Annual Report 2009 - Isagen

ANNUAL REPORT 2009 / ISAGEN S.A. E.S.P.100p) Recognition of revenue, costs and expensesRevenue from sales is recognized during the contractual period orwhen services are rendered. Revenue and costs are recorded onan accrual basis.For cost management, the costing system used is the Activities-Based Costing (ABC) defined by the Superintendency ofDomiciliary Public Utilities in Resolution SSPD 001417 of April 18,1997 as Unified Costs and Expenses System (SUCG, its Spanishinitials), updated by Resolution No. SSPD - 20051300033635 ofDecember 28, 2005. Accordingly, direct costs of energy and gasservices are recorded directly in the process defined by SUCG,and administration expenses are distributed on the basis of revenue,number of people, assigned times and areas. Costs areclosed and reported to the Public Utilities Single InformationSystem (SUI).q) Memorandum accountsAgreements pending formalization and contingent rights or liabilities,such as loans not yet disbursed and the differences existing betweendebit and credit accounts used for accounting purposes and thoseused for tax matters, are recorded under memorandum accounts.r) ContingenciesOn the date financial statements are issued certain contingent conditionsmay exist which might result in a loss for the Company butare only resolved in the future when events actually take place.These contingencies are estimated by the Company’s managementand its legal counsels. The estimation of loss contingenciesis necessarily a matter of judgment and opinion. When estimatingcontingent losses in legal processes pending against the Company,legal counsels assess the merit of claims, related decisions, andthe current state of processes, among other issues. When a caseis decided against the Company in the trial court, it is recorded as aliability affecting the results of the year.If evaluation of the contingency indicates that loss is improbablebut the result is uncertain, or that it is probable but its amount isimpossible to estimate, then the nature of the contingency is recordedin a memorandum account and disclosed in a note to the financialstatements together with an estimate of the probable loss.Generally, loss contingencies estimated as remote are not recordednor disclosed.s) Use of estimatesThe preparation of financial statements according to accountingprinciples generally accepted in Colombia requires some estimatesthat affect the values of assets, liabilities, revenues, costsand expenses reported for such periods. The actual result of certainitems may differ from such estimates.t) Reclassifications of financial statementsSome figures in the financial statements of 2008 have been reclassifiedfor comparison purposes with the year 2009.SPECIFIC NOTES6. Foreign currency investmentsCurrent regulations in Colombia allow open foreign exchange tradingthrough banks and other financial institutions at non-controlled exchangerates. However, most foreign currency transactions still requireGovernment approval.Contents Letter from the CEO Achievements2009Good GovernancePractices EvaluationCorporateManagementFinancial Management