Subsidiaries and Associates continued PT Mandiri AXA General Insurance continued

PT BANK MANDIRI PERSERO Tbk. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 DECEMBER 2011 AND 2010 Expressed in millions of Rupiah, unless otherwise stated Appendix 513 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued

a. Basis of Preparation of the Consolidated Financial Statements

The consolidated financial statements have been prepared under the historical cost, except for financial assets classified as available for sale, financial assets and liabilities held at fair value through profit or loss and all derivative instruments which have been measured at fair value. The consolidated financial statements are prepared under the accrual basis of accounting, except for the consolidated statements of cash flows. Consolidated statements of cash flows are prepared using the direct method by classifying cash flows in operating activities, investing and financing activities. The financial statements of a Subsidiary company engaged in sharia banking have been prepared in conformity with the Statement of Financial Accounting Standards SFAS No. 101, “Presentation of Financial Statement for Sharia Banking”, SFAS No. 102, “Accounting for Murabahah”, SFAS No. 104, “Accounting for Istishna”, SFAS No. 105, ”Accounting for Mudharabah”, SFAS No. 106, “Accounting for Musyarakah”, SFAS No. 107, “Accounting for Ijarah”, Accounting Guidelines for Indonesian Sharia Banking PAPSI and other Statements of Financial Accounting Standards established by the Indonesian Institute of Accountants and also accounting and reporting guidelines prescribed by the Indonesian banking regulatory authority and Bapepam-LK. The preparation of consolidated financial statements in conformity with accounting principles generally accepted in Indonesia requires the use of estimates and assumptions that affects: • the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements; • the reported amounts of revenues and expenses during the reporting period. Although these estimates are based on Management’s best knowledge of current events and activities, actual results may differ from those estimates. Figures in the consolidated financial statements are rounded to and stated in millions of Rupiah, unless otherwise stated.

b. Changes in accounting policies in current year

The following are amendments of accounting standards and interpretations, which become effective starting 1 January 2011: - SFAS 1 Revised 2009 – Presentation of Financial Statements, - SFAS 2 Revised 2009 – Statements of Cashflows, - SFAS 3 Revised 2010 – Interim Financial Reporting, - SFAS 4 Revised 2009 – Consolidated and Separate Financial Statements, - SFAS 5 Revised 2009 – Operating Segments, - SFAS 7 Revised 2010 – Related Party Disclosures, - SFAS 8 Revised 2010 – Events After the Reporting Period, - SFAS 12 Revised 2009 – Interest in Joint Ventures, - SFAS 15 Revised 2009 – Investment in Associates, - SFAS 19 Revised 2010 – Intangible Assets, - SFAS 22 Revised 2010 – Business Combination, - SFAS 23 Revised 2010 – Revenue, - SFAS 25 Revised 2009 – Accounting Policies, Changes in Accounting Estimates and Errors,