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The document ceased to be valid since  December 1, 2015 according to Item 2 of the Resolution of Board of the National Bank of Ukraine of  June 22, 2015 No. 400

It is registered

Ministry of Justice of Ukraine

October 26, 2005

No. 1265/11545

RESOLUTION OF BOARD OF THE NATIONAL BANK OF UKRAINE

of October 3, 2005 No. 358

About approval of the Instruction for financial accounting of transactions with securities in banks of Ukraine

(as amended on on October 8, 2010)

According to article 41 of the Law of Ukraine "About the National Bank of Ukraine" and for the purpose of enhancement of regulatory legal acts of the National Bank of Ukraine according to requirements of the world and national situations (standards) of financial accounting concerning display of transactions with securities in banks of Ukraine the Board of the National Bank of Ukraine DECIDES:

1. Approve the Instruction for financial accounting of transactions with securities in banks of Ukraine it (is applied).

2. Recognize invalid:

the resolution of Board of the National Bank of Ukraine of 20.08.2003 N 355 "About approval of the Instruction for financial accounting of transactions with securities in banks of Ukraine", registered in the Ministry of Justice of Ukraine 12.09.2003 for N 801/8122;

Item 1 of the resolution of Board of the National Bank of Ukraine of 17.11.2004 N 556 "About modification of some regulatory legal acts of the National Bank of Ukraine on financial accounting", registered in the Ministry of Justice of Ukraine 29.11.2004 for N 1512/10111.

3. To accounting department (V. I. Rychakovskaya) after state registration in the Ministry of Justice of Ukraine to bring contents of this resolution to the attention of territorial administrations, structural divisions and units, specialized enterprises and educational institutions of the National Bank of Ukraine, banks of Ukraine for management and use in work.

4. To impose control over the implementation of this resolution on territorial administrations of the National Bank of Ukraine.

5. The resolution becomes effective since January 1, 2006.

 

Chairman V. S. Stelmakh

Approved by the Resolution of Board of the National Bank of Ukraine of October 3, 2005 No. 358

The instruction for financial accounting of transactions with securities in banks of Ukraine

Section I. General provisions

Chapter 1. Basic provisions and terms

1.1. This Instruction determines procedure for display in financial accounting of information on transactions on acquisition, sale, placement, release, the address and the securities redemption. The procedure of transactions by banks of Ukraine (further - banks) with securities is regulated by the legislation of Ukraine, including regulatory legal acts of the National Bank of Ukraine (daleenatsionalny bank).

1.2. The investments of banks which are not drawn up by securities are displayed in financial accounting similar to the procedure determined by this Instruction.

1.3. The instruction is developed according to the Laws of Ukraine "About banks and banking activity", "About the National Bank of Ukraine", "About securities and the stock market", the main requirements of international accounting standards and Provisions (standards) of financial accounting.

1.4. Requirements of this Instruction do not extend on:

transactions on accounting and avalization of bills of exchange;

transactions on sale (purchase) of securities with the obligation of the return sale (purchase);

transactions with securities for the purpose of implementation of calculations;

the transactions connected with accumulation of means on the current or accumulative accounts for the purpose of forming of the authorized capital during creation of bank;

transactions with privatization securities;

depository activity and activities for maintaining registers of owners of personalized securities.

1.5. The instruction does not regulate procedure for display in financial accounting of the accrued (paid) taxes and fees (obligatory payments) on transactions with securities.

1.6. In the Instruction the terms below are used in the following value:

the associated company (company) is the company in which the investor has essential impact and which is not either subsidiary company, or joint business of the investor. Essential impact provides that the investor directly or through subsidiary companies owns 20% or more voices of investment object. Essential impact is if the investor (bank) directly or through subsidiary companies owns less than 20% of voices of investment object, but at least two of the following conditions are carried out:

the investor (bank) has representatives in the board of directors or similar governing body of the company;

the investor (bank) participates in determination of strategy and transactions of the company;

exchange of managerial personnel between the investor (bank) and the company is performed;

the investor (bank) provides to the company essential technical information;

expenses on transactions - commission fees, taxes and fees (obligatory payments) which are directly connected with transactions on acquisition, issue or security sale and the investments which are not drawn up by securities and which would not be if transaction on acquisition, issue or sale was not performed. Expenses on transactions do not include discount or premium to debt securities, administrative expenses;

date of balance - date for which the balance of bank is made. Usually date of balance is the end of the last day of the accounting period. The accounting period for creation of the financial reporting is calendar year. The intermediate (quarter) financial reporting is constituted for the end of the last day of quarter;

activity date is date with which the asset shall acquire or sell bank;

settlement date is date with which the asset is transferred to bank (is recognized asset of bank) or with which the asset is transferred by bank (asset derecognition). Settlement date is date with which begins (in case of acquisition) and charge of percent on assets and liabilities of bank stops (in case of realization);

discount is difference between nominal value of securities and their cost during primary recognition without the percent added for the period of acquisition if such cost is lower than nominal value;

subsidiary company (company) - the company controlled by other company. Control provides that the mother company (bank) directly or through subsidiary companies owns more than 50% of voices of investment object. Control is if the mother company (bank) directly or through subsidiary companies owns less than 50% of voices of investment object, but has:

the share of managerial voices in the company exceeding 50% thanks to contracts with other investors;

the right to determine financial and operational policy of the company according to constituent documents;

the right to appoint or dismiss most of board members or similar governing body of the company;

the right of the determining voice in the board of directors or similar governing body of the company;

issued differences (share premium) are excess of the amount of the means received from primary release or sale of own shares (other corporate laws) over their nominal or excess of nominal of shares (other corporate laws) over the cost of their redemption;

reduction of usefulness of securities - the loss of economic benefit caused by one or several unprofitable events which took place after primary recognition of securities and have impact on the expected future cash flows on securities;

method of equity participation - accounting method of investments according to which book value of investments respectively increases or decreases by the amount of share of the investor in net profit (loss) of investment object for the accounting period and by the amount of share of the investor in the amount of change of the total value of equity of investment object for the accounting period;

accumulated interests - the amount of percent added from date of issue of securities or date of the last payment of the coupon before date of acquisition (sale) or for certain date;

unamortized discount (award) - the amount of discount (award) which for certain date is not carried into income accounts (expenses) of bank yet;

securities portfolio - the grouped information on accounting of investments into securities on their types and appointment for the purpose of creation of the financial reporting;

the award is excess of cost of securities during their primary recognition without added (saved-up) for the period of acquisition percent over their nominal value;

market value of securities - the amount of means which can be received from security sale in the active market;

cost of security is the price of acquisition of security, including accumulated interests, and also expenses on transactions on acquisition of securities;

fair value - the amount on which exchange of asset or payment of the obligation as a result of transaction between the informed, interested and independent parties can be performed;

securities in trade portfolio - the securities acquired by bank for resale and mainly for the purpose of profit earning from short-term fluctuations of their price or dealer margin. Any securities on which the bank during primary recognition made the decision on their accounting at fair value with recognition of revaluation through profits/losses can be carried to trade securities;

securities in portfolio to repayment - debt securities concerning which there are intention and possibility of bank to contain them till repayment period;

securities in portfolio for sale - securities which do not belong to trade securities portfolio and to portfolio before repayment.

Chapter 2. The accounts used for accounting of transactions of banks of Ukraine with securities

2.1. Financial accounting of transactions with securities is performed according to balance and off-balance sheet accounts of the Chart of accounts of the financial accounting of banks of Ukraine approved by the resolution of Board of the National Bank of Ukraine of 17.06.2004 N 280 and registered in the Ministry of Justice of Ukraine 26.07.2004 for N 918/9517 (with changes) (further - the Chart of accounts) given in appendix to this Instruction.

2.2. For display in financial accounting of transactions with securities banks according to accounting policy can use transit accounts, accounts creditor and receivables with the subsequent display of these transactions on the corresponding accounts on accounting of securities.

Chapter 3. General valuation principles and accounting of securities in portfolios of bank

3.1. Securities of bank for the purpose of their assessment and display in financial accounting are classified as follows:

a) the securities considered in trade portfolio;

b) securities in portfolio of bank for sale;

c) securities in portfolio of bank to repayment;

d) investments into the associated and subsidiary companies.

3.2. Securities which are acquired and/or are stored according to the order and for means of clients, and also the securities acquired according to agreements on trust management are considered on off-balance accounts.

3.3. The acquired securities (except securities in trade portfolio, investments into the associated and subsidiary companies) are initially estimated and displayed in financial accounting at fair value to which expenses on transactions on acquisition of such securities increase.

Securities in trade portfolio are initially estimated at fair value. Expenses on transactions on acquisition are recognized according to expenditure accounts during primary recognition of such securities.

Expenses on transactions on acquisition of debt securities in portfolio for sale or in portfolio to repayment are displayed on accounts on accounting of discount (award) for date of their acquisition.

3.4. Recognition (derecognition) of securities according to standard procedures is displayed in financial accounting using method of their recognition (derecognition) for settlement date.

Purchase or security sale according to standard procedures provides transfer of these securities during time which is established according to the general rules existing in the corresponding market.

3.5. Change of fair value of securities which shall be transferred to bank (except the securities considered at cost or the amortized cost), to the period between activity date and is displayed settlement date in financial accounting according to income accounts or expenses (for securities in trade portfolio) and the capital (for securities in portfolio for sale).

3.6. For each date of balance following after recognition all securities acquired by bank are estimated at their fair value, except:

a) the securities containing before repayment;

b) shares and other securities with unstable profit in portfolio for sale which fair value it is reliable to determine it is excluded;

c) investments into the associated and subsidiary companies.

3.7. Fair value of the securities which are traded on organizationally the drawn-up markets is determined by their market value.

If the quotation of market prices of securities is unavailable, then banks apply the following methods to determination of fair value:

reference to market price of other similar tool;

the analysis of the discounted cash flows. Applying the analysis of the discounted cash flows, banks use discount rate which is equal to existing rule of profitability of the similar financial investment having generally the same conditions and characteristics (remaining period of repayment; structure of cash flows; currency; credit rating of the issuer, interest rate);

other methods providing reliable determination of fair value of securities.

3.8. Shares and other securities with unstable profit in portfolio for sale which fair value it is reliable to determine it is excluded, are displayed for date of balance on their cost taking into account reduction of their usefulness.

3.9. The securities containing bank before their repayment are displayed for date of balance on the amortized cost with use of effective rate of percent.

3.10. Investments into associated companies are displayed for date of balance by method of equity participation.

3.11. If the investor constitutes consolidated financial statements, then investments into subsidiary companies in the individual financial reporting are displayed for date of balance on their cost.

3.12. All securities, except the securities considered in trade portfolio are reviewed on usefulness reduction.

Reduction of usefulness is recognized for each date of balance if there are objective proofs of one or several events having impact on the expected future cash flows on securities.

Data about can be the objective proofs testimonial of reduction of usefulness of securities:

financial difficulties of the issuer;

the actual contract cancelation owing to failure to carry out of terms of the contract or delay of interest payment or the main amount;

high probability of bankruptcy;

reorganization of the issuer;

disappearance of the active market for these securities because of financial difficulties of the issuer;

considerable or long reduction of fair value of shares and other securities with unstable profit in comparison with their cost.

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