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VAKIFBANK
2014 ANNUAL REPORT
229
TÜRKİYE VAKIFLAR BANKASI TÜRK ANONİM ORTAKLIĞI AND ITS FINANCIAL SUBSIDIARIES
CONSOLIDATED FINANCIAL REPORT AS AT AND
FOR THE YEAR 31 DECEMBER 2014
(Amounts expressed in thousands of Turkish Lira (“TL”) unless otherwise stated.)
CONVENIENCE TRANSLATION OF PUBLICLY ANNOUNCED CONSOLIDATED FINANCIAL STATEMENTS ORIGINALLY ISSUED IN TURKISH, SEE IN NOTE I. OF SECTION THREE
Operational leases
Transactions regarding operational lease agreements are accounted on an accrual basis in accordance with the terms of the related contracts.
XVI. INFORMATION ON PROVISIONS AND CONTINGENT LIABILITIES
Provisions other than the specific and general provisions set for loans and other receivables and provisory liabilities are accounted in accordance with TAS 37
“Turkish Accounting Standard on Provisions, Contingent Liabilities and Contingent Assets Corresponding”.
In the consolidated financial statements, a provision is booked for an existing commitment resulted from past events if it is probable that the commitment will
be settled and a reliable estimate can be made of the amount of the obligation. Provisions are calculated based on the best estimates of management on the
expenses to incur as at the balance sheet date and, if material, such expenses are discounted for their present values. If the amount is not reliably estimated
and there is no probability of cash outflow from the Group to settle the liability, the related liability is considered as “contingent” and disclosed in the notes to
the consolidated financial statements.
A contingent asset is a possible asset that arises from past events and whose existence will be confirmed only by the occurrence or non-occurrence of one
or more uncertain future events not wholly within the control of the entity. Contingent assets are not recognized in consolidated financial statements but are
assessed continuously to ensure that related updates are appropriately reflected in the consolidated financial statements. If it has become virtually certain that
an inflow of economic benefits will arise, the asset and the related income are recognized in the consolidated financial statements of the period in which the
change occurs. If an inflow of economic benefits has become probable, the Group discloses the contingent asset.
XVII. INFORMATION ON OBLIGATIONS OF THE GROUP CONCERNING EMPLOYEE RIGHTS
Provision for severance payments
In accordance with existing Turkish Labour Law, the Group is required to make lump-sum termination indemnities to each employee who has completed
one year of service with the Parent Bank and whose employment is terminated due to retirement or for reasons other than resignation or misconduct. The
computation of the liability is based upon the retirement pay ceiling announced by the Government. The applicable ceiling amount as at 31 December 2014 is
TL 3,438 (full TL) (31 December 2013: TL 3,254 (full TL)).
The Group reserved for employee severance indemnities in the accompanying consolidated financial statements using actuarial method in compliance with the
TAS 19-
Employee Benefits.
As at 31 December 2014 and 31 December 2013, the major actuarial assumptions used in the calculation of the total liability are as follows:
Current Period
Prior Period
Discount Rate
8.60%
9.70%
Estimated Inflation Rate
6.50%
6.40%
Other benefits to employees
In the accompanying consolidated financial statements, the Group has provided provision in compliance with
TAS 19
, for undiscounted other employee benefits
earned during the financial period as per services rendered.
The accounting of actuarial gains and losses due to the changes in actuarial assumptions or the differences between assumption and realized has been
changed to be applied as at or after the account periods starting from 1 January 2013 by “The communique (No: 9) about Employee Benefits
(“TAS 19”)” published by the Official Gazette No. 28585 dated 12 March 2013 issued by Public Oversight Accounting and Auditing Standards Authority.
“Transition and Validity Date” in the standard permits retrospective application. Thus, actuarial gains and losses have been accounted in “Other Profit Reserves”
shown under “Equity” associated with “The Statement of Gains and Losses Recognized in Equity” for the respective reporting periods.