Karoon Gas Australia Ltd  Annual Report 2011 37 NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 30 JUNE 2011 Karoon Gas Australia Ltd (the ‘Company’) is a public company limited by shares and is listed on the ASX. It is incorporated and  domiciled in Australia. The registered office of Karoon Gas Australia Ltd and the principal place of business is Office 7A, 34-38  Lochiel Avenue, Mount Martha, VIC, 3934. The technical office is located at Level 25, 367 Collins Street, Melbourne, VIC, 3000. The financial statements are for the consolidated entity consisting of Karoon Gas Australia Ltd and its subsidiaries (the ‘Group’). The nature of the operations and principal activities of the Group are described in the Directors’ Report. The following is a summary of significant accounting policies adopted by the Group in the preparation of these consolidated  financial statements. The accounting policies have been consistently applied to all the financial years presented, unless otherwise  stated. These general purpose financial statements have been prepared in accordance with the requirements of the  Corporations Act  2001 , relevant Australian Accounting Standards, Urgent Issues Group Interpretations and other authoritative pronouncements of  the Australian Accounting Standards Board (‘AASB’). Where necessary, comparative information has been reclassified to achieve consistency in disclosure with financial year amounts  and other disclosures. The financial statements have been prepared on an accrual basis under the historical cost convention as modified, when relevant,  by the revaluation of selected financial assets and financial liabilities for which the fair value basis of accounting has been  applied. The financial statements comply with International Financial Reporting Standards as issued by the International Accounting  Standards Board (‘IASB’). On the basis of the present level of operations and after consideration of the Group’s ability to: Note 1. Summary of Significant Accounting Policies (a) Basis of Preparation Historical Cost Convention Compliance with International Financial Reporting Standards Going Concern (i) farm-out its interests in exploration permits/Blocks in order to fund future exploration expenditure commitments; (ii) raise capital through the issue of new ordinary shares in the Company to meet working capital requirements and/or shortfalls  in exploration expenditure commitments; and/or (iii) manage its existing cash and future cash flows to meet its current obligations and future plans, the Directors are of the opinion that for the next 12 month period from the date of signing the Directors’ Declaration, the Group  and Company will have sufficient liquidity to meet their existing commitments and accordingly present the financial statements  on a going concern basis. The preparation of financial statements requires the use of certain significant accounting estimates. It also requires management  to exercise its judgement in the process of applying Group accounting policies. The areas involving a high degree of judgement  or complexity, or areas where assumptions and estimates are significant to the financial statements are disclosed in Note 2. Significant Accounting Estimates, Assumptions and Judgements Change in Accounting Policy The Group has applied revised Australian Accounting Standard  AASB 107 ‘Statement of Cash Flows’  issued by the AASB, which  was mandatory to apply to the current reporting period. Under the revised accounting standard, only exploration and evaluation expenditure that is capitalised may be presented as cash  flows from investing activities. Under the Group’s previous accounting policy, all cash flows associated with exploration and  evaluation expenditure (comprising both amounts expensed and capitalised) were classified as cash flows from investing  activities. The change in accounting policy increased net cash outflows used in operating activities and decreased net cash  outflows used in investing activities for the previous financial year by $136,812.