2.

L'ASSOCIATION DES FRANCOPHONES DE NANAIMO
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED MARCH 31, 2004

SIGNIFICANT ACCOUNTING POLICIES continued
(f) Financial instruments

The association's financial instruments consist of short-term investments, accounts receivable,
investment, bank overdraft and accounts payable. Unless otherwise noted, it is management's
opinion that the association is not exposed to significant interest, currency or credit risks arising
from these financial instruments.

The carrying amount of short-term investments, accounts receivable, bank overdraft, and
accounts payable approximates their fair value due to the short-term maturities of these items.

The fair value of the Company’s investment approximates the carrying amount since interest
earned on the investments approximates current market rates.

(g) Measurement uncertainty

The preparation of financial statements in conformity with Canadian generally accepted
accounting principles requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements, and the reported amounts of revenues and expenses during the
reporting period. Accounts receivable are stated after evaluation as to their colléctibility and an
appropriate allowance for doubtful accounts is provided where considered necessary. Provisions are
made for slow moving and obsolete inventory.

These estimates and assumptions are reviewed periodically and, as adjustments become
necessary they are reported in earnings in the periods in which they become known.

INVESTMENT
The investment is a GIC bearing interest at 2.50% and matures November 1, 2006. The carrying
amount of the investmentment approximates its market value. This investment is required by the

Association's creditor as security for overdraft privileges. The Association intends to renew the
investment after maturity.

CAPITAL ASSETS

Capital assets include office equipment, computer equipment and software and special event
equipment.

BANK OVERDRAFT

The Association has an approved line of credit of $20,000 bearing interest at the bank prime rate
plus 1%, secured by a term deposit of $23,127.

Mp