Annual Report 2010 03 August 2011 - Banka Qendrore e ...

Central Bank of the Republic of Kosovo
Notes to the financial Statement
(in thousands of EUR, unless otherwise stated)
3. Significant accounting policies (continued)
n) Donor financed salaries
Certain individuals engaged at CBK are international experts appointed and funded for a
short term by international organisations. The funding from these international organisations
includes, but it is not limited to, the payment of salaries to these international experts. As this
assistance is paid by the international organisations directly to the appointee, the extent of the
payments are not known nor are they included in these financial statements.
o) Provisions
A provision is recognised if, as a result of a past event, CBK has a present legal or constructive
obligation that can be estimated reliably, and it is probable that an outflow of economic benefits
will be required to settle the obligation. Provisions are determined by discounting the expected
future cash flows at a pre-tax rate that reflects current market assessments of the time value of
money and, where appropriate, the risks specific to the liability.
A provision for onerous contracts is recognised when the expected benefits to be derived by CBK
from a contract are lower than the unavoidable cost of meeting its obligations under the contract.
The provision is measured at the present value of the lower of the expected cost of terminating the
contract and the expected net cost of continuing with the contract. Before a provision is
established, CBK recognises any impairment loss on the assets associated with that contract.
p) New standards and interpretations
A number of new standards, amendments to standards and interpretations are not yet effective for the
year ended 31 December 2010, and have not been applied in preparing these financial statements.
None is expected to have an effect on the financial statements of the Bank with the exception of:
IFRS 9 Financial Instruments (effective for annual periods beginning on or after 1 January 2013,
earlier application is permitted). This Standard replaces the guidance in IAS 39, Financial
Instruments: Recognition and Measurement, about classification and measurement of financial assets.
The Standard eliminates the existing IAS 39 categories of held to maturity, available for sale and
loans and receivable.
• Financial assets will be classified into one of two categories on initial recognition:
• Financial assets measured at amortized cost or financial assets measured at fair value.
A financial asset is measured at amortized cost if the following two conditions are met: the assets is
held within a business model whose objective is to hold assets in order to collect contractual cash
flows; and, its contractual terms give rise on specified dates to cash flows that are solely payments of
principal and interest on the principal outstanding.
Gains and losses on remeasurement of financial assets measured at fair value are recognised in profit
or loss, except that for an investment in an equity instrument which is not held for trading, IFRS 9
provides, on initial recognition, an irrevocable election to present all fair value changes from the
investment in other comprehensive income (OCI). The election is available on an individual share-byshare
basis. No amount recognised in OCI is ever reclassified to profit or loss at a later date. CBK is
in the process of determining the effect, if any, on the financial statements, of the introduction of
IFRS 9.
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