Bilansi uspjeha - Raiffeisen Bank

Notes to the financial statements
31 December 2005 and 2004
(all amounts are expressed in thousands of KM)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of presentation
These financial statements are prepared in accordance with International Financial Reporting Standards (‘IFRS’) as
published by the International Accounting Standards Board. The financial statements have been prepared under the
historical cost basis, except for the revaluation of certain financial instruments at fair value. The financial statements
are presented in thousands of convertible mark (KM’000) which is the functional currency of the Bank.
The financial statements are prepared on an accrual basis of accounting, under the going concern assumption.
The preparation of financial statements in conformity with IFRS requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities
at the date of the financial statements and their reported amounts of revenues and expenses during the reporting
period. These estimates are based on the information available as at the balance sheet date and actual results could
differ from those estimates.
The Bank has prepared these unconsolidated financial statements as required by Law of Federation of Bosnia and
Herzegovina, and its investments in associates and subsidiaries are presented in these financial statements at cost.
The Bank will also prepare consolidated financial statements, which will be approved by the Management Board. For
a better understanding of the Group as a whole, users should read the consolidated financial statements.
The Bank maintains its books of accounts and prepares financial statements for regulatory purposes in accordance
with the regulations of the Federal Banking Agency (‘FBA”) and Law on Banks of the Federation of Bosnia and
Herzegovina. The accompanying financial statements are based on the accounting records of the Bank, together with
appropriate adjustments and reclassifications necessary for fair presentation in accordance with IFRS.
Change in accounting policies
Effective 1 January 2005 the Bank changed its accounting policy in respect of recognizing loan origination fee income
and borrowing fee expense. According to the new policy loan origination fees, after approval and drawdown of
loans, are deferred (together with related direct costs) and recognized as an adjustment to the effective yield of the
loan over its life and borrowing fee expense is deferred over the life of the borrowing. Management believes that
new accounting policy will result in a more appropriate financial statement presentation. The effect of the change is
a decrease in fee income of KM 5,679 thousand and decrease in fee expense of KM 1,353 thousand in 2005, which
resulted in profit before income tax reduced by KM 4,325 thousand. The Management assessed the effect of not
applying new accounting policy retrospectively, for the years ended before 1 January 2005 as not material for the
financial statements as a whole. If the new accounting policy had been applied, retained earnings as of 31 December
2004 would have been decreased by KM 353 thousand.
Financial statement
www.raiffeisenbank.ba
99