Page 56 - UBF AR 2018 - E Version

NOTES TO THE FINANCIAL STATEMENTS
Year ended 31 March 2018
2.7 Events occurring after the reporting date
Events after the reporting period are those events,
favourable and unfavourable, that occur between
the reporting date and the date when the financial
statements are authorized for issue.
All material post reporting date events have been
considered and where appropriate, adjustments or
disclosures have been made in the respective notes to
the financial statements.
2.8 Statement of Cash Flows
The Statement of Cash flows is prepared using the direct
method, as stipulated in LKAS 7-“Statement of Cash
Flows”. Cash and cash equivalents comprise cash in hand;
cash at bank, bank overdraft and Investments with short
maturities i.e. three months or less from the date of
acquisition are also treated as cash equivalents.
2.9 Significant accounting Judgments, Estimates
and Assumptions
The preparation of Financial Statements of the company
in conformity with Sri Lanka Accounting Standards (LKASs
and SLFRSs) requires management to make judgements,
estimates and assumptions that affect the application of
accounting policies and the reported amounts of assets,
liabilities, income and expenses. Actual results may differ estate prices indices, country risk and the performance
from these estimates.
Estimates and underlying assumptions are reviewed an
ongoing basis. Revision to the accounting estimates are
recognized in the period in which the estimate is revised
on and in any future periods affected.
The most significant areas of estimation, uncertainty and
critical judgements in applying accounting policies that
have most significant effect on the amounts recognized in
the Financial Statements of the Company are as follows,
2.9.1 Going Concern
The Company’s Management has made an assessment of
its ability to continue as a going concern and is satisfied available for sale equity investments when there
that it has the resources to continue in business for
the foreseeable future. Furthermore, management is
not aware of any material uncertainties that may cast
significant doubt upon the Company’s ability to continue
as a going concern. Therefore, the financial statements
continue to be prepared on the going concern basis.
2.9.2 Fair value of financial instruments
The determination of fair value of financial assets
and financial liabilities recorded on the Statement of
Financial Position for which there is no observable
market price are determined using a variety of valuation
techniques that include the use of mathematical models.
The valuation of financial instrument is described in Note
32 to the Financial Statements. The Company measures
fair value using the fair value hierarchy that reflects
the significance of input used in making measurements.
The fair value hierarchy is also given in Note 32.4 to the
Financial Statements.
54 UB Finance
2.9.3 Impairment Losses on Loans and Advances
The Company reviews its individually significant loans
and advances at each statement-of-financial-position
date to assess whether an impairment loss should
be recorded in the income statement. In particular,
management’s judgement is required in the estimation
of the amount and timing of future cash flows when
determining the impairment loss. These estimates are
based on assumptions which are based on a number of
factors and actual results may differ, resulting in future
changes to the assumptions.
Loans and advances that have been assessed individually
and found not to be impaired and all individually
insignificant loans and advances are then assessed
collectively, in comparing of assets with similar risk
characteristics, to determine whether provision should
be made due to incurred loss events for which there
is objective evidence, but the effects of which are not
yet evident. The collective assessment takes account of
data from the loan portfolio (such as levels of arrears,
credit utilization, loan-to-collateral ratios, etc.), and
judgements on the effect of concentrations of risks and
economic data (including levels of unemployment, real
of different individual Companies). The impairment loss
on loans and advances is disclosed in more detail in Note
06 and Note 14.
2.9.4 Impairment of Available for Sale Investments
The Company reviews its debt securities classified as
available for sale investments at each reporting date to
assess whether they are impaired. This requires similar
judgement as applied to the individual assessment of
loans and advances.
The Company also records impairment charges on
has been a significant or prolonged decline in the fair
value below their cost. The determination of what is
‘significant’ or ‘prolonged’ requires judgement. In making
this judgement, the Company evaluates, among other
factors, historical share price movements and duration
and extent to which the fair value of an investment is
less than its cost.
2.9.5 Taxation
The Company is subject to income taxes and other
taxes including VAT on financial services. Significant
judgments were required to determine the total provision
for current, deferred and other taxes in the financial
statements and the taxable profit for the purpose of
imposition of taxes. Uncertainties exist, with respect to
the interpretation of the applicability of tax laws, at the
time of the preparation of these financial statements.
The Company recognized assets and liabilities for current
deferred and other taxes based on estimates of whether
additional taxes will be due. Where the final tax outcome
of these matters is different from the amounts that
were initially recorded, such differences will impact the
income, deferred and tax amounts in the period in which
the determination is made. The taxation is disclosed in
more detail in Note 09.