A. Qasem & Co. - Islami Bank Bangladesh Limited

*Since 1953*A. Qasem & Co.Chartered Accountants3.21.1 Inter Branch TransactionsTransactions with regard to inter branches are reconciled regularly and there is no difference inthis account as on 31 st December, 2010.3.22 Foreign Currency Transactionsa) The transactions in foreign currencies are translated into equivalent Taka currency using theexchange rates ruling on the dates of such transactions.b) The Assets and Liabilities including balance with Other Banks denominated in foreigncurrencies as at 31 December 2010 are translated into Taka currency at the weighted averagerate of inter Bank Market as determined by Bangladesh Bank. Balances held in foreigncurrencies other than US Dollar are converted into equivalent US Dollar at buying rates of NewYork closing of the previous day.3.23 Subordinated Debt/Mudaraba Perpetual Bond (MPB)Mudaraba Perpetual Bond (MPB) was issued by the Bank as per approval of Bangladesh BankLetter No. BRPD(P-1)661/14(a)/2006-1437 dated 07.05.2006 and Securities and ExchangeCommission Letter No. SEC/CI/CPLC-118/2006/385 & SEC/CI/RPO-01/2007/386 both dated10.06.2007. It is treated as a component of Supplementary Capital as Subordinated Debt.Theinstrument having face value of Tk.1,000 each is subordinated to the claims of other creditors anddepositors. In the case of liquidation the subordinated debt holders would be paid just beforepaying to the shareholders assuming there are assets to distribute after all other liabilities anddebts have been paid. The Mudaraba Perpetual Bond (MPB) is perpetual in nature i.e. neverending maturity.3.24 Off Balance Sheet ItemsOff Balance Sheet Items are disclosed under Contingent Liabilities & Other Commitments andrequired provision on Off Balance Sheet exposures have been made in accordance withBangladesh Bank Guidelines.3.24.1 Contingent LiabilitiesAny possible obligation that arises from past events and the existence of which will be confirmedonly by the occurrence or non-occurrence of one or more uncertain future events not whollywithin the control of the bank; orAny present obligation that arises from past events but is not recognized because: it is notprobable that an outflow of resources embodying economic benefits will be required to settle theobligation, is considered as contingent liability.Contingent Liabilities are not recognized but disclosed in the Financial Statements unless possibilityof an outflow of resources embodying economic benefits is reliably estimated.Contingent Assets are not recognized in the Financial Statements as this may result in therecognition of income which may never be realized.3.25 Materiality and AggregationEach material class of similar items is presented separately in the Financial Statements. Items ofdissimilar nature or function are presented separately unless they are immaterial as permitted byBAS 1 “Presentation of Financial Statements”.3.26 Offsetting of Assets and LiabilitiesThe value of any asset or liability as shown in the Balance Sheet is not off-set by way of deductionfrom another liability or assets unless there exist legal right thereof.21