Annual Report - VÚB banka

3. Summary of significant accounting policies
3.1 Basis of preparation
The consolidated fi nancial statements of the VUB
Group (‘the fi nancial statements’) have been prepared
in accordance with International Financial
Reporting Standards (‘IFRS’) issued by the International
Accounting Standards Board (‘IASB’) and
with interpretations issued by the International Financial
Reporting Interpretations Committee of the
IASB (‘IFRIC’) as approved by the Commission of
European Union in accordance with the Regulation
of European Parliament and Council of European
Union and in accordance with the Act No. 431/2002
Collection on Accounting.
The Group decided to apply IFRS 8 Operating Segments
for the accounting period beginning on 1
January 2007 as permitted by the Standard.
The fi nancial statements have been prepared under
the historical cost convention, as modifi ed by the
revaluation of available-for-sale fi nancial assets,
fi nancial assets held for trading and all derivative
fi nancial instruments to fair value.
The fi nancial statements are presented in millions of
Slovak crowns (‘Sk’), unless indicated otherwise.
Negative values are presented in brackets.
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3.2 Changes in accounting policies
The principal accounting policies applied in the
preparation of these consolidated fi nancial statements
are set out below. The accounting policies
adopted are consistent with those of the previous
fi n a n c i a l y e a r.
Reclassifications
Certain balances in the consolidated income statement
from 2006 were reclassifi ed in accordance
with their presentation in 2007 to better refl ect the
substance of the income and expense. All reclassifi
cations are related to the redesigned contracts
for the insurance of banking products that is being
collected from clients and subsequently paid to
the insurance company. Originally, the VUB Group
reported balances collected from clients and balances
paid to the insurance company in gross values.
After the reclassifi cation, only net margin is
presented in the income statement.
2006
2006 Restated Change
Fee and commission income 3,283 3,338 55
Fee and commission expense (643) (678) (35)
Other operating income 496 366 (130)
Other operating expenses (2,892) (2,782) 110
3.3 Basis of consolidation
(a) Subsidiaries
Subsidiaries are entities controlled by the Bank.
Control exists when the Bank has the power, directly
or indirectly, to govern the fi nancial and operating
policies of an enterprise so as to obtain benefi ts
from its activities. The fi nancial statements of subsidiaries
are included in the consolidated fi nancial
statements from the date at which effective control
commences until the date at which control ceases.
The fi nancial statements of the Bank and its subsidiaries
are combined on a line-by-line basis by
adding together like items of assets, liabilities, equity,
income and expenses. Intra-group balances,
transactions and resulting profi ts are eliminated in
full.
The purchase method of accounting is used to account
for the acquisition of subsidiaries by the VUB
Group. The cost of an acquisition is measured as
Annual Report 2007