disclosure in financial statements - notes to accounts

7/29/2019 Disclosure in Financial Statements - Notes to Accounts

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Disclosure in Financial Statements -

Notes to Accounts


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Introduction

The users of the financial statements need information about the financial positionand performance of the bank in making economic decisions.

They are interested in its liquidity and solvency and the risks related to the assetsand liabilities recognised on its balance sheet and to its off balance sheet items.

In the interest of full and complete disclosure, some very useful information isbetter provided, or can only be provided, by notes to the financial statements.

The use of notes and supplementary information provides the means to explainand document certain items, which are either presented in the financial statementsor otherwise affect the financial position and performance of the reportingenterprise.

Recently, a lot of attention has been paid to the issue of market discipline in thebanking sector.

Market discipline, however, works only if market participants have access to timelyand reliable information, which enables them to assess banks activities and therisks inherent in these activities.

Enabling market discipline may have several benefits.

Market discipline has been given due importance under Basel II framework oncapital adequacy by recognizing it as one of its three Pillars.

Summary of Significant Accounting Policies and Notes to Accounts is shownunder Schedule 17 and Schedule 18 respectively, to maintain uniformity.


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Minimum Disclosures

Disclosures are to be shown in the Notes to

Accounts comprehensively.

Banks are required to disclose the accounting

policies adopted by them along with Notes to

Accounts in their financial statements which

includes Basis of Accounting, Transactions involving

Foreign Exchange, Investments Classification,

Valuation, etc, Advances and Provisions thereon,

Fixed Assets and Depreciation, RevenueRecognition, Employee Benefits, Provision for

Taxation, Net Profit, etc.


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Disclosure Requirements

Market discipline deals with capital adequacy, risk

exposures, risk assessment processes and key

business parameters which provide a consistent and

understandable disclosure framework that

enhances comparability.

Banks are required to comply with the AS 1 on

Disclosure of Accounting Policies issued by ICAI.

Apart from the 16 detailed prescribed schedules to

the balance sheet, banks are required to furnish the

following information in the Notes to Accounts:


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Details of Single Borrower Limit (SGL)/ Group Borrower Limit (GBL) exceeded by the bank.


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Details of Single Borrower Limit (SGL)/ Group Borrower Limit (GBL) exceeded by the bank.

Unsecured Advances

Disclosure of Penalties imposed by RBI

Accounting Standard 5 Net Profit or Loss for the period, prior period items and changes in accounting policies.

Accounting Standard 9 Revenue Recognition

Accounting Standard 15 Employee Benefits

Accounting Standard 17 Segment Reporting

Accounting Standard 18 Related Party Disclosures

Accounting Standard 21 Consolidated Financial Statements (CFS)

Accounting Standard 22 Accounting for Taxes on Income

Accounting Standard 23 Accounting for Investments in Associates in Consolidated Financial Statements

Accounting Standard 24 Discontinuing Operations

Provisions and Contingencies

Disclosure of complaints

Awards passed by the Banking Ombudsman

Disclosure of Letters of Comfort (LoCs) issued by banks

The PCR (ratio of provisioning to gross non-performing assets) should be disclosed in the Notes to Accounts tothe Balance Sheet.

Bancassurance Business

Concentration of Deposits, Advances, Exposures and NPAs

Sector-wise NPAs

Movement of NPAs Off-balance Sheet SPVs sponsored

Unamortised Pension and Gratuity Liabilities

Disclosures on Remuneration

Disclosures relating to Securitisation


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disclosure in financial statements - notes to accounts

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