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2. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
2.4 Summary of significant accounting policies (cont’d)
(j) Provisions
Provisions are recognised if, as a result of past event, the Group and the Bank have a present legal and constructive
obligation that can be estimated reliably, 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 flow at a pre-tax rate that
reflects current market assessment of the time value of money and the risks specific to the liability.
Provisions are reviewed at each reporting date and adjusted to reflect the current best estimates.
Where it is not probable that an outflow of economic benefits will be required, or the amount cannot be estimated
reliably, the obligation is disclosed as a contingent liability, unless the probability of outflow of economic benefits is
remote. Possible obligations, whose existence will only be confirmed by the occurrence or non-occurrence of one or
more future events are also disclosed as contingent liabilities unless the probability of outflow of economic benefits
is remote.
Where the Group and the Bank enter into financial guarantee contracts to guarantee the indebtedness of other
companies, the Group and the Bank treat the guarantee contract as a contingent liability until such time as it becomes
probable that the Group and the Bank will be required to make a payment under the guarantee.
(k) Employee benefits
Short-term employee benefits obligation in respect of salaries, annual bonuses, paid annual leave and sick leave are
measured on an undiscounted basis and are expensed as the related service is provided.
A provision is recognised for the amount expected to be paid under short-term cash bonus if the Group and the
Bank have a present legal or constructive obligation to pay this amount as a result of past service provided by the
employees and the obligation can be estimated reliably.
The Group’s and the Bank’s contribution to statutory pension funds is charged to the income statements in
the year to which they relate. Once the contributions have been paid, the Group and the Bank have no further
payment obligations.
(l) Insurance/Takaful contract liabilities
These liabilities comprise premium/contribution liabilities and claims liabilities.
(i) Premium/Contribution liabilities
Provision for premium/contribution liabilities is the higher of the aggregate of the Unearned Premium/
Contribution Reserves (“UPR”/”UCR”) for all lines of business and the best estimate value of the Unexpired Risk
Reserves (“URR”) with a provision of risk margin for adverse deviation.
For the purpose of disclosure in the financial statements, premium/contribution liabilities and deferred income
arising from bank guarantee are classified as deferred income.
EXIM Bank Annual Report 2013
119