Found the answer on Template Monster website:
Replace code with following:
if (function_exists('iconv'
&& PHP_VERSION_ID < 50600)
{
// These are settings that can be set inside code
iconv_set_encoding("internal_encoding", "UTF-8"
;
iconv_set_encoding("input_encoding", "UTF-8"
;
iconv_set_encoding("output_encoding", "UTF-8"
;
}
elseif (PHP_VERSION_ID >= 50600)
{
ini_set("default_charset", "UTF-8"
;
}