pdf - 1.26 MB - Ahli United Bank

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pdf - 1.26 MB - Ahli United Bank

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

3 ACCOUNTING POLICIES (continued)

3.2 Significant accounting judgements and estimates

The preparation of the consolidated financial statements requires management to make judgements and estimates that affect

the reported amount of financial assets and liabilities and disclosure of contingent liabilities. These judgements and estimates

also affect the revenues and expenses and the resultant provisions as well as fair value changes reported in equity.

Judgements

Judgements are made in the classification of available-for-sale, held-for-trading and held-to-maturity investments based

on management’s intention at acquisition of the financial asset, and the allocation of goodwill to cash generating units.

Judgements are also made in determination of the objective evidence that a financial asset is impaired.

Estimates

Pension plans

Estimates and assumptions are used in determining the Group’s pension liabilities. The principal actuarial assumptions

used for the defined benefit plan are set out in note 27 to the consolidated financial statements.

Impairment losses on loans and advances and non-trading investments

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Estimates are made regarding the amount and timing of future cash flows when measuring the level of provisions required

for non-performing loans, portfolios of performing loans with similar risk characteristics where the risk of default has

increased, as well as provisions for non-trading investments. These are more fully described in note 3.3 (g).

Fair value of financial instruments

Estimates are also made in determining the fair values of financial assets and derivatives that are not quoted in an active

market.Such estimates are necessarily based on assumptions about several factors involving varying degrees of uncertainty

and actual results may differ resulting in future changes in such provisions.

ANNUAL REPORT 2008

The methodology and assumptions used for estimating future cash flows are reviewed regularly to reduce any differences

between loss estimates and actual loss experience.

3.3 Summary of significant accounting policies

The principal accounting policies applied in the preparation of these consolidated financial statements are set out below.

These policies have been consistently applied to all the years presented, except for reclassification of certain financial

instruments, as detailed in note 11.

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