CFM INDOSUEZ Wealth Management - 2020 Annual Report

144 NOTE 1 Accounting principles & policies applied 1.1. INTRODUCTION CFM Indosuez’s financial statements are prepared in compliance with the regulations that apply to credit institutions in the Principality of Monaco, within the framework of the agreements between France and Monaco. 1.2. ACCOUNTING PRINCIPLES AND POLICIES A) Translation of assets and l iabi l ities denominated in foreign currencies Assets and liabilities denominated in foreign currencies are translatedat themarket exchange rates at thebalance sheet date. The income and expenses resulting from these translations, together with the translation differences generated on transactions during the financial year, are recognised in the income statement. B) Foreign exchange transactions Spot and forward foreign exchange contracts Spot foreign exchange contracts are valued at the spot market rate for the currency in question at each balance sheet date. Forward currency transactions are back-to-back transactions, and the rate used is the spot rate for the currency in question. Currency options Currency options are back-to-back transactions entered into on the over-the-counter market. C) Instruments financiers à terme de taux d’ intérêt Interest rate swaps These are primarily back-to-back contracts that form part of the asset and liability management process. The expenses and income relating to these transactions are entered on the income statement on a pro rata basis. Interest rate options Interest-rate options are back-to-back transactions entered into on the over-the-counter market. D) Securities Trading securities Trading securities are securities purchased on an organised market that is sufficiently liquid, with a view to reselling them within a maximum timeframe of six months from the outset. Trading securities are valued at their market value. The capital gains or losses generated are recorded under income or expense for the financial year. Investment securities Investment securitiesare financial investmentspurchased in order to provide a financial return. A provision is recordedwhere their market value is lower than their book value. Equity investments The recording of impairment provisions on equity investments is assessed on an individual basis, taking account of their value-in-use and of the economic and financial appraisal of each company concerned. E) Non-current assets Property, plant and equipment are recorded at their historical cost and in accordance with the component accountingmethod; repairs,maintenanceandsmall items are recognised in expenses for the period. Intangible assets include business assets purchased, software, and lease rights, and are shown on the balance sheet at their historical cost. Business assets purchased and lease rights are not amortised, and are subject to an impairment test. The depreciation and amortisation charges for other fixed assets are calculated on a straight-line basis. NOT E S TO THE ACCOUNT S