Wages

10.1 Payroll
a) Records will be maintained in respect all employees of PFGFX showing:
1. Hours worked and rate of pay
2. Applicable Wage Awards
3. Gross salary or wages
4. Tax and details of all other payments and deductions
5. Sick, annual, long service and other leave available and taken
6. Allocation of time worked on jobs; transfer to Group companies and locations that
the employee is stationed.

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7. Superannuation deductions
b) 9.1.2 Salaries and wages will be paid on the basis of hours of attendance recorded on an
approved time sheet, except for employees on “fixed wage” contracts.
c) Time sheets will be submitted fortnightly by the employee to the Operations Dept.
d) All annual leave and long service leave must be applied for in writing by employees and
authorised by their supervisor prior to commencement of leave.
e) All sick leave must be authorised by the relevant supervisor as soon as practical after the
period of absence, and will be paid in accordance with PFGFX’s HR Policy.
f) Additional hours resulting in the accrual of flexi time or payment of overtime must be
approved by the relevant Manager/Director prior to undertaking the additional hours.
g) PFGFX may make payments of cash advances against salaries or wages earned but unpaid.
No advance shall exceed the amount of salary or wage earned in the next pay period and the
advance shall be reimbursed on the next date on which salaries and wages are paid. Any
such payment is to be approved by the Chief Financial Officer in writing.
h) The employment procedures outlined in PFGFX’s Human Resources Policy must be followed
before new employees are entered into PFGFX’s payroll.
i) Payroll deductions on behalf of employees will be limited to:
1. Taxation liabilities
2. Superannuation liabilities
3. Registered Banking Institutions
4. Deductions for cash/other advances made.

11 Computing/Electronic Accounting

PFGFX uses its proprietary software ‘SPS Accounts’ for processing of transactions and for multi-
currency accounting.

General Journal Entries generated from the system are uploaded to the accounting software MYOB.

11.1 Security
Security of the general and subsidiary ledgers is implemented at both the hardware and software
levels. Initial access to the system is restricted by individual user ID code and password validation.
Access to the database is restricted by system access routines.

Access to application programs in the financial and transaction systems is restricted by relevant
module securities per employee and database access security.

The relevant securities for specific modules are set for employees working in the specific areas of
accounting, transaction processing, dealing room etc. Employees in the above areas have access to
the respective module’s programs as per their job-roles and can perform enquiry, reporting, data
entry, processing and maintenance of financial records.

Employees outside these specific financial and rating areas are restricted to enquiry and reporting
access only.

11.2 System Integrity

System integrity is maintained through the use of audit logs which track all changes to data in
specific modules. In addition a comprehensive system of data backups and system redundancy

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mean that recovery from either a system failure or potential disaster situation can always be
performed.

12 Long Term Financial Plan

a) A Long Term Financial Plan will be developed as part of PFGFX’s strategic management
planning processes. The plan will provide a long term financial projection for a period of no
less than 3 years and will be reviewed at least annually.
b) The Long Term Financial Plan will align with PFGFX’s Strategic Plan and should form the basis
for the annual budget each year.
c) Assumptions used in developing the plan will be reviewed yearly and updated in conjunction
with PFGFX’s annual budget development process.
d) The assumptions used in developing the plan should address at a minimum PFGFX’s position
on debt levels, the company’s business prospects and specific operational expenditure
strategies.
e) The Long Term Financial Plan should include:
(1) Estimated Statement of Comprehensive Income
(2) Estimated Balance Sheet
(3) Estimated Cash Flow Statement
(4) Estimated Statement of Changes in Equity
(5) Key Financial Indicators
(6) Capital Project & Operating Project Expenditure Programme

13 Financial Statements

Annual financial statements shall be prepared in accordance with applicable Australian Accounting
Standards and other applicable accounting standards.

Financial statements will be presented to Board for adoption no later than 31st October of each
year.

A summary of significant Accounting Policies for the purpose of preparing the annual audited
financial statements are as follows:

13.1. Basis of Preparation

Compliance with Australian equivalents to International Financial Reporting Standards

General purpose financial reports should be prepared in accordance with Australian Accounting
Standards (AASB).

Financial statements are to be prepared on an accruals basis and based on historical costs modified
by the revaluation of selected noncurrent assets, financial assets and financial liabilities for which
the fair value basis of accounting is to be applied.

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13.2. Revenue Recognition

Revenue is to be measured at the fair value of the consideration received or receivable. Revenue is
recognised when PFGFX obtains control over the assets comprising the revenue, or when the
amount due constitutes an enforceable debt, whichever first occurs.

13.3. Cash, Cash Equivalents and other Financial Instruments

Cash Assets include all amounts readily convertible to cash on hand at PFGFX’s option with an
insignificant risk of changes in value with a maturity of three months or less from the date of
acquisition.

All receivables are reviewed as at the reporting date and adequate allowance made for amounts the
receipt of which is considered doubtful.

All financial instruments are to be recognised at fair value at the date of recognition.

13.4. Infrastructure, Property, Plant & Equipment

Initial Recognition- All assets are initially recognised at cost. For assets acquired at no cost or for
nominal consideration, cost is determined as fair value at the date of acquisition.

Subsequent Recognition- Certain asset classes are re-valued on a regular basis such that the carrying
values are not materially different from fair value.

Depreciation of Non-Current Assets - Other than land, all infrastructure, property, plant and
equipment assets recognised are systematically depreciated over their useful lives in a manner
which reflects the consumption of the service potential embodied in those assets.

13.5. Payables
Goods & Services Creditors are amounts due to external parties for the supply of goods and services
and are recognised as liabilities when the goods and services are received.

Payments Received in Advance & Deposits Amounts received from external parties in advance of
service delivery, and deposits held against possible damage to PFGFX assets, are recognised as
liabilities until the service is delivered or damage reinstated, or the amount is refunded as the case
may be.

13.6. Borrowings
Loans are carried at their principal amounts.

Interest is accrued over the period to which it relates, and is recorded as part of “Payables”.

13.7. Employee Benefits

Salaries, Wages & Compensated Absences Liabilities for employees’ entitlements to salaries, wages
and compensated absences expected to be paid or settled within 12 months of reporting date are
accrued at nominal amounts (including payroll based on costs).

Liabilities for employee benefits not expected to be paid or settled within 12 months are measured
as the present value of the estimated future cash outflows (including payroll based on costs) to be
made in respect of services provided by employees up to the reporting date. Present values are
calculated using government guaranteed securities rates with similar maturity terms.

No accrual is made for sick leave as PFGFX does not make payment for unused sick leave.

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Superannuation - PFGFX makes employer superannuation contributions in respect of its employees

to Superannuation Schemes. PFGFX does not use defined benefit accounting for these
contributions.

13.8. Leases
Lease payments under operating leases, where substantially all the risks and benefits remain with
the lessor, are charged as expenses in the periods in which they are incurred.

13.9. Comparative Information

Comparative information will be reclassified to be consistent with the current year disclosure of
equivalent information.

13.10. Procedures for the Certification of the Annual Financial Statements

a) The principal accounting officer (Accountant), in consultation with the external accountant,
will prepare draft statements for submission to the Management Committee, and for
external audit if required.
b) The Management Committee will review the draft statements to ensure that they present
fairly, the affairs of PFGFX. This review will be conducted independent of the external audit.
c) Following the external audit, the principal accounting officer and auditor will propose any
necessary amendments to the draft statements, which will be referred to the certifying
officers for consideration.
d) The certifying officers will review the proposed amendments to the draft statements and
will either refer them to the Management Committee for further consideration or may, if
satisfied that the proposed amendments are appropriate, complete and date the certificate.
e) The certificate of the final statements will be signed by the Director.
f) The date of the certificate will be the date of authorisation for issue of the annual financial
statements.

14 Review

The Manual will be reviewed in line with PFGFX’s Policy Framework or earlier in the event of major
changes to legislation or related policies/procedures or if deemed necessary by the Chief Executive
Officer or Relevant Director.

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