of June 22, 2015 No. 400
About approval of the Instruction for financial accounting of transactions with securities and financial investments in banks of Ukraine
According to Articles 15, of 41, "About the National Bank of Ukraine" and article 68 of the Law of Ukraine "About banks and banking activity" the Board of the National Bank of Ukraine decides 56 Laws of Ukraine:
1. Approve the Instruction for financial accounting of transactions with securities and financial investments in banks of Ukraine which is applied.
1) the resolution of Board of the National Bank of Ukraine "About approval of the Instruction for financial accounting of transactions with securities in banks of Ukraine" of October 03, 2005 No. 358, registered in the Ministry of Justice of Ukraine on October 26, 2005 for No. 1265/11545;
2) subitem 1.22 of Item 1 of the resolution of Board of the National Bank of Ukraine "About modification of some regulatory legal acts of the National Bank of Ukraine" of October 8, 2010 No. 457, registered in the Ministry of Justice of Ukraine on December 13, 2010 on No. 1249/18544.
3. To accounting department (Lukasiewicz B. V.) to bring contents of this resolution to the attention of banks of Ukraine for use in work.
4. To impose control over the implementation of this resolution on the vice-chairman of the National Bank of Ukraine Rashkovan V. L.
V. A. Hontareva
Approved by the Resolution of Board of the National Bank of Ukraine of June 22, 2015 No. 400
1. This Instruction determines procedure for reflection in financial accounting of information on transactions on acquisition, sale, placements, release, the address and the securities redemption and other financial investments which are not drawn up by securities. The procedure of transactions by banks of Ukraine (further - banks) with securities and other financial investments is regulated by the legislation of Ukraine, including regulatory legal acts of the National Bank of Ukraine.
2. This Instruction is developed according to the Laws of Ukraine "About banks and banking activity", "About the National Bank of Ukraine", "About financial accounting and the financial reporting in Ukraine", "About securities and the stock market" and the main requirements of international accounting standards.
3. Requirements of this Instruction do not extend on:
1) transactions on accounting and avalization of bills of exchange;
2) transactions with securities for the purpose of implementation of calculations;
3) 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;
4) transactions with privatization securities;
5) depository activity and activities for maintaining registers of owners of personalized securities;
6) transactions with derivative financial instruments;
7) transactions with tovarorasporyaditelny securities.
4. This Instruction does not regulate procedure for reflection in financial accounting of the accrued (paid) taxes and fees (obligatory payments) on transactions with securities and other financial investments.
5. In this Instruction terms are used in such value:
1) the active market - the market in which transactions for assets or liabilities happen to sufficient frequency and in sufficient amount to provide information on pricing on continuous basis;
2) the amortized cost of financial asset or the financial liability is the cost of financial asset or the financial liability in case of initial recognition less the received or paid means (the main amount of debt, interest incomes (expenses) or other payments connected with initiation of financial asset or the financial liability) increased or reduced by the size of accumulated depreciation of difference between originally acknowledged amount and repayment sum of the financial instrument, and also reduced by the size of acknowledged impairment of financial asset;
3) book value is the cost at which the asset and obligations are reflected in balance. Book value for financial asset and the financial liability consists of the main amount of debt (nominal) or cost of shares or other financial investments with unstable profit, the added percent, unamortized award (discount), the amount of revaluation, the amount of acknowledged impairment;
Costs for transactions - the additional expenses which are directly connected with acquisition, release or disposal of financial asset or the obligation and which could not arise if the subject of managing did not issue did not acquire 4) or did not realize the financial instrument. The commission charges paid to agents, consultants, brokers and dealers, charges to regulating authorities, stock exchanges, taxes and the state tax and so forth belong to expenses on transaction. Expenses on transactions do not include discount or premium to debt securities, administrative expenses;
5) 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;
6) activity date is date with which the asset shall acquire or sell bank;
7) 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);
8) discount is the amount of excess of nominal value of securities over their cost in case of initial recognition without the percent added at the time of acquisition if such cost is lower, than nominal value;
9) issued differences (share premium) is 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;
10) usefulness reduction (impairment) - loss of the economic benefit caused by one or several unprofitable events which took place after initial recognition of financial asset or group of financial assets and have influence on the expected future cash flows on financial asset or group of financial assets;
11) award is the amount of excess of cost of securities in case of their initial recognition without added (saved-up) for the period of acquisition percent over their nominal value;
12) cost of financial investment is the price of acquisition of financial investment, including accumulated interests. Cost of financial investments joins also the expenses on transaction connected with their acquisition except financial investments which are estimated at fair value with recognition of revaluation through there arrived losses;
13) fair value - the price which would be received in case of sale of asset or is paid for transfer of the obligation in regular (ordered easy) to transaction between participants of the market for date of assessment;
14) standard procedures of purchase or sale is purchase or sale of financial asset according to the agreement which conditions require delivery of asset during the period of time established by the rules or the convention accepted in the corresponding market. The agreement providing implementation of calculation of change of its cost on a net basis is not the agreement according to standard procedures. In financial accounting such agreement is displayed as the derivative financial instrument;
15) financial investments are financial assets which contain bank for the purpose of increase in profit (percent, dividends, etc.), growth of capital cost or other benefits for the investor. The acquired debt securities, shares and other securities with unstable profit, investments into the associated and subsidiary companies, other financial investments which are not drawn up by securities belong to financial investments;
16) the financial instrument is agreement according to which at the same time there is financial asset at one subject of managing and the financial liability or equity instrument at other subject of managing.
Other terms used in this Instruction are used in the values determined by the laws of Ukraine, regulatory legal acts of the National Bank of Ukraine and international accounting standards.
6. This Instruction regulates reflection in financial accounting of standard transactions of banks with securities and other financial investments which are not drawn up by securities. The bank shall perform financial accounting of transactions with securities and other financial investments, not determined by this Instruction, according to internal operational procedures (rules) developed taking into account requirements of the legislation of Ukraine and international accounting standards.
7. Financial accounting of transactions with securities and other financial investments which are not drawn up by securities is performed according to economic essence of these transactions 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 June 17, 2004 No. 280, registered in the Ministry of Justice of Ukraine on July 26, 2004 for No. 918/9517 (with changes) (further - the Chart of accounts).
The bank when implementing transactions can use transit accounts, accounts creditor and receivables according to requirements of the software with their subsequent display on the corresponding accounts on accounting of certain financial instrument.
8. Financial accounting of transactions on attraction of foreign financial investments is performed taking into account requirements of the regulatory legal acts of the National Bank of Ukraine regulating questions of investment of the foreign capital into Ukraine.
9. The bank for the purpose of assessment and reflection in financial accounting classifies financial investments as follows:
1) financial investments which are estimated at fair value with recognition of revaluation through profits/losses.
The debt securities, shares and other financial investments withheld in trade portfolio, and those which are determined by bank as estimated at fair value through profits/losses in case of initial recognition belong to financial investments which are estimated at fair value with recognition of revaluation through profits/losses.
The bank considers in trade portfolio the securities and other financial investments acquired with sales objective in the nearest future and profit earnings from short-term price fluctuations or dealer margin and also financial investments which in case of initial recognition are part of portfolio of financial instruments, control of which is exercised together and concerning which there are certificates of the actual receipt of short-term profit;
2) financial investments in portfolio of bank for sale.
The bank considers in portfolio of bank for sale debt securities, shares and other financial investments, held for sale and are not classified as financial investments which are estimated at fair value with recognition of revaluation through profits/losses or financial investments in portfolio of bank to repayment, namely:
debt securities which the bank has no intention and/or opportunity to keep before date of their repayment or in the presence of certain restrictions on accounting of securities in portfolio before repayment;
debt securities which the bank is ready to sell in connection with change of market interest rates or risks, requirements of liquidity, availability and profitability of alternate investments, sources and financing terms or change of currency risk;
shares and other financial investments by which it is impossible to determine fair value authentically;
3) financial investments in portfolio of bank to repayment.
The bank includes in this category the acquired debt securities with fixed payments or with payments which can be determined, and fixed maturity date. Debt securities belong to portfolio to repayment if the bank has intention and capability to hold them till repayment period;
4) investments into the associated and subsidiary companies.
This category joins investments into the authorized capital of the companies which correspond to criteria of determination of the associated or subsidiary company;
5) investments into the associated and subsidiary companies withheld for sale.
The bank includes in this category of investment into the associated and subsidiary companies acquired and/or contain only for sale within 12 months.
10. The bank performs accounting of transactions on purchase and sale of financial investments according to standard procedures with use of activity date or settlement date according to accounting policy. The bank applies the chosen accounting method consistently to all acquisitions and sales of the financial investments belonging to the same category.
11. The bank reflects in financial accounting change of fair value of the acquired financial investments (except financial investments which are considered at cost or depreciated cost) during the period between activity date and settlement date on accounts of class 6 (for financial investments which are carried at fair value with recognition of revaluation through profits/losses) and the accounts of the capital of class 5 (for financial investments in portfolio for sale).
12. The bank in case of initial recognition reflects in financial accounting financial investments which are estimated at fair value with recognition of revaluation through profits/losses at fair value without the expense accounting on transaction. Expenses on transactions on acquisition of such financial investments are reflected according to expenditure accounts for date of their implementation.
All other financial investments in case of initial recognition are estimated at fair value in which expenses on transactions are added.
13. The bank recognizes as debt securities interest income [charges of the coupon, depreciation of discount (award)] on effective rate of percent during the period of date of their acquisition before date of derecognition (sale, repayment), reclassification.
Frequency of charge of interest income determines bank independently in accounting policy, but at least once a month, and it is obligatory for date of revaluation, reclassification, sale.
The bank performs depreciation of discount (award) on the financial instrument with floating interest rate which changes depending on fluctuations of market rates or in case of the offer, before the following date of review of interest rate.
14. The bank can recognize interest income according to debt securities which are estimated at fair value with recognition of revaluation through profits/losses, separately or as a part of the revaluation amount at fair value according to accounting policy.
If the bank recognizes interest income according to debt securities which are estimated at fair value with recognition of revaluation through profits/losses, as a part of revaluation, charges of percent and depreciation of discount or award is not performed. In case of acquisition of coupon securities with accumulated interests the bank reflects them in accounting on accounts of award (discount), the amount of the received coupon reduces the amount of award or increases the discount amount.
15. The bank recognizes interest incomes according to the depreciated debt securities (except the securities estimated at fair value with recognition of revaluation through profits/losses) on effective rate of percent which was used for discounting of future cash flows during the last loss assessment owing to impairment of these debt securities.
16. The bank recognizes as securities with unstable profit the income in type of dividends for date of establishment of the rights to their obtaining.
17. The bank reflects in financial accounting profit or loss in case of initial recognition on accounts of class 6 or 7 respectively on difference amount between fair value of financial investments (except investments into the associated and subsidiary companies) and the agreement amount (without the expense accounting in transaction) in correspondence with accounts of discount (award). The bank reflects as profit or loss from transaction with shareholders as a part of the supplementary capital according to the balance sheet account of class 5 until disposal of the financial instrument or includes parts to retained earnings (loss) during the period of its content.
The bank for date of balance following the results of year carries annual depreciation amount of discount (award) to retained earnings (loss), arisen owing to transactions with shareholders at cost is lower or higher, than market, in case of adoption of the relevant decision by it about inclusion of such difference in retained earnings (loss) parts during the period of content of the financial instrument.
18. For each date following after recognition all financial investments are estimated at their fair value, except:
1) the financial investments withheld before repayment;
2) shares and other financial investments in portfolio for sale which fair value cannot be determined authentically;
3) investments into the associated and subsidiary companies.
19. Fair value of the securities which are in circulation on organizationally the drawn-up markets is determined by their market value.
If quotations of market prices of securities are unavailable, then banks apply to determination of fair value the entering data observed in the market in case of their availability (such as quotations on similar assets or liabilities in the active markets; quotations on identical assets and liabilities in the inactive markets; observed rates and yield curves, etc. or input data, not observable in the market (own data of bank - budgets, forecasts, historical information on economic indicators, etc.) - the market-based approach either profitable or costly approaches.
20. The bank reflects in financial accounting for each date of the share following after recognition and other financial investments in portfolio for sale which fair value cannot be determined authentically, by their cost.
21. Reflects the financial investments withheld by bank before their repayment, bank for each date of balance following after recognition on depreciated cost with use of effective rate of percent.
22. The bank in case of sale of investments into the associated and subsidiary companies shall reclassify them in category of investments into the associated and subsidiary companies withheld for sale.
23. The bank considers investments into the associated and subsidiary companies acquired for the purpose of their further sale within 12 months on the smallest of two sizes of book value or fair value less costs to sell and recognizes reduction of their usefulness.
24. The bank on all financial investments, except carried at fair value with recognition of revaluation through profits/losses, performs the analysis on reduction of their usefulness.
The bank recognizes impairment for each date of balance by forming of provisions if there are objective proofs of the events influencing the expected future cash flows on financial investments.
25. The bank reflects in financial accounting of impairment of book value of financial investments owing to reduction of their usefulness only by the amount which does not result in negative value of their cost. If book value of such financial investments reaches zero, then in financial accounting they are reflected at zero cost before adoption by bank of the decision on their write-off.
26. The income and expenses in foreign currency on transactions with securities are reflected on accounts of classes 6 and 7 of the Chart of accounts in national currency on the official rate of foreign currency for date of their charge and/or obtaining and payment.
27. Revaluation (recalculation of hryvnia equivalent of remaining balance of foreign currency) on accounts on accounting of financial investments in foreign currency in connection with change of the official rate of hryvnia to foreign currencies is performed in the general procedure for asset revaluation and obligations in foreign currency determined by regulatory legal acts of the National Bank of Ukraine by financial accounting of foreign currency transactions and bank metals.
28. The bank reclassifies the securities sold on transaction of repo according to which the buyer has the right to sell them or to provide as a deposit, from trade portfolio or portfolio for sale in receivables on transactions of repo that is carried at fair value through profit or loss.
The securities purchased according to the repurchase agreement with the right of the subsequent sale in case of their sale to the third parties are reflected the buyer at fair value as the obligation on return of securities according to accounts payable accounts on transactions of repo that is carried at fair value through profit or loss.
The result of revaluation at fair value of the securities considered on accounts of receivables and payables on transactions of repo and result from sale to the third party reflects bank according to balance sheet account 6202.
29. The bank considers the securities provided in trust management on separate analytical accounts of the corresponding balance sheet accounts, performs their revaluation, depreciation of discount (award), charge of the income and so forth.
30. The bank considers the securities acquired and/or which are stored on behalf and at the expense of clients, and also the securities acquired under agreements on trust management, on off-balance accounts.
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