PT BANK MANDIRI PERSERO AND SUBSIDIARIES
Notes to the Consolidated Financial Statements Continued December 31, 2002 and 2001
Expressed in millions of Rupiah, unless otherwise stated
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142
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61. SUBSEQUENT EVENTS
a. Initial Public Offering IPO Plan The Bank’s plan for a local and international Initial Public Offering IPO has been postponed
due to the outstanding Government decisions to divest its ownership in the Bank through an IPO. According to the decision of the Privatization Policy Team of the Government dated May 3,
2002, Bank Mandiri will offer shares up to 30, which will consist of 15 divestment and 15 primary issues. Upon resolution of these issues, the Bank will finalize the filing and registration
of the public offering. To support the IPO Plan, the Bank has engaged ABN AMRO Rotschild as an underwriter, in addition to Credit Suisse First Boston and PT Danareksa Sekuritas.
b. Prospective Accounting Pronouncement In 2002, the Indonesian Institute of Accountants IAI issued SFAS 59 regarding “Accounting for
Syariah Based Banks” which will become effective from January 1, 2003. The Management of the Bank’s subsidiary, Bank Syariah Mandiri, is in the process of evaluating the effect of
implementation of this new accounting standard.
c. New Organizational Structure Based on Board of Directors’ Decision Letter No. KEP.DIR0022003 dated January 11, 2003,
the Directors approved a new Bank Organizational Structure effective as of January 13, 2003. Under the new organizational structure, the President Director and Chief Executive Officer are
assisted by 8 eight Senior Executive Vice Presidents.
62. SUMMARY OF SIGNIFICANT DIFFERENCES BETWEEN ACCOUNTING PRINCIPLES
FOLLOWED BY THE BANK “INDONESIAN GAAP” AND INTERNATIONAL ACCOUNTING STANDARDS “IAS”
The accompanying consolidated financial statements have been prepared in accordance with Indonesian GAAP, which varies in certain significant respects from IAS. The significant differences
relate to the items in the following paragraphs:
a. Investments
Held-to-Maturity As of September 30, 2001, the Bank had reclassified certain of its Government Bonds and other
investments from its held-to-maturity portfolio to its trading or available-for-sale portfolios that are outlined in SFAS No. 50 – “Accounting for Specific Securities.” In accordance with its application
of Indonesian GAAP, the Bank did not mark-to-market the remaining held-to-maturity portfolio as a result of these transactions.
Under IAS No. 39 – “Financial Instruments: Recognition and Measurement”, the Bank made these reclassifications from its held-to-maturity portfolio as of January 1, 2001.
PT BANK MANDIRI PERSERO AND SUBSIDIARIES
Notes to the Consolidated Financial Statements Continued December 31, 2002 and 2001
Expressed in millions of Rupiah, unless otherwise stated
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143
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62. SUMMARY OF SIGNIFICANT DIFFERENCES BETWEEN ACCOUNTING PRINCIPLES
FOLLOWED BY THE BANK “INDONESIAN GAAP” AND INTERNATIONAL ACCOUNTING STANDARDS “IAS” Continued
b. Allowance for Possible Losses on Earning Assets Under Indonesian GAAP, the Bank records allowances for possible losses on earning assets
using a general and specific allowance based on management’s estimates and using the guidelines prescribed by Bank Indonesia.
Under IAS, the Bank records allowances for possible losses on earning assets that are not considered impaired using general and specific allowances in accordance with the provisions of
IAS No. 37 – “Estimated Liabilities, Contingent Liabilities and Contingent Assets” from January 1, 2000.
Under IAS No. 39 – “Financial Instruments: Recognition and Measurement”, from January 1, 2001, the Bank calculates allowances for possible losses on earning assets based on the net
present value of earning assets that are impaired and based on the expected collection of other earning assets. An earning asset is considered impaired when it becomes probable that the
Bank will be unable to collect all amounts due according to contractual terms.
c. Derivative instruments Under Indonesian GAAP, the Bank adopted SFAS No. 55 – “Accounting for Derivative
Instruments and Hedging Activities” that is effective from January 1, 2001 which requires that derivative instruments be measured and recognized at their fair values. Such values for
Indonesian Banks are further defined under the reporting guidelines prescribed by Bank Indonesia and are based on the value of derivative instruments determined based on the
Reuters spot rate at reporting date. Under IAS No. 39 – “Financial Instruments: Recognition and Measurement”, from January 1,
2001 the Bank calculates the fair values of derivative instruments based on forward rates of exchange.
The Bank classifies Government bonds Note 8 as originated loans under IAS and therefore no separate measurement and recognition is required for indexation derivatives that are embedded
in the hedge bonds. Originated loans are characterized by assets for which the Bank provided the original funding and are not determined by the form of the instrument that results from the
loan origination.
d. Employee Benefits In accordance with the Decree of the Minister of Manpower No.Kep-150Men2000 “KEPMEN
150” dated June 20, 2000, regarding the “Settlement of Labour Dismissal and the Stipulation of Severance Pay, Gratuity and Compensation in Companies”, the Bank recognizes a provision for
employee entitlements based on actuarial reports. In accordance with SFAS No. 57 – “Provisions, Contingent Liabilities and Contingent Assets”, no specific actuarial method is
mandated. The Bank however applies the projected unit credit valuation method and the simplified actuarial valuation method as of December 31, 2002 and 2001, respectively.
Under IAS, KEPMEN 150 is accounted for as a defined benefit plan and as such it requires the actuary to use the projected unit credit method of actuarial valuation as mandated by IAS 19 –
“Employee Benefits”. Further, changes in the amount of the actuarially determined provision for KEPMEN 150 does not require recognition, unless the change is more than a 10 corridor
range of variation.
