General requirements for the development of the financial statements of the bank

The legal basis for the formation of financial reporting in Ukraine are defined by the Law of Ukraine "On Accounting and Financial Reporting in Ukraine" dated 16.07.1999, № 996-HІU

Financial reporting - it is accounting, which contains information about financial position, results of operations and cash flows for the establishment of the reporting period.

The purpose of financial reporting is to provide complete, truthful and accurate information about the financial condition and operations of the bank users in making economic decisions.

Users of financial statements are the individuals and entities that require information about the activities of the institution to make decisions.

The reporting period for the preparation of financial statements is the calendar year. Monthly and quarterly reports are prepared and the interim cumulative from the beginning of the year. In accordance with the Law of Ukraine "On Accounting and Financial Reporting in Ukraine" is the first reporting period for the newly formed company (institution) may be less than 12 months, but not to exceed 15 months.

Financial statements are prepared on the basis of accounting. It should contain information that is essential, timely, understandable, relevant, reliable. In addition, you must enable comparison of financial statements for different periods, as well as comparison reports of different banks.

Procedure for the preparation and presentation of financial statements is the same for all agencies of the bank. Banks, which were formed with the participation of legal entities and natural persons-residents located in the territory of Ukraine shall submit financial statements on a common basis.

Correction of errors in financial reporting is conducted in the period in which these errors were identified, through the formation of adjusting entries.

Corrective wiring - it's accounting records, which are performed after the formation of financial statements to correct identified errors in the reporting.

Particulars of the documents, a list of invoices, order and timing of adjusting entries are defined by the Regulations on the formation of adjusting entries, which are carried out by banks of Ukraine, approved by the NBU Board of 09.10.2001g. Number 427. Law of Ukraine "On Accounting and Financial Reporting in Ukraine" is defined financial statements of companies that includes: balance sheet, income statement, statement of cash flows, statement of shareholders' equity and notes to the statements.

In Section 5, Art. 11 of the Act states that the form of financial statements of banks and fill the order in which they are set by the National Bank of Ukraine as agreed with the State Statistics Committee of Ukraine.

· Bank statement

Balance - a report on the financial condition of banking institutions, which shows its assets, liabilities and equity at a certain date. Account form of balance is as follows:

ASSETS = LIABILITIES + EQUITY

bank capital cash accounts

The structure of the balance of the commercial bank is defined rules of the organization of financial and statistical reporting by banks of Ukraine.

Commercial banks use the horizontal form of balance. The balance of the commercial bank [reporting form № 1-KB (monthly)] provides for the submission of information on the balances on the balance sheet accounts at the balance sheet date.

The balance sheet is formed according to the accounts 1-5th grades chart of accounts of banks of Ukraine. Active and passive accounts in the balance sheet are shown separately in the following sequence:

• balance sheets in section IV of the order of the accounts;

• only for each group of accounts;

• only for each section of accounts;

• only for the class of accounts.

Kontraktivnye account assets and liabilities account kontrpasivnye appear with opposite sign and reduce the relevant articles of the groups and sections.

The result of the asset must always equal the sum of liabilities and equity of the bank.

Income and expenses on a monthly balance shown in these accounts of the 6th and 7th grades Chart of Accounts. The balances of these accounts are not included in the calculation of the balance sheet.

Accounting for income and expenses of the bank during the year is the method of accumulation, that is, writing in the accounts of the 6th and 7th grades are displayed cumulatively since the beginning of the year. At the end of each accounting period, income of the period compared to the cost. Such a comparison of income and expenditure is carried out to determine the result of the bank, as the difference between total revenue and total expenditure

The result of the bank appears in the monthly balance sheet as a separate item in the accounts after the outcome of the 6th and 7th grades. The same amount is displayed in the classroom the bank's capital and thus added to the total assets. Obviously, the positive financial result (profit) increases the total amount of capital, and negative (loss) - reduces it.

Account management accounting in the balance is introduced. Off-balance sheet accounts are formed according to the accounts of the 9th grade chart of accounts. The amount of active off-balance sheet accounts can be equal to the sum of passive off-balance sheet accounts.

The structure of the annual balance sheet of the bank is distinct from that of the monthly balance. The annual balance represents only a statement of assets and liabilities, and in addition to paper assets and liabilities are aggregated.

Income and expenditure accounts are closed once a year and the end of the year on the balance sheet are not shown. The result of the bank's annual balance sheet is shown in the bank's equity capital under the item "Profit for the year, which is awaiting approval" or "loss of the year, which is awaiting approval."

Balances on off-balance sheet accounts are shown after the balance sheet aggregated articles. The equality of the asset and liability accounts of the 9th class is retained.

· Income Statement

Income statement describes the results of the Bank during the reporting period. This report contains information on the constituent elements of the financial result. The form of a monthly (quarterly) and annual report on financial results is the same.

The scheme of construction of the report gives the possibility to calculate these intermediate indicators, which characterize the bank's financial performance as operating income, income from operations, profit to the taxation and net profit (or loss) of the bank. Operating income of the bank in accordance with this report contains the following elements:

The string names articles Calculation Methodology article

1 Net interest income Interest income - interest expenses

2 Net fee and commission income and commission income - commissions expenses

3 Dividend income Dividend income on securities for sale and for investment

4 Net trading income from trading positive result - a negative result from trade

5 Income (loss) from investment securities positive result from the sale of securities to the investment - a negative result from the sale of investment securities

6 Income from long-term investments in associates and subsidiaries, and other investment institutions Dividend income from long-term investments in associated companies and affiliated institutions, and other investments

7 Other operating income Other operating income article

Operating income 8 Line 8 = 1 +2 +3 +4 +5 +6 +7

Net profit or loss the bank calculated the correction for profit after tax windfalls or expenses.

Income Statement contains all of the above article and the article: net income per common share and adjusted net earnings per common share.

Content of the report are calculated on the basis of data on income and expenses of the bank (balance and analytical accounts of the 6th and 7th grades Chart of Accounts). These reports are the basis for determining the directions of increasing the effectiveness of the bank.

· Statement of Cash Flows

Statement of cash flows shows the sources of cash and non-bank funds and direction of their use in the reporting period, and cash flows for the reporting period depending on the bank's activities (operating, investing, financial).

Statement of cash flows generated in the annual financial statements of the bank.

The purpose of the report is to provide users of accounting information to assess the possibility of the bank to generate cash, as well as to assess its needs for them. This information is provided by a cash basis.

International Accounting Standard № 7 "Statement of Cash Flows" offers two methods to determine the amount of cash flows: direct and indirect. Such an approach is the basis for instructions on how to fold the annual financial statements of banks of Ukraine, approved by the NBU Board of 26.12.2001 № 545. The method of reporting a commercial bank shall elect its own.

The direct method involves the steady accumulation of data on entry and departure of funds for individual articles. The data are based on the generalization of the required parameters in the analytical accounting.

Preparation of the statement of cash flows indirect method based on maximizing the performance of already prepared balance sheet and financial results. At the same time the need to use data directly from source documents or analytical accounting registers is minimal.

Report generated in certain areas of the bank. Sections of the statement of cash flows of a commercial bank, which is made by direct and indirect methods are like the

Direct method for generating reports Indirect method for generating reports

1. Operations 1. Operating activities

2. Investment activity 2. investment activities

3. Financial Activities 3. financial activities

4. Effect of changes in exchange rates

· Operating activities - the main activities of the institution to generate income, as well as other activities that are not investing or financing activities.

Investing activities - activities related to the acquisition and implementation of the non-negotiable and financial investments that are not part of cash equivalents.

Financing activities - activities that result in changes in the size and composition of equity and loans institutions.

The report contains information on the establishment of the bank cash flows, which are treated as income and decreasing cash and cash equivalents. Cash equivalents - a short, highly liquid investments that are easily converted into cash and which have changed little risk of their value.

In the formation of the statement of cash flows to the attention of non-cash transactions are not taken.

Non-cash transactions - transactions that do not require the use of cash and cash equivalents.

The basic formula of the statement of cash funds are the same for both methods. In particular, the net increase (or decrease) in cash and cash equivalents, which are the main indicator of the report, is the sum of these articles:

• clean the parish (or loss) Cash flows from operating activities;

• clean the arrival of cash flows from investing activities;

• net cash flows from the parish financial activity.

However, the amount of cash and cash equivalents at the end of the year is calculated differently, using different methods for generating reports.

· Statement of Equity

Statement of changes in equity reflects the bank's capital and the movement during the reporting period. This report is part of the bank's annual financial statements, interim reports are generated. Statement of shareholders' equity banks have started to form with the introduction of the Law of Ukraine "On Accounting and Financial Reporting in Ukraine" dated 16.07.1999, № 996-HІU (as amended), which provides a form of financial statements. The purpose of the report is to show users reporting any changes in the volume, composition and structure of the bank's capital that occurred during the reporting period.

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