management, accommodation and other overheads are apportioned and charged as expenses to the Fund in accordance with council policy.
All investment management expenses are accounted for on an accruals basis. Fees for the fund managers and custodian are agreed in the respective mandates governing their appointments and are broadly based on the market value of the investments under their management and therefore, increase or reduce as the value of these investments change. Where an investment management fee has not been received by the balance sheet date, an estimate based upon the market value of the mandate as at the end of the year is used for inclusion in the accounts.
Financial assets are included in the Net Assets Statement on a fair value basis as at the reporting date. Any amounts due in respect of trades entered into but not yet complete as well as accrued income at 31 March each year are accounted for as financial assets held at amortised cost. A financial asset is recognised in the net asset statement on the date the fund becomes party to the contractual acquisition of the assets. From this date, any gains/losses are recognised in the Fund Account. The Net Assets Statement shows values of investments have been determined at fair value in accordance with the requirements of the code and IFRS13 "Fair Value Measurement". For the purposes of disclosing levels of fair value hierarchy, the Fund has adopted the classification guidelines recommended in accordance with the requirements of the Code and IFRS 13 (see Note 14d).
Dividends, interest and purchases and sales of investments in foreign currencies are accounted for in sterling at the spot market exchange rate prevailing on the date of the transaction. End of year spot market exchange rates are used to value cash balances held in foreign currency bank accounts, market values of overseas investments and purchases and sales outstanding at the end of the reporting period. Any exchange differences arising are recognised in profit or loss.
Cash and cash equivalents include cash on hand, balances held in UK bank accounts, and deposits with financial institutions that are repayable on demand without penalty. These balances comprise short-term, highly liquid investments that are readily convertible into known amounts of cash and are subject to an insignificant risk of changes in value.
The Fund recognises financial liabilities at fair value as at the reporting date. Any amounts payable in respect of trades entered into but not yet complete at 31 March each year are accounted for as financial liabilities held at amortised cost and reflected in the classification of financial instruments in Note 14D. A financial liability is recognised in the Net Assets Statement on the date the Fund becomes party to the liability. From this date any gains or losses arising from changes in the fair value of the liability are recognised by the Fund.
The fund provides an additional voluntary contributions (AVC) scheme for its members, the assets of which are invested separately from those of the Pension Fund, and in accordance with the Local Government Pension Scheme (Management and Investment of Funds) Regulations 2016. AVCs are not included in the accounts in accordance with Regulation