Annual Report & Accounts 1999 - Anglo Irish Bank

32
Notes to the Financial Statements
1. Basis of Accounting and Accounting Policies
These accounts have been prepared under the
historical cost convention in accordance with the
Companies Acts, 1963 to 1990, and the European
Communities (Credit Institutions:Accounts)
Regulations, 1992, and with applicable accounting
standards.There have been no changes in
accounting policies since last year except in
relation to goodwill [see l) below]. During the
year the group implemented the requirements of
Financial Reporting Standard (FRS)10 - ‘Goodwill
and Intangible Assets’, FRS 11 - ‘Impairment of
Fixed Assets and Goodwill’, FRS 12 - ‘Provisions,
Contingent Liabilities and Contingent Assets’, FRS
13 - ‘Derivatives and other Financial Instruments:
Disclosures’ and FRS 14 - ‘Earnings per Share’.
The principal accounting policies adopted are
as follows:
a) Consolidation
The consolidated accounts include the accounts
of the company and all its group undertakings to
30 September 1999.Where a subsidiary undertaking
is acquired during the financial year, the
consolidated accounts include the attributable
results from the date of acquisition up to the
end of the financial year.
b) Provisions for Bad and Doubtful Debts
Loans and advances are stated in the balance
sheet after deduction of provisions for bad and
doubtful debts.The provisions arise as a result
of a detailed appraisal of the lending portfolio.
Provisions made during the year (less amounts
released and recoveries of bad debts previously
written off) are charged against the profit for the
year. Interest is not taken to profit where recovery
is doubtful.A general provision is also made to
cover latent loan losses which are present in any
lending portfolio but which have not been
specifically identified.
c) Income Recognition
Interest on advances is accounted for on an
accruals basis. Credit has been taken for finance
charges on instalment credit and finance leasing
accounts by spreading the income on each
contract over the primary period of the
agreement by the sum of digits method, save
that an amount equivalent to the set-up costs
on each agreement is credited to income at the
date of acceptance.The finance charges on certain
tax-based finance leases are credited to income
on an after-tax actuarial basis.
d) New Business Costs
Initial costs of obtaining new business have been
charged in arriving at the profit for the year
except in the case of introductory commission
paid on instalment credit and finance leasing
agreements which is charged against revenue over
the primary period of each agreement by the sum
of digits method.
e) Investment Income
Premiums and discounts on debt securities, which
are not held for trading purposes, are amortised
over the period from the date of purchase to
maturity. Gains which have arisen from the
exchange of Irish government stocks under the
Irish National Treasury Management Agency’s
switching programmes have been deferred and are
taken to the profit and loss account over the
remaining life of the original holdings. Other gains
and losses arising on the realisation of debt securities,
net of amortisation adjustments, are taken to the
profit and loss account as and when realised.
f) Insurance Commission and Fee Income
Life and pension commission income for the first
policy year on all new business is credited to the
profit and loss account as policies are written,
after making provision for expected lapses. Other