Page 34 - Agib Bank Ltd Annual Report and IFRS Financial statements 2020

The IASB has issued a revised Conceptual Framework which will be used in standard-setting decisions with
immediate effect. Key changes include:

 increasing the prominence of stewardship in the objective of financial reporting  reinstating prudence as a
component of neutrality

 defining a reporting entity, which may be a legal entity, or a portion of an entity

 revising the definitions of an asset and a liability

 removing the probability threshold for recognition and adding guidance on derecognition

 adding guidance on different measurement basis, and

 stating that profit or loss is the primary performance indicator and that, in principle, income and expenses in
other comprehensive income should be recycled where this enhances the relevance or faithful representation
of the financial statements. No changes will be made to any of the current accounting standards. However,
entities that rely on the Framework in determining their accounting policies for transactions, events or
conditions that are not otherwise dealt with under the accounting standards will need to apply the revised
Framework from 1 January 2020. These entities will need to consider whether their accounting policies are
still appropriate under the revised Framework.

4 Significant Accounting Policies

The accounting policies set out below have been applied consistently to all periods presented in these financial
statements

4.1 Foreign currency activities

Transactions in currencies other than Dalasi are recorded at the rates of exchange prevailing on the dates of
the transactions. At each balance sheet date, monetary assets and liabilities that are denominated in foreign
currencies are retranslated at the rates prevailing on the balance sheet date. Non-monetary assets and
liabilities carried at fair value that are denominated in foreign currencies are translated at the rates prevailing
at the date when the fair value was determined. Gains and losses arising on retranslation are included in net
profit or loss for the period, except for exchange differences arising on non-monetary assets and liabilities
where the changes in fair value are recognized directly in equity.

4.2 Revenue from investments

Revenue is generally recognised when future economic benefits of the underlying assets will flow to the Bank
and it can be reliably measured. It is income derived from use of an entity’s assets and hence the revenue is
mostly dependent on the underlying agreement. Investment income and expense is accrued on a time basis,
by reference to the principal outstanding and the effective interest rate applicable. The effective interest rate
is the rate that exactly discounts the estimated future cash payments and receipts through the expected life
of the financial asset or liability (or, where appropriate, a shorter period) to the carrying amount of the financial
asset or liability.

The calculation of the effective interest rate includes all fees paid or received transaction costs, and discounts
or premiums that are an integral part of the effective interest rate. Transaction costs are incremental costs that
are directly attributable to the acquisition, issue or disposal of a financial asset or liability.

Investment income and expense presented in the income statement include:

Profit (markup) on financial assets and liabilities at amortised cost on an effective interest rate basis.

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Annual Report and IFRS Financial Statements for the year ended 31 December 2020 33