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TURKS AND CAICOS ISLANDS NATIONAL INSURANCE BOARD
Notes to Financial Statements, continued Year ended March 31, 2013
3. Significant accounting policies, continued (b) Provisions
(c)
A provision is recognised if, as a result of a past event, NIB has a present legal or constructive obligation that can be reliably estimated, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by discounting the expected future cash flows at a rate that reflects current market assessments of the time value of money and the risks specific to the liability.
Per IAS 26 NIB has an option as to whether it discloses the actuarial present value of promised retirement benefits on the statement of financial position, in the notes to the financial statements or in an accompanying actuarial report. NIB has elected to disclose the actuarial present value of promised retirement benefits in a note to the financial statements (note 27). The actuarial present value of other long-term benefits was not quantified.
Investment property
Investment property is property held either to earn rental income or for capital appreciation or for both, but not for sale in the ordinary course of business or for administrative purposes.
NIB’s investment property comprised land and a building held under an operating lease which was leased to TCIG until November 2012 after which date it was sold.
The investment property was accounted for using the fair value model under IAS 40, ‘Investment Property’, with changes in fair value recognised in the statement of income, expenses and reserves. An external, independent, valuation company, with recognised and relevant professional qualifications and recent experience in the location and category of property being valued, valued NIB’s investment property at March 31, 2012.
The fair values were based on market values, being the estimated amount for which a property could be exchanged on the date of the valuation between a willing buyer and a willing seller in an arm’s length transaction after proper marketing wherein the parties had each acted knowledgeably and willingly.
Investment property was measured at cost on initial recognition and subsequently at fair value with any change therein recognised in the statement of income, expenses and reserves. Cost included expenditures that were directly attributable to the acquisition of investment property.
When the use of investment property changed such that it was reclassified as property and equipment, its fair value at the date of reclassification became its cost for subsequent accounting.
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