2011 Annual Report - Khaleeji Commercial Bank BSC

KHALEEJI COMMERCIAL BANK BSC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 31 December 2011
2. SIGNIFICANT ACCOUNTING POLICIES (continued)
FAS 25 ‘Investment in sukuk, shares and similar instruments’
FAS 25 was issued in July 2010 and replaced FAS 17 ‘Investments’. FAS 25 retains and simplifies the mixed measurement model
and establishes two measurement categories for investments: amortised cost and fair value (refer to note 2 (e)). The guidance
in FAS 17 on ‘investment in real estate’ continues to apply. The new standard requires retroactive application.
The Group has adopted the revised FAS 25 on its required application date 1 January 2011. The retroactive adoption of this
standard did not result in any impact on the income statement and equity of the previous period.
On the date of application, the classification and categorisation of investments has been reassessed based on the facts and
circumstances on that date. The adoption of the standard resulted in the following re-categorisation of investment securities
in the statement of financial position:
1 January 2010 Revised categorisation
(Previous categorisation amortised Fair value through Fair value through total
as per FAS 17) cost equity income statement BD 000’s
Available-for-sale - 63,111 - 63,111
Held-to-maturity 29,243 - - 29,243
29,243 63,111 - 92,354
31 December 2010 Revised categorisation
(Previous categorisation amortised Fair value through Fair value through total
as per FAS 17) cost equity income statement BD 000’s
Available-for-sale 310 69,922 12,796 83,028
Held-to-maturity 17,251 - - 17,251
17,561 69,922 12,796 100,279
a. Statement of compliance
The financial statements have been prepared in accordance with Financial Accounting Standards (‘FAS’) issued by the
Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI). In line with the requirement of AAOIFI
and the CBB Rule Book, for matters that are not covered by AAOIFI standards, the Group uses guidance from the relevant
International Financial Reporting Standards.
b. Basis of preparation
The consolidated financial statements are presented in Bahraini Dinars, being the principal currency of the Bank’s operations.
They are prepared on the historical cost basis except for the measurement at fair value of certain investments carried at
fair value.
The Group classifies its expenses in the income statement by the nature of expense method.
The preparation of consolidated financial statements requires the use of certain critical accounting estimates. It also requires
management to exercise its judgement in the process of applying the Group’s accounting policies. Estimates and underlying
assumptions are reviewed on an on-going basis. Revisions to accounting estimates are recognised in the period in which the
estimate is revised and in any future periods affected. Management believes that the underlying assumptions are appropriate
and the Group’s consolidated financial statements therefore present the financial position and results fairly. The areas
involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the
consolidated financial statements, are disclosed in note 21.
Consolidated Financial Statements
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