RESOLUTION OF BOARD OF NATIONAL BANK OF THE REPUBLIC OF KAZAKHSTAN

of June 28, 2013 No. 149

About approval of the Instruction for conducting financial accounting by the insurance (reinsurance) organizations, societies of mutual insurance and branches of the insurance (reinsurance) organizations - nonresidents of the Republic of Kazakhstan

According to the subitem 63) of part two of article 15 of the Law of the Republic of Kazakhstan "About National Bank of the Republic of Kazakhstan", the subitem 2) of Item 6 of article 20 of the Law of the Republic of Kazakhstan "About financial accounting and the financial reporting", the Board of National Bank of the Republic of Kazakhstan DECIDES:

1. Approve the enclosed Instruction for conducting financial accounting by the insurance (reinsurance) organizations, societies of mutual insurance and branches of the insurance (reinsurance) organizations - nonresidents of the Republic of Kazakhstan.

3. This resolution becomes effective after ten calendar days after day of its first official publication.

Approved by the resolution of Board of National Bank of the Republic of Kazakhstan of June 28, 2013 No. 149

The instruction for conducting financial accounting by the insurance (reinsurance) organizations, societies of mutual insurance and branches of the insurance (reinsurance) organizations - nonresidents of the Republic of Kazakhstan

Chapter 1. General provisions

1. This Instruction for conducting financial accounting by the insurance (reinsurance) organizations, societies of mutual insurance and branches of the insurance (reinsurance) organizations - nonresidents of the Republic of Kazakhstan (further – the Instruction) is developed according to the subitem 63) of part two of article 15 of the Law of the Republic of Kazakhstan "About National Bank of the Republic of Kazakhstan", the subitem 2) of Item 6 of article 20 of the Law of the Republic of Kazakhstan "About financial accounting and the financial reporting", article 52-3 of the Law of the Republic of Kazakhstan "About insurance activity" (further – the Law on insurance activity), international accounting standards and disaggregates conducting financial accounting by the insurance (reinsurance) organizations, societies of mutual insurance, and branches of the insurance (reinsurance) organizations - nonresidents of the Republic of Kazakhstan (further – the insurance (reinsurance) organizations).

2. In the Instruction the concepts provided by the Civil code of the Republic of Kazakhstan, the laws of the Republic of Kazakhstan "About insurance activity", "About fund of guaranteeing insurance payments", "About financial accounting and the financial reporting" and international accounting standards are used.

3. When conducting financial accounting by the insurance (reinsurance) organizations, societies of mutual insurance and branches of the insurance (reinsurance) organizations - nonresidents of the Republic of Kazakhstan accounts according to the resolution of Board of National Bank of the Republic of Kazakhstan of December 22, 2017 No. 251 "About approval of the Standard chart of accounts of financial accounting to the insurance (reinsurance) organizations, societies of mutual insurance and branches of the insurance (reinsurance) organizations - nonresidents of the Republic of Kazakhstan and modification and amendments in some regulatory legal acts of the Republic of Kazakhstan concerning conducting financial accounting" are applied (it is registered in the Register of state registration of regulatory legal acts at No. 16390).

When conducting financial accounting of assets of the clients who are in investment management of insurance company off-balance accounts according to the resolution of Board of National Bank of the Republic of Kazakhstan of December 22, 2017 No. 251 "About approval of the Standard chart of accounts of financial accounting to the insurance (reinsurance) organizations, societies of mutual insurance and branches of the insurance (reinsurance) organizations - nonresidents of the Republic of Kazakhstan and modification and amendments in some regulatory legal acts of the Republic of Kazakhstan concerning conducting financial accounting" are applied (it is registered in the Register of state registration of regulatory legal acts at No. 16390).

4. Making of additional accounting entries in the part which is not contradicting requirements of the Law of the Republic of Kazakhstan "About the financial accounting and the financial reporting" and international accounting standards according to the procedure provided by the internal documents of the insurance (reinsurance) organizations regulating conducting financial accounting is allowed.

Reflection of transaction amounts in foreign currency with use of accounts of foreign exchange position and countercost of foreign currency is allowed. The income and expenses in the form of remuneration are recognized with use of effective interest rate method according to international accounting standard (IFRS) 9 "Financial instruments".

Section 1. Financial accounting of financial instruments and the affined precious metals

Chapter 2. Financial accounting of transactions with securities

Paragraph 1. Accounting of the acquired debt securities carried at fair value which changes are reflected in profit or loss

5. Upon purchase of the debt securities classified in category "the securities carried at fair value which changes are reflected in profit or loss" (on the purchase value including costs according to the transaction) the following accounting entries are performed:

1) in case of advance transfer to the broker:

Dt	1610 02	Settlings with brokers
Kt	1060 61	Money (pension assets) on the current account (the investment account);

2) on the net value of the acquired debt security (on the amount which is not exceeding it nominal value) taking into account costs according to the transaction:

Dt	1120 01	The current financial assets carried at fair value which changes are reflected in profit or loss
Kt	1030	Money on current accounts
	1610 02	Settlings with brokers;

3) on the award amount including the costs connected with acquisition of the debt security:

Dt	1120 03	Award on the acquired current financial assets carried at fair value which changes are reflected in profit or loss
Kt	1030	Money on current accounts
	1610 02	Settlings with brokers;

4) on the amount of discount (discount):

Dt	1120 01	The current financial assets carried at fair value which changes are reflected in profit or loss
Kt	1120 02	Discount on the acquired current financial assets carried at fair value which changes are reflected in profit or loss;

5) on the amount of remuneration, added by the previous holder:

Dt	1270 04	The remuneration added by the previous holders on securities
Kt	1030	Money on current accounts
	1610 02	Settlings with brokers;

6) in case of excess of the amount of transaction on purchase (taking into account costs according to the transaction) debt securities over their fair value:

Dt	7470 10	Expenses from purchase - security sale
Kt	1120 02	Discount on the acquired current financial assets carried at fair value which changes are reflected in profit or loss
	1120 03	Award on the acquired current financial assets carried at fair value which changes are reflected in profit or loss;

7) in case of excess of fair value of debt securities over the amount of transaction on their purchase:

Dt	1120 02	Discount on the acquired current financial assets carried at fair value which changes are reflected in profit or loss
	1120 03	Award on the acquired current financial assets carried at fair value which changes are reflected in profit or loss
Kt	6280 09	Income from purchase - security sale.

6. When charging remuneration according to the acquired debt securities carried at fair value which changes are reflected in profit or loss with the frequency established by accounting policy of the organization on the amount of the added remuneration the following accounting entry is performed:

Dt	1270 01	Imputed incomes in the form of remuneration on the acquired securities
Kt	6110 01	The income connected with receipt of remuneration on the acquired securities.

7. In case of depreciation of premium or discount (discount) to the acquired debt securities carried at fair value which changes are reflected in profit or loss with the frequency established by accounting policy of the organization the following accounting entries are performed:

1) on award depreciation amount:

Dt	7310 02	The expenses connected with depreciation of premium to the acquired securities
Kt	1120 03	Award on the acquired current financial assets carried at fair value which changes are reflected in profit or loss;

2) on depreciation amount of discount (discount):

Dt	1120 02	Discount on the acquired current financial assets carried at fair value which changes are reflected in profit or loss
Kt	6110 03	The income connected with depreciation of discount on the acquired securities.

8. After charge of remuneration and depreciation of award or discount (discount), according to Items 6 and 7 of the Instruction, revaluation of the acquired debt securities estimated at fair value which changes are reflected in profit or loss is made, at fair value, with the frequency established by accounting policy of the organization and the following accounting entries are performed:

if fair value of debt securities is higher than their book value:

Dt	1120 04	Positive fair value adjustment of the current financial assets carried at fair value which changes are reflected in profit or loss
Kt	6150 01	Income from change in value of the securities carried at fair value which changes are reflected in profit or loss;

if the book value of debt securities is higher than their fair value:

Dt	7470 03	Expenses from change in value of the securities carried at fair value which changes are reflected in profit or loss
Kt	1120 05	Negative fair value adjustment of the current financial assets carried at fair value which changes are reflected in profit or loss;

on the amount of the registered positive or negative fair value adjustment of debt securities:

Dt	1120 05	Negative fair value adjustment of the current financial assets carried at fair value which changes are reflected in profit or loss
Kt	1120 04	Positive fair value adjustment of the current financial assets carried at fair value which changes are reflected in profit or loss.

9. In case of revaluation of the debt securities carried at fair value which changes are reflected in profit or loss which cost is expressed in foreign currency on the exchange rate of currencies the following accounting entries are performed:

in case of increase in the exchange rate of currencies at the amount of positive exchange difference:

Dt	1120 01	The current financial assets carried at fair value which changes are reflected in profit or loss
	1120 03	Award on the acquired current financial assets carried at fair value which changes are reflected in profit or loss
	1120 04	Positive fair value adjustment of the current financial assets carried at fair value which changes are reflected in profit or loss
	1270 01	Imputed incomes in the form of remuneration on the acquired securities
	1270 04	The remuneration added by the previous holders on securities
Kt	6250 02	Income from revaluation of foreign currency;

at the same time, on the amount of negative exchange difference:

Dt	7430 02	Expenses from revaluation of foreign currency
Kt	1120 02	Discount on the acquired current financial assets carried at fair value which changes are reflected in profit or loss
	1120 05	Negative fair value adjustment of the current financial assets carried at fair value which changes are reflected in profit or loss;

in case of reduction of the exchange rate of currencies by the amount of negative exchange difference:

Dt	7430 02	Expenses from revaluation of foreign currency
Kt	1120 01	The current financial assets carried at fair value which changes are reflected in profit or loss
	1120 03	Award on the acquired current financial assets carried at fair value which changes are reflected in profit or loss
	1120 04	Positive fair value adjustment of the current financial assets carried at fair value which changes are reflected in profit or loss
	1270 01	Imputed incomes in the form of remuneration on the acquired securities
	1270 04	The remuneration added by the previous holders on securities;

at the same time, on the amount of positive exchange difference:

Dt	1120 02	Discount on the acquired current financial assets carried at fair value which changes are reflected in profit or loss
	1120 05	Negative fair value adjustment of the financial assets carried at fair value which changes are reflected in profit or loss
Kt	6250 02	Income from revaluation of foreign currency.

10. When obtaining from the issuer of the added remuneration according to the acquired debt securities carried at fair value which changes are reflected in profit or loss on the amount of the earned reward the following accounting entry is performed:

Dt	1030	Money on current accounts
Kt	1270 01	Imputed incomes in the form of remuneration on the acquired securities
	1270 04	The remuneration added by the previous holders on securities.

11. In case of sale of the acquired debt securities carried at fair value which changes are reflected in profit or loss after charge of remuneration, depreciation of award or discount (discount) and revaluation of debt securities at fair value, according to Items 6, 7 and 9 Instructions, the following accounting entries are performed:

1) on the amount of not softened award:

Dt	1120 01	The current financial assets carried at fair value which changes are reflected in profit or loss
Kt	1120 03	Award on the acquired current financial assets carried at fair value which changes are reflected in profit or loss;

2) on the amount of not softened discount (discount):

Dt	1120 02	Discount on the acquired current financial assets carried at fair value which changes are reflected in profit or loss
Kt	1120 01	The current financial assets carried at fair value which changes are reflected in profit or loss;

3) on the amount of the concluded bargain on sale of debt securities:

Dt	1030	Money on current accounts
Kt	1120 01	The current financial assets carried at fair value which changes are reflected in profit or loss
	1270 01	Imputed incomes in the form of remuneration on the acquired securities
	1270 04	The remuneration added by the previous holders on securities;

4) in case of excess of the amount of the concluded bargain on sale of the debt securities carried at fair value which changes are reflected in profit or loss, over their book value, on difference amount:

Dt	1030	Money on current accounts
Kt	6280 09	Income from purchase - security sale;

5) in case of excess of book value of the debt securities carried at fair value which changes are reflected in profit or loss, over the amount of the concluded bargain on their sale, on difference amount:

Dt	7470 10	Expenses from purchase - security sale
Kt	1120 01	The current financial assets carried at fair value which changes are reflected in profit or loss
	2030 01	The non-current financial assets carried at fair value through other comprehensive income.

12. In case of repayment by the issuer of the debt securities carried at fair value which changes are reflected in profit or loss after charge of remuneration, depreciation of award or discount (discount) and revaluation of debt securities at fair value according to Items 6, 7 and 9 Instructions, the following accounting entry is performed:

on amount of money, arrived from the issuer:

Dt	1030	Money on current accounts
Kt	1120 01	The current financial assets carried at fair value which changes are reflected in profit or loss
	1270 01	Imputed incomes in the form of remuneration on the acquired securities
	1270 04	The remuneration added by the previous holders on securities.

Paragraph 2. Accounting of the acquired debt securities carried at fair value through other comprehensive income

13. Upon purchase of the debt securities classified in category "the securities carried at fair value through other comprehensive income" (on the purchase value including costs according to the transaction) the following accounting entries are performed:

1) in case of advance transfer to the broker:

Dt	1610 02	Settlings with brokers
Kt	1060 61	Money (pension assets) on the current account (the investment account);

2) on the net value of the acquired debt security (on the amount which is not exceeding it nominal value) taking into account costs according to the transaction:

Dt	1140 01	The current financial assets carried at fair value through other comprehensive income
	2030 01	The non-current financial assets carried at fair value through other comprehensive income
Kt	1030	Money on current accounts
	1610 02	Settlings with brokers;

3) on the award amount including the costs connected with acquisition of the debt security:

Dt	1140 03	Award on the acquired financial assets carried at fair value through other comprehensive income
	2030 03	Award on the acquired non-current financial assets carried at fair value through other comprehensive income
Kt	1030	Money on current accounts
	1610 02	Settlings with brokers;

4) on the amount of discount (discount):

Dt	1140 01	The current financial assets carried at fair value through other comprehensive income
	2030 01	The non-current financial assets carried at fair value through other comprehensive income
Kt	1140 02	Discount on the acquired financial assets carried at fair value through other comprehensive income
	2030 02	Discount on the acquired non-current financial assets carried at fair value through other comprehensive income;

5) on the amount of remuneration, added by the previous holder:

Dt	1270 04	The remuneration added by the previous holders on securities
Kt	1030	Money on current accounts
	1610 02	Settlings with brokers.

14. When charging remuneration according to the acquired debt securities carried at fair value through other comprehensive income with the frequency established by accounting policy of the organization on the amount of the added remuneration the following accounting entry is performed:

Dt	1270 01	Imputed incomes in the form of remuneration on the acquired securities
Kt	6110 01	The income connected with receipt of remuneration on the acquired securities.

15. In case of depreciation of premium or discount (discount) to the acquired debt securities carried at fair value through other comprehensive income with the frequency established by accounting policy of the organization the following accounting entries are performed:

1) on award depreciation amount:

Dt	7310 02	The expenses connected with depreciation of premium to the acquired securities
Kt	1140 03	Award on the acquired financial assets carried at fair value through other comprehensive income
	2030 03	Award on the acquired non-current financial assets carried at fair value through other comprehensive income;

2) on depreciation amount of discount (discount):

Dt	1140 02	Discount on the acquired financial assets carried at fair value through other comprehensive income
	2030 02	Discount on the acquired non-current financial assets carried at fair value through other comprehensive income
Kt	6110 03	The income connected with depreciation of discount on the acquired securities.

16. After charge of remuneration and depreciation of award or discount (discount), according to Items 14 and 15 of the Instruction, revaluation of the acquired debt securities carried at fair value through other comprehensive income is made, at fair value, with the frequency established by accounting policy of the organization and the following accounting entries are performed:

if fair value of debt securities is higher than their book value:

Dt	1140 04	Positive fair value adjustment of the financial assets carried at fair value through other comprehensive income
	2030 04	Positive fair value adjustment of the non-current financial assets carried at fair value through other comprehensive income
Kt	5440	Reserve on revaluation of the financial assets carried at fair value through other comprehensive income;

if the book value of debt securities is higher than their fair value:

Dt	5440	Reserve on revaluation of the financial assets carried at fair value through other comprehensive income
Kt	1140 05	Negative fair value adjustment of the financial assets carried at fair value through other comprehensive income
	2030 05	Negative fair value adjustment of the non-current financial assets carried at fair value through other comprehensive income;

on the amount of the registered positive or negative fair value adjustment of debt securities:

Dt	1140 05	Negative fair value adjustment of the financial assets carried at fair value through other comprehensive income
	2030 05	Negative fair value adjustment of the non-current financial assets carried at fair value through other comprehensive income
Kt	1140 04	Positive fair value adjustment of the financial assets carried at fair value through other comprehensive income
	2030 04	Positive fair value adjustment of the non-current financial assets carried at fair value through other comprehensive income.

17. When obtaining from the issuer of the added remuneration according to the acquired debt securities carried at fair value through other comprehensive income the following accounting entry is performed:

on the amount of the earned reward:

Dt	1030	Money on current accounts
Kt	1270 01	Imputed incomes in the form of remuneration on the acquired securities
	1270 04	The remuneration added by the previous holders on securities.

18. In case of sale of the acquired debt securities carried at fair value through other comprehensive income after charge of remuneration, depreciation of award or discount (discount) and revaluation of debt securities at fair value, according to Items 14, 15 and 16 Instructions, the following accounting entries are performed:

1) on the amount of not softened premium to the debt securities carried at fair value through other comprehensive income:

Dt	1140 01	The current financial assets carried at fair value through other comprehensive income
	2030 01	The non-current financial assets carried at fair value through other comprehensive income
Kt	1140 03	Award on the acquired financial assets carried at fair value through other comprehensive income
	2030 03	Award on the acquired non-current financial assets carried at fair value through other comprehensive income;

2) on the amount of not softened discount (discount) according to the debt securities carried at fair value through other comprehensive income:

Dt	1140 02	Discount on the acquired financial assets carried at fair value through other comprehensive income
	2030 02	Discount on the acquired non-current financial assets carried at fair value through other comprehensive income
Kt	1140 01	The current financial assets carried at fair value through other comprehensive income
	2030 01	The non-current financial assets carried at fair value through other comprehensive income;

3) on the amount of the concluded bargain on sale of the debt securities carried at fair value through other comprehensive income:

Dt	1030	Money on current accounts
Kt	1140 01	The current financial assets carried at fair value through other comprehensive income
	1270 01	Imputed incomes in the form of remuneration on the acquired securities
	1270 04	The remuneration added by the previous holders on securities
	2030 01	The non-current financial assets carried at fair value through other comprehensive income;

4) in case of excess of the amount of the concluded bargain on sale of the debt securities carried at fair value through other comprehensive income over their book value, on difference amount:

Dt	1030	Money on current accounts
Kt	6280 09	Income from purchase - security sale;

5) in case of excess of book value of the debt securities carried at fair value through other comprehensive income, over the amount of the concluded bargain on their sale, on difference amount:

Dt	7470 10	Expenses from purchase - security sale
Kt	1140 01	The current financial assets carried at fair value through other comprehensive income
	2030 01	The non-current financial assets carried at fair value through other comprehensive income;

6) on the amount of the income from revaluation of the debt securities carried at fair value through other comprehensive income:

Dt	5440	Reserve on revaluation of the financial assets carried at fair value through other comprehensive income
Kt	6150 03	Income on the securities carried at fair value through other comprehensive income;

7) on expense amount from revaluation of the debt securities carried at fair value through other comprehensive income:

Dt	7470 06	Expenses on the securities carried at fair value through other comprehensive income
Kt	5440	Reserve on revaluation of the financial assets carried at fair value through other comprehensive income.

19. In case of repayment by the issuer of the debt securities carried at fair value through other comprehensive income and carried at fair value which changes are reflected in profit or loss after charge of remuneration, depreciation of award or discount (discount) and revaluation of debt securities at fair value according to Items 14, 15 and 16 Instructions, the following accounting entries are performed:

1) on amount of money, the debt securities which arrived from the issuer carried at fair value through other comprehensive income:

Dt	1030	Money on current accounts
Kt	1140 01	The current financial assets carried at fair value through other comprehensive income
	1270 01	Imputed incomes in the form of remuneration on the acquired securities
	1270 04	The remuneration added by the previous holders on securities
	2030 01	The non-current financial assets carried at fair value through other comprehensive income;

2) on the amount of the income from revaluation of the debt securities carried at fair value through other comprehensive income:

Dt	5440	Reserve on revaluation of the financial assets carried at fair value through other comprehensive income
Kt	6150 03	Income on the securities carried at fair value through other comprehensive income;

3) on expense amount from revaluation of the debt securities carried at fair value through other comprehensive income:

Dt	7470 06	Expenses on the securities carried at fair value through other comprehensive income
Kt	5440	Reserve on revaluation of the financial assets carried at fair value through other comprehensive income.

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