Material Information on Valuation Methods and Material Accounts

Material Information on Valuation Methods and Material Accounts

1. Data Comparability in Disclosure Reporting Forms

2. Principles and Methods of Valuation and Accounting of Individual Balance-Sheet Items

• 
  the assets and liabilities in foreign currency (save for the amounts of received and issued advances and advance payments for the goods, work and services delivered, which are recognized on the balance-sheet accounts of settlements with nonresident organizations for business transactions) and precious metals are revaluated as the exchange rate and the metal price change subject to the regulations of the Bank of Russia;
  
• 
  the assets, claims and liabilities, the specific value (cost) of which is determined using non-detachable embedded derivatives (NDED) are revaluated (recalculated) on a daily basis with recognition of the resulting differences for the respective income/expenditure items from the date of the transfer of ownership of the asset delivered (the date of work acceptance or service provision) to the actual payment date;
  
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  the cost of fixed assets changes in the event of further construction, additional equipment, modernization, reconstruction, revaluation or partial liquidation of the respective assets in accordance with the regulatory documents of the Bank of Russia. In particular, as per Regulation of the Bank of Russia No. 302-P, the bank revaluates the group of homogeneous items of fixed assets at the current (replacement) cost.
  

Moreover, fixed assets are regularly revaluated, so that the cost under which they appear in the accounting records and financial statements would not differ materially from the current (replacement) cost. Increased property cost resulting from the revaluation is a source of Level 2 internal resources (equity). Pursuant to Regulation of the Bank of Russia No. 215-P, property revaluation may be included in the calculation of capital not more than once every 3 years based on the accounting statements confirmed by the auditor;

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  securities are accounted according to the actual costs for their acquisition. The actual acquisition costs for the interest bearing (coupon) securities include, besides the cost of the security at the acquisition price determined under the contract (deal), the interest (coupon) income paid upon its acquisition.
  

The securities “at fair value through profit or loss” and the securities “available for sale” are subject to daily revaluation at the current (fair) value of securities.

3. List of Material Changes in the Accounting Policy

The changes made to the Accounting Policy for 2011 cover the following aspects:

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  creation of a provision for the staff retirement plan under the Corporate Retirement Program;
  
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  inclusion of the value added tax paid upon the property acquisition in the cost of the property, acquired as a result of transactions under compensation and pledge contracts and accepted for accounting and further sale, and the property acquired for charity purposes and posted on balance account 61008 “Materials” (regardless of the cost). If it is decided to use the property acquired as a result of transactions under compensation and pledge contracts in own activities (including for lease purposes), the value added tax will be recognized on balance account 60310.
  
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  the materiality criteria for the purpose of acknowledging erroneous entries;
  
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  the cost limit for items to be allocated to fixed assets is established in the amount of 40,000 rubles inclusive.
  

4. Brief Information on Balance-Sheet Items Inventory

As of January 1, 2012, cash and valuables were audited in all the Bank’s cash departments. The audit resulted in no surplus or shortages revealed.

5. Information on Receivables and Payables

The accounts receivable from, and the accounts payable to, the suppliers, contractors, buyers and counterparties were reconciled and bilateral reconciliation statements were sent to them.

To exclude recognition of actually commissioned fixed asset items on account No. 607 “Investments in Construction (Building), Creation (Production) and Acquisition of Fixed Assets and Intangible Assets”, the Bank analyzed the capital investments and revealed no incorrect recognition of costs.

The required measures were taken to settle and minimize the amounts on the accounts until clarification.

The balance on account No. 47416 “Amounts Entered to Correspondent Accounts until Clarification” as of January 1, 2012 in the amount of 3.0 billion rubles, accrued as a result of posting amounts, which were not allocated to the recipients’ accounts due to unavailability of settlement documents, as well as misrepresentation or misstatement of details, to correspondent accounts and intra-subsidiary settlement accounts. The balance in rubles accrued in the period from December 23 to December 31, 2011, and that in foreign currency accrued in the period from December 1 to December 31, 2011.

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