What are 'Accounting Policies?

'
Accounting policies are the specific policies and procedures used by a company
to prepare its financial statements. These include any methods, measurement
systems and procedures for presenting disclosures. Accounting policies differ
from accounting principles in that the principles are the rules and the policies
are a company's way of adhering to the rules.

Purpose
To establish decisions, directions and precedents which act as a reference for
financial reporting and are the basis from which the Universitys accounting
procedures are determined.

Scope
This Policy should be consistently applied by the University, as well as all of its
controlled entities, for both their financial reporting responsibilities and group
consolidation purposes. This Policy is applied in the preparation and the
presentation of the consolidated financial statements of the group of entities
under the control of the University. The financial statements include separate
financial statements for the University as an individual entity and the
consolidated entity (the Group) consisting of the University and its controlled
entities.

Basis of Preparation
The general purpose financial statements of the University are prepared in
accordance with the following requirements: Public Finance and Audit Act
1983; Public Finance and Audit Regulations 2010; Australian Accounting
Standards; other authoritative pronouncements of the Australian Accounting
Standards Board (AASB); Australian Accounting Interpretations; Higher
Education Support Act 2003 (Financial Statement Guidelines); and other
Australian Government and State legislative requirements.

General Features:
Fair Presentation
The financial statements of the University shall present fairly the financial
position, financial performance and cash flows of an entity. Fair presentation
requires the faithful representation of the effects of transactions, other events
and conditions in accordance with the definitions and recognition criteria of
assets, liabilities, income and expenses as set out in the AASB Framework.

Compliance with International Financial Reporting Standards

The University is a not-for-profit entity and the financial statements and notes
of the University have been prepared on that basis. Some of the requirements
for not-for-profit entities are inconsistent with the International Financial
Reporting Standards (IFRSs) requirements.

Historical Cost Convention

The financial statements are prepared under the historical cost convention, as
modified by the revaluation of available-for-sale financial assets, financial
assets and liabilities at fair value through profit or loss and certain classes of
property, plant and equipment.

Critical Accounting Estimates

The preparation of the financial statements in conformity with Australian
Accounting Standards requires the use of certain critical accounting estimates. It
also requires management to exercise its judgement in the process of applying
the Universitys accounting policies. The estimates and underlying assumptions
are reviewed on an ongoing basis. The areas involving a higher degree of
judgement or complexity, or areas where assumptions and estimates are
significant are disclosed in the financial statements.

Going Concern
The financial statements are prepared on the assumption that the University is
operating as a going concern (and will continue to do so in the foreseeable
future, which is at least 12 months from the balance sheet date).

Accrual Basis of Accounting

The financial statements of the University are prepared using the accrual basis
of accounting, except for cash flow information.

Materiality and Aggregation

Each material class of similar items shall be presented separately in the financial
statements of the University. Items of a dissimilar nature or function shall be
presented separately unless they are immaterial.

Offsetting
Assets and liabilities, and income and expenses, shall not be offset unless
required or permitted under the Australian Accounting Standards.

Comparative Information
Except when Australian Accounting Standards permit or require otherwise,
comparative information shall be disclosed in respect to the previous period for
all amounts reported in the financial report. Comparative information shall be
included for narrative and descriptive information when it is relevant to an
understanding of the current periods financial statements.

Consistency of Presentation
The presentation and classification of items in the financial statements shall be
consistent from one period to the next unless:
(a) it is apparent, following a significant change in the nature of the
Universitys operations or a review of its financial statements, that another
presentation or classification would be more appropriate having regard to the
criteria for the selection and application of accounting policies; or (b) an
Australian Accounting Standard requires a change in presentation.

Principles of Consolidation
The University, as a parent, shall present consolidated financial statements in
which it should include all controlled entities of the University. Controlled
entities are fully consolidated from the date on which control is transferred to
the University. They are deconsolidated from the date that control ceases. The
acquisition method of accounting is used to account for the acquisition of
controlled entities by the University.
All inter-entity transactions, balances and unrealised gains on transactions shall
be eliminated in full on consolidation. Unrealised losses shall also be eliminated
unless the transaction provides evidence of the impairment of the asset
transferred. The financial statements of the University and its controlled entities
used in the preparation of the consolidated financial statements are prepared as
of the same reporting date and using uniform accounting policies for like
transactions and other events in similar circumstances.

Definitions:
A controlled entity is an entity, including an unincorporated entity such as a
partnership, that is controlled by another entity (known as the parent).
Control is the power to govern the financial and operating policies of an entity
so as to obtain benefits from its activities.
A parent is an entity that has one or more controlled entities. The Group means
the University and its controlled entities.
The University means the University of New South Wales.

Advantages:

Like other organizational policies and rules, finance and accounting policies
serve to improve organizational performance in myriad ways. By understanding
the benefit of having well-designed accounting policies, you can design and
implement accounting policy in your business to improve both the quality and
efficiency of your financial reporting function.

Consistency of Application

Accounting policies help employees evaluate accounting transactions in a

similar manner. In larger companies, many accountants may be examining
financial activity and, due to the judgment required in accounting decisions,
these accountants may determine different accounting treatments for the same
transaction. Accounting policy acts as a roadmap for the application of generally
accepted accounting principles and removes variance in employee judgment.

Correct Accounting Treatment

For complex accounting issues, such as revenue recognition or classification of

securities, accounting policies provide a way for employees to arrive at the
correct accounting treatment, even if they do not have specialized knowledge in
the complex area. Accounting supervisors should be careful. While accounting
policies can help guide competent employees to the right decision, policy
should not be a substitute for competence. Accounting staff should know how to
apply the accounting policy but also be able to recognize when a transaction
doesn't quite fall under the umbrella of the policy and more analysis should be
conducted.

Efficiency

By streamlining decision processes, accounting policies can make the

bookkeeping process more efficient. For the most simple transactions,
accounting policy can be used to automate financial transactions in a company's
accounting system. While the work of automated accounting systems still needs
to be reviewed by accounting personnel, this process should still be less timeconsuming than performing the work manually. An additional benefit to the
automation of accounting processes is a reduction in error. In general,
automated accounting systems do not make typographical errors or transpose
figures. While mistakes can be made, they are generally more systematic and
easier to spot.

Documentation Requirements

For companies with audit requirements, accounting policy serves an additional

purpose. The Sarbanes-Oxley Act of 2002 requires companies to assess internal
control systems and render an opinion on internal control over financial
reporting. Accounting policies serve as evidence that accounting transactions

are evaluated in a systematic manner, and adherence to these policies shows that
transactions are processed in the same way. Accountants examining internal
control can use accounting policies to help follow transactions throughout the
accounting system.

IAS 8 Accounting Policies, Changes in Accounting Estimates and

Errors:
The objective of this Standard is to prescribe the criteria for selecting and
changing accounting policies, together with the accounting treatment and
disclosure of changes in accounting policies, changes in accounting estimates
and corrections of errors. The Standard is intended to enhance the relevance and
reliability of an entitys financial statements and the comparability of those
financial statements over time and with the financial statements of other entities.

Accounting policies
Accounting policies are the specific principles, bases, conventions, rules and
practices applied by an entity in preparing and presenting financial statements.
When an IFRS specifically applies to a transaction, other event or condition, the
accounting policy or policies applied to that item shall be determined by
applying the IFRS and considering any relevant Implementation Guidance
issued by the IASB for the IFRS.
In the absence of a Standard or an Interpretation that specifically applies to a
transaction, other event or condition, management shall use its judgement in
developing and applying an accounting policy that results in information that is
relevant and reliable. In making the judgement management shall refer to, and
consider the applicability of, the following sources in descending order: (a) the
requirements and guidance in IFRSs dealing with similar and related issues; and
(b) the definitions, recognition criteria and measurement concepts for assets,
liabilities, income and expenses in the Conceptual Framework.
An entity shall select and apply its accounting policies consistently for similar
transactions, other events and conditions, unless an IFRS specifically requires or
permits categorisation of items for which different policies may be appropriate.
If an IFRS requires or permits such categorisation, an appropriate accounting
policy shall be selected and applied consistently to each category.
An entity shall change an accounting policy only if the change:
(a) Is required by an IFRS; or

(b) Results in the financial statements providing reliable and more relevant
information about the effects of transactions, other events or conditions on the
entitys financial position, financial performance or cash flows.
An entity shall account for a change in accounting policy resulting from the
initial application of an IFRS in accordance with the specific transitional
provisions, if any, in that IFRS. When an entity changes an accounting policy
upon initial application of an IFRS that does not include specific transitional
provisions applying to that change, or changes an accounting policy voluntarily,
it shall apply the change retrospectively. However, a change in accounting
policy shall be applied retrospectively except to the extent that it is
impracticable to determine either the period-specific effects or the cumulative
effect of the change.

Change in accounting estimate

The use of reasonable estimates is an essential part of the preparation of
financial statements and does not undermine their reliability. A change in
accounting estimate is an adjustment of the carrying amount of an asset or a
liability, or the amount of the periodic consumption of an asset, that results from
the assessment of the present status of, and expected future benefits and
obligations associated with, assets and liabilities. Changes in accounting
estimates result from new information or new developments and, accordingly,
are not corrections of errors. The effect of a change in an accounting estimate,
shall be recognised prospectively by including it in profit or loss in:
(a) The period of the change, if the change affects that period only; or
(b) The period of the change and future periods, if the change affects both.

Prior period errors

Prior period errors are omissions from, and misstatements in, the entitys
financial statements for one or more prior periods arising from a failure to use,
or misuse of, reliable information that:
(a) was available when financial statements for those periods were authorised
for issue; and

(b) could reasonably be expected to have been obtained and taken into account
in the preparation and presentation of those financial statements. Such errors
include the effects of mathematical mistakes, mistakes in applying accounting
policies, oversights or misinterpretations of facts, and fraud. Except to the
extent that it is impracticable to determine either the period-specific effects or
the cumulative effect of the error, an entity shall correct material prior period
errors retrospectively in the first set of financial statements authorised for issue
after their discovery by:
(a) Restating the comparative amounts for the prior period(s) presented in which
the error occurred; or
(b) If the error occurred before the earliest prior period presented, restating the
opening balances of assets, liabilities and equity for the earliest prior period
presented.
Omissions or misstatements of items are material if they could, individually or
collectively; influence the economic decisions of users taken on the basis of the
financial statements. Materiality depends on the size and nature of the omission
or misstatement judged in the surrounding circumstances. The size or nature of
the item, or a combination of both, could be the determining factor.

Conclusion:
Organization Target Corporation (Target, the Corporation, or the Company)
operates three reportable segments: U.S. Retail, U.S. Credit Card and Canadian.
Our U.S. Retail Segment includes all of our merchandising operations,
including our fully integrated online business. Our U.S. Credit Card Segment
offers credit to qualified guests through our branded proprietary credit cards; the
Target Visa Credit Card and the Target Credit Card (Target Credit Cards).
Additionally, we offer a branded proprietary Target Debit Card. Collectively, we
refer to these products as RED cards, which strengthen the bond with our
guests, drive incremental sales and contribute to our results of operations. Our
Canadian Segment was initially reported in the first quarter of 2011 as a result
of our purchase of leasehold interests in Canada from Zellers, Inc. (Zellers).
This segment includes costs incurred in the U.S. and Canada related to our
planned 2013 Canadian retail market entry.

Consolidation
The consolidated financial statements include the balances of the Corporation
and its subsidiaries after elimination of intercompany balances and transactions.

All material subsidiaries are wholly owned. We consolidate variable interest

entities where it has been determined that the Corporation is the primary
beneficiary of those entities' operations, including a bankruptcy remote
subsidiary through which we sell certain accounts receivable as a method of
providing funding for our accounts receivable.

Use of estimates
The preparation of our consolidated financial statements in conformity with
U.S. generally accepted accounting principles (GAAP) requires management to
make estimates and assumptions affecting reported amounts in the consolidated
financial statements and accompanying notes. Actual results may differ
significantly from those estimates.

Accounting policies

Our accounting policies are disclosed in the applicable Notes to the

Consolidated Financial Statements.

Reclassifications

Certain prior year amounts have been reclassified to conform to the current year
presentation.