Annual Report - Ahli United Bank

ahliunited.com

Annual Report - Ahli United Bank

Notes to theConsolidated Financial Statements (Contd.)3 ACCOUNTING POLICIES (continued)3.1 Basis of preparation (continued)Amendments to IFRS 7 Financial Instruments: Disclosures - Improving Disclosures about financial instrumentsThe amendments to IFRS 7 were issued in March 2009 to enhance fair value and liquidity disclosures. With respect to fair value, theamendments require disclosure of a three-level fair value hierarchy, by class, for all financial instruments recognised at fair valueand specific disclosures related to the transfers between levels in the hierarchy and detailed disclosures related to level 3 of the fairvalue hierarchy. In addition, the amendments modify the required liquidity disclosures with respect to derivative transactions andassets used for liquidity management. Comparative information has not been represented as this is not required by the transitionprovisions of the amendment.The preparation of the consolidated financial statements requires management to make judgements and estimates that affect thereported amount of financial assets and liabilities and disclosure of contingent liabilities. These judgements and estimates alsoaffect the revenues and expenses and the resultant provisions as well as fair value changes reported in equity.3.2 Significant accounting judgements and estimatesJudgementsJudgements are made in the classification of available-for-sale, held-for-trading and held-to-maturity investments based onmanagement’s intention at acquisition of the financial asset, and the allocation of goodwill to cash generating units. Judgementsare also made in determination of the objective evidence that a financial asset is impaired.EstimatesPension plansEstimates and assumptions are used in determining the Group’s pension liabilities. The principal actuarial assumptions used forthe defined benefit plan are set out in note 26 to the consolidated financial statements.Impairment losses on loans and advances and non-trading investmentsEstimates are made regarding the amount and timing of future cash flows when measuring the level of provisions required fornon-performing loans, portfolios of performing loans with similar risk characteristics where the risk of default has increased, aswell as provisions for non-trading investments. These are more fully described in note 3.3 (g).Fair value of financial instrumentsEstimates 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 actualresults may differ resulting in future changes in such provisions.The methodology and assumptions used for estimating future cash flows are reviewed regularly to reduce any differences betweenloss estimates and actual loss experience.3.3 Summary of significant accounting policiesThe principal accounting policies applied in the preparation of these consolidated financial statements are set out below. Thesepolicies have been consistently applied to all the years presented.(a) Investments in associates and joint ventureAssociated companies are companies in which the Group exerts significant influence but does not control, normallyrepresented by an interest of between 20% and 50% in the voting capital. The Group classifies an investment as “joint venture”54 AUB Annual Report 2009

More magazines by this user
Similar magazines