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## ACCOUNTING POLICIES AND INTERNAL CONTROLS 

## Significant Changes in Accounting Standards 

The consolidated financial statements have been prepared in accordance with IFRS. 

Capstone has adopted the new and revised standards, along with consequential amendments, effective January 1, 2013. These changes include: 

• IFRS 10, Consolidated Financial Statements and IAS 27, Separate Financial Statements; 

• IFRS 11, Joint Arrangements and IAS 28, Investments in Associates and Joint Ventures; 

• IFRS 12, Disclosure of Interests in Other Entities; 

• IFRS 13, Fair Value Measurement; 

• IAS 1, Amendment, Presentation of Items of Other Comprehensive Income; and 

• IAS 19, Employee Benefits. 

Refer to note 2 (Summary of Significant Accounting Policies) to the December 31, 2013 annual consolidated financial statements for detail of the nature and impact of these changes to Capstone financial statements. 

Certain comparative figures in this MD&A have been adjusted as if these accounting policies had always been applied. No adjustments were made to the periods before September 30, 2011, prior to the acquisition of Bristol Water. 

## Future Accounting Changes 

The IASB has previously issued the following standard which has not yet been adopted by the Corporation: 

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(1) See note 2 to the consolidated financial statement for the year ended December 31, 2013 for further detail about the nature of these future accounting changes. 

## Accounting Estimates 

The consolidated financial statements are prepared in accordance with IFRS, which requires the use of estimates and judgment in reporting assets, liabilities, revenues, expenses and contingencies. 

Refer to note 2 (Summary of Significant Accounting Policies) to the December 31, 2013 annual consolidated financial statements for greater detail of the areas of significance and the related critical estimates and judgments. 

Capstone's significant accounting estimates and judgments used in the preparation of the consolidated financial statements were: 

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Management’s estimates and judgements were based on historical experience, trends and various other assumptions that are believed to be reasonable under the circumstances. Actual results could materially differ from those estimates. 

