The OeNB’s financial statements are prepared in conformity with the provisions governing the Eurosystem’s accounting and reporting operations, which follow accounting principles harmonized by Community law and generally accepted international accounting standards. In particular, the following accounting principles have been applied:
- economic reality and transparency
- prudence
- recognition of post-balance sheet events
- materiality
- going-concern basis
- accruals principle
- consistency and comparability
Time of Recording
Foreign exchange transactions, financial instruments denominated in foreign currency and related accruals must be recorded at trade date (economic approach) while securities transactions (including transactions with equity instruments) denominated in foreign currency may still be recorded according to the cash/settlement approach. Interest accrued in relation to foreign currency transactions, including premiums or discounts, must be recorded on a daily basis from the spot settlement date. To record specific euro-denominated transactions, financial instruments and related accruals, the Eurosystem national central banks (NCBs) may use either the economic or the cash/settlement approach.
Foreign currency transactions whose exchange rate is not fixed against the accounting currency were recorded at the euro exchange rate prevailing on the day of the transaction.
Basis of Accounting
At year-end, both financial assets and liabilities are revalued at current market prices/rates. This applies equally to transactions that are disclosed in the balance sheet and to transactions that are not. 1 The arbitrage pricing principle is used to value gold interest rate swaps and gold forward interest rate swaps. To this end, the products are split into the components at which these products are traded on international exchanges (LIBOR curve, gold swap rates and gold forward rates).
The average acquisition cost and the value of each currency position are calculated on the basis of the sum total of the holdings in any one currency, including both asset and liability positions and both on balance sheet items and transactions that are not disclosed in the balance sheet. Own funds invested in foreign exchange assets are treated as a separate currency item under other financial assets, as are those equity instruments (equity shares or equity funds) denominated in foreign currency that are to be disclosed under other financial assets.
For securities, revaluation takes place on a code-by-code basis, i.e. of securities with the same ISIN number/type.
Securities classified as held-to-maturity or nonmarketable securities are valued at amortized cost subject to impairment. This also applies to securities purchased under the Eurosystem’s Covered Bond Purchase Programme (CBPP). Securities purchased under the Eurosystem’s Securities Markets Programme (SMP) are subject to a uniform Eurosystem impairment framework.
The prices of master fund shares are calculated daily by the designated custodian bank or the master fund, using established market information systems on the basis of the assets held by the subfunds.
Participating interests are valued on the basis of the net asset value of the respective company.
Income Recognition
Premiums or discounts arising on securities are calculated and presented as part of interest income and are amortized over the remaining life of the securities.
Gains and losses realized in the course of transactions are taken to the profit and loss account. The average cost method is used on a daily basis for gold, foreign currency instruments and securities to compute the acquisition cost of items sold, having regard to the effect of exchange rate and/or price movements. As a rule, the realized gain or loss is calculated by juxtaposing the sales price of each transaction with the average acquisition cost of all purchases made during the day. In the case of net sales, the calculation of the realized gain or loss is based on the average cost of the respective holding for the preceding day.
Unrealized revaluation gains are not taken to the profit and loss account, but transferred to a revaluation account on the liabilities side of the balance sheet. Unrealized losses are recognized in the profit and loss account when they exceed previous revaluation gains registered in the corresponding revaluation account; they may not be reversed against new unrealized gains in subsequent years. Unrealized losses in any one security, currency or in gold holdings are not netted with unrealized gains in other securities, currencies or gold, since netting is prohibited under the ECB’s accounting guideline.
In derogation from general accounting principles and standards, alternative valuation methods may be applied to synthetic instruments; unrealized gains and losses of the instruments combined to form a synthetic instrument are netted at year-end.
Tangible and Intangible Fixed Assets
Tangible and intangible fixed assets are valued at cost less depreciation. Depreciation is calculated on a straight-line basis from the quarter after acquisition throughout the expected economic lifetime of the assets:
| Asset | Depreciation period |
|---|---|
| Computers, related hardware and software, motor vehicles | 4 years |
| Equipment, furniture and plant in building | 10 years |
| Buildings | 25 years |
| Fixed assets costing less than EUR 10,000 (net of value added tax) | no capitalization |
1 Transactions that are not disclosed in the balance sheet are recorded and disclosed separately.