CFM Indosuez Wealth Management Annual Report 2022 140 / Notes to the financial statements / 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 METHODS A) Translation of assets and liabilities denominated in foreign currencies Assets and liabilities denominated in foreign currencies are translated at the market exchange rates at the balance 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) Forward interest rate instruments 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 securities are financial investments purchased in order to provide a financial return. A provision is recorded where 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. Pensions issued Securities delivered under repurchase agreements are kept on the balance sheet and the amount received, representing the debt to the transferee, is recorded as a liability on the balance sheet. Securities received under repurchase agreements are not recorded on the balance sheet but the amount disbursed, representing the claim on the transferor, is recorded as an asset on the balance sheet. Securities delivered under repurchase agreements are subject to the accounting treatments corresponding to the category of portfolio from which they originate.
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