Contents - Equity Bank Group

Notes to the Financial StatementsFor the year ended 31st December 20071. Reporting entityEquity Bank Limited (The “Bank”) is a company domiciled in Kenya. The address of the Bank’s registered office is P. O. Box 75104-00200Nairobi. The principal activity of the bank is to offer retail banking and microfinance services.2. Basis of preparation(a) Statement of complianceThe financial statements have been prepared in accordance with International Financial Reporting Standards (IFRSs).The financial statements were approved by the Board of Directors on 6th March 2008.(b) Basis of measurementThe financial statements have been prepared on the historical cost basis except for the following:• Financial instruments at fair value with profit or loss measured at fair value• Available-for-sale financial assets are measured at fair value• Investment property is measured at fair value(c) Functional and presentation currencyThe financial statements are presented in Kenya Shillings, which is the Bank’s functional currency and have been rounded off to thenearest million.(d) Use of estimates and judgementsThe preparation of financial statements requires management to make judgements, estimates and assumptions that affect the applicationof accounting policies and the reported amounts of assets, liabilities, income and expenses.Estimates and underlying assumptions are reviewed on an on-going basis. Revisions to accounting estimates are recognised in the yearin which the estimate is revised and in any future years affected.In particular, information about significant areas of estimation uncertainty and critical judgements in applying accounting policies thathave the most significant effect on the amount recognised in the financial statements are described in notes 4 and 5.3. Significant accounting policiesThe accounting policies set out below have been applied consistently to all years presented in these financial statements (except asotherwise disclosed).(a) AssociatesAn associated company is that in which the Bank has significant influence, but not control, over the financial and operating policies. Thefinancial statements include the Bank’s share of the total recognised gains and losses of the associated company on an equity accountingbasis, from the date that significant influence commences until the date that significant influence ceases. At the company level, associatesare recognised using the equity method.362007 Annual Report and Financial Statements