© 2006 KPMG, the Trinidad and Tobago member firm of KPMG International, a Swiss cooperative. All rights reserved. The KPMG logo and name are trade marks of KPMG International. CAIB - 1 Role of IFRS in Financial Statement Preparation AUDIT Presentation to the 2006 CAIB Conference

© 2006 KPMG, the Trinidad and Tobago member firm of KPMG International, a Swiss cooperative. All rights reserved. The KPMG logo and name are trade marks of KPMG International. CAIB - 2 Role of IFRSs Provides specific guidance on: Definition Recognition Measurement Disclosure

© 2006 KPMG, the Trinidad and Tobago member firm of KPMG International, a Swiss cooperative. All rights reserved. The KPMG logo and name are trade marks of KPMG International. CAIB - 3 IAS (30) SIC (11) Framework IFRIC (7) Summary of IFRS IFRS (7) IFRSs are for general purpose financial reporting by profit-oriented entities

© 2006 KPMG, the Trinidad and Tobago member firm of KPMG International, a Swiss cooperative. All rights reserved. The KPMG logo and name are trade marks of KPMG International. CAIB - 4 Agenda IFRS Framework IAS 1 Financial Instruments Standards Future Developments IFRS Framework IAS 1 Financial Instruments Standards Future Developments

© 2006 KPMG, the Trinidad and Tobago member firm of KPMG International, a Swiss cooperative. All rights reserved. The KPMG logo and name are trade marks of KPMG International. CAIB - 5 Framework Consistency of IFRSs Assist in development of future IFRSs and review of existing IASs Assist national standard setting bodies in developing national standards Assist preparers and users in preparing and interpreting IFRS financial statements and with the issues not covered by standards Strict guidance in IAS 8 applies

© 2006 KPMG, the Trinidad and Tobago member firm of KPMG International, a Swiss cooperative. All rights reserved. The KPMG logo and name are trade marks of KPMG International. CAIB - 6 Objective of financial statements The objective is to Provide information about financial position, performance, and changes in financial position of an entity: …that is useful to a wide range of users in making economic decisions

© 2006 KPMG, the Trinidad and Tobago member firm of KPMG International, a Swiss cooperative. All rights reserved. The KPMG logo and name are trade marks of KPMG International. CAIB - 7 Financial statements Users of financial statements Investors, Present & potential Employees Suppliers and other trade creditors Lenders Customers Public Governments and their agencies

© 2006 KPMG, the Trinidad and Tobago member firm of KPMG International, a Swiss cooperative. All rights reserved. The KPMG logo and name are trade marks of KPMG International. CAIB - 8 Underlying assumptions Accrual basis Going concern

© 2006 KPMG, the Trinidad and Tobago member firm of KPMG International, a Swiss cooperative. All rights reserved. The KPMG logo and name are trade marks of KPMG International. CAIB - 9 Qualitative characteristics of financial statements Materiality Faithful representation Substance over form Neutrality Prudence Completeness Relevance Understandability Reliability Comparability True and fair view / fair presentation

© 2006 KPMG, the Trinidad and Tobago member firm of KPMG International, a Swiss cooperative. All rights reserved. The KPMG logo and name are trade marks of KPMG International. CAIB - 10 Qualitative characteristics of financial statements (continued) Constraints on relevant and reliable information Timeliness Balance between benefit and cost Balance between qualitative characteristics

© 2006 KPMG, the Trinidad and Tobago member firm of KPMG International, a Swiss cooperative. All rights reserved. The KPMG logo and name are trade marks of KPMG International. CAIB - 11 Assets & Liabilities: Definition and recognition Asset Liability Income Expenses The matching concept less important

© 2006 KPMG, the Trinidad and Tobago member firm of KPMG International, a Swiss cooperative. All rights reserved. The KPMG logo and name are trade marks of KPMG International. CAIB - 12 Assets, liabilities and equity: definitions AssetLiability Equity Residual interest in the assets of the entity

© 2006 KPMG, the Trinidad and Tobago member firm of KPMG International, a Swiss cooperative. All rights reserved. The KPMG logo and name are trade marks of KPMG International. CAIB - 13 Agenda IFRS Framework IAS 1 Financial Instruments Standards Future Developments IFRS Framework IAS 1 Financial Instruments Standards Future Developments

© 2006 KPMG, the Trinidad and Tobago member firm of KPMG International, a Swiss cooperative. All rights reserved. The KPMG logo and name are trade marks of KPMG International. CAIB - 14 Objective and scope Objective: ensure comparability between years and entities Scope: all financial statements (FS) prepared in accordance with IFRSs: All financial statements, including interims (IAS 34) All types of entities Separate FS Consolidated FS Individual FS

© 2006 KPMG, the Trinidad and Tobago member firm of KPMG International, a Swiss cooperative. All rights reserved. The KPMG logo and name are trade marks of KPMG International. CAIB - 15 Required components of financial statements Balance sheet Income statement Either: Statement showing all changes in equity; or Statement of recognised income and expense (SoRIE) Cash flow statement Notes

© 2006 KPMG, the Trinidad and Tobago member firm of KPMG International, a Swiss cooperative. All rights reserved. The KPMG logo and name are trade marks of KPMG International. CAIB - 16 Other components of financial reports Not within scope of IFRSs, but often presented outside financial statements: Financial review by management performance financial position uncertainties Environmental reports, value added statements etc The financial statements must be clearly identified and distinguished from other information in annual report

© 2006 KPMG, the Trinidad and Tobago member firm of KPMG International, a Swiss cooperative. All rights reserved. The KPMG logo and name are trade marks of KPMG International. CAIB - 17 Overall considerations Accrual basis of accounting Going concern Materiality and aggregation Offsetting Consistency of presentation Comparative information Compliance with IFRS Fair presentation Financial Statements

© 2006 KPMG, the Trinidad and Tobago member firm of KPMG International, a Swiss cooperative. All rights reserved. The KPMG logo and name are trade marks of KPMG International. CAIB - 18 Offsetting Assets and liabilities should not be offset unless: Required or permitted by a standard or interpretation Items of income and expense should not be offset unless: Required or permitted by a standard or interpretation, or Gains, losses and related expenses arising from the same or similar items not material

© 2006 KPMG, the Trinidad and Tobago member firm of KPMG International, a Swiss cooperative. All rights reserved. The KPMG logo and name are trade marks of KPMG International. CAIB - 19 Compliance with IFRSs “Explicit and unreserved statement of compliance” in notes Disclose application of standards or interpretations before effective date Compliance with all standards and interpretations. Inappropriate accounting treatments not rectified by disclosure

© 2006 KPMG, the Trinidad and Tobago member firm of KPMG International, a Swiss cooperative. All rights reserved. The KPMG logo and name are trade marks of KPMG International. CAIB - 20 Fair presentation Achieved by appropriate application of IFRSs Requires faithful representation of effects of transactions, events and conditions in accordance with recognition criteria set out in the Framework If compliance with a standard or interpretation misleading, departure from that standard required (extremely rare) Comprehensive disclosure requirements

© 2006 KPMG, the Trinidad and Tobago member firm of KPMG International, a Swiss cooperative. All rights reserved. The KPMG logo and name are trade marks of KPMG International. CAIB - 21 Assets – Suggested Presentation Cash and cash equivalents Trading assets Pledged assets Derivative assets held for risk management Loans and advances to banks Loans and advances to customers Investment securities Property and equipment Intangible assets Deferred tax assets Other assets

© 2006 KPMG, the Trinidad and Tobago member firm of KPMG International, a Swiss cooperative. All rights reserved. The KPMG logo and name are trade marks of KPMG International. CAIB - 22 Liabilities – Suggested Presentation Trading liabilities Derivative liabilities held for risk management Deposits from banks Deposit from customers Debt securities issued Subordinated liabilities Provisions Current tax liabilities Deferred tax liabilities Other liabilities

© 2006 KPMG, the Trinidad and Tobago member firm of KPMG International, a Swiss cooperative. All rights reserved. The KPMG logo and name are trade marks of KPMG International. CAIB - 23 Other Elements of the Financial Statements Total assets Total liabilities Equity Share capital and share premium Retained earnings Other reserves Total equity attributable to equity holders of the Bank Minority interest Total equity Total liabilities and equity

© 2006 KPMG, the Trinidad and Tobago member firm of KPMG International, a Swiss cooperative. All rights reserved. The KPMG logo and name are trade marks of KPMG International. CAIB - 24 Agenda IFRS Framework IAS 1 Financial Instruments Standards Future Developments IFRS Framework IAS 1 Financial Instruments Standards Future Developments

© 2006 KPMG, the Trinidad and Tobago member firm of KPMG International, a Swiss cooperative. All rights reserved. The KPMG logo and name are trade marks of KPMG International. CAIB - 25 Overview of currently effective financial instruments standards

© 2006 KPMG, the Trinidad and Tobago member firm of KPMG International, a Swiss cooperative. All rights reserved. The KPMG logo and name are trade marks of KPMG International. CAIB - 26 IFRS 7 Financial Instruments: Disclosures The disclosure requirements for financial instruments have been amended by IFRS 7, which was issued in August 2005 and supersedes IAS 30 and the disclosure requirements in IAS 32. In particular, the IASB removed unnecessarily onerous or duplicate disclosures from IAS 30 and IAS 32 and located in one IFRS all disclosure requirements relating to financial instruments.

© 2006 KPMG, the Trinidad and Tobago member firm of KPMG International, a Swiss cooperative. All rights reserved. The KPMG logo and name are trade marks of KPMG International. CAIB - 27 Agenda IFRS Framework IAS 1 Financial Instruments Standards Future Developments IFRS Framework IAS 1 Financial Instruments Standards Future Developments

© 2006 KPMG, the Trinidad and Tobago member firm of KPMG International, a Swiss cooperative. All rights reserved. The KPMG logo and name are trade marks of KPMG International. CAIB - 28 Future developments Discussion paper Management Commentary Guidance on management commentary in financial report Prerequisite for compliance with IFRSs? Exposure Draft of Proposed Amendments to IAS 1 Presentation of Financial Statements – A Revised Presentation Focus on performance (total recognised income and expense) rather than on profit or loss Statement of financial position (balance sheet) for three periods

© 2006 KPMG, the Trinidad and Tobago member firm of KPMG International, a Swiss cooperative. All rights reserved. The KPMG logo and name are trade marks of KPMG International. CAIB - 29 increased complexity increased disclosure limited options increased use of fair values Trends in recent IFRS strict application: no“IFRS lite”

The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. © 2006 KPMG, the Trinidad and Tobago member firm of KPMG International, a Swiss cooperative. All rights reserved. Presenter’s contact details Robert Alleyne Presenter’s contact details Robert Alleyne