Obligation due Immediately Mandiri - Investor Relations - Audited Financials 2009 12English
PT BANK MANDIRI PERSERO Tbk. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
31 DECEMBER 2009, 2008 AND 2007
Expressed in millions of Rupiah, unless otherwise stated
Appendix 526 2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued ab. Interest Income and Expense continued
Interest receivable on non-performing assets of Bank Mandiri and its Subsidiaries is recorded as contingent receivables in the commitment and contingency statement in the notes to the
consolidated financial statements.
Included in interest income and expense are sharia income and expense. The Bank’s income as a fund manager mudharib consist of income from sale and purchase on murabahah transaction,
income from istishna, rent income ijarah and income from profit sharing from mudharabah and musyarakah financing as well as other main operating income.
Income from murabahah, which payment is made on installment or deferred, is recognised proportionally over the contract period, in accordance with generally accepted banking practice
Surat Bank Indonesia No.101260DPbS dated 15 October 2008 and Surat Bank Indonesia No.9634DPbS dated 20 April 2007.
Considering the risk on murabahah receivables, the Subsidiary adopts the following policy in recognising income from murabahah financing:
1. Murabahah with a deferred payment term of one year or less, without considering the cash
collection on receivables nor management fee collection risks, the income is recognised using effective interest method annuity over the contract period.
2. Murabahah with a deffered payment term above than one year, where the risk of cash
collection receivables andor management fee are relatively low risk, the income is recognised using effective interest method annuity.
Subsidiary determine level of the risk based on internal requirement. Istishna income is recognised using percentage of completion method or at the end of contract.
Ijarah income is recognised proportionally over the contract period. Musyarakah income for active partner is recognised based on an agreed portion in accordance with
the financing contract. Mudharabah income is recognised in a period where the right of revenue sharing is due based on
agreed portion. It is not allowable to recognise the income based on projection. Subsidiaries’ consumer financing income is presented net of with consumer financing income for
other banks in relation with channeling transactions, joint financing cooperations, factoring, and the appointment as manager of accounts receivable.
ac. Fees and Commissions Income
Fees and commissions that are directly related to lending activities andor involving specific time periods are deferred and amortised using the straight-line method over those periods. The
unamortised fees and commissions balances relating to loans which were settled prior to maturity are recognised upon settlement of the loan. Other fees and commissions that are not directly
related to lending activities or involving specific time periods are recognised as income at the transaction date.
PT BANK MANDIRI PERSERO Tbk. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
31 DECEMBER 2009, 2008 AND 2007
Expressed in millions of Rupiah, unless otherwise stated
Appendix 527 2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued ad. Employee Benefits
Pension Liability
Bank Mandiri established a defined contribution pension plan covering substantially all of its eligible employees from 1 August 1999 and also defined benefit pension plans, which were derived from
each of the Merged Banks’ pension plan. This program is funded through payment to pension fund management as defined in the regular actuarial calculation.
Bank Mandiri and Subsidiaries’ pension liability has been calculated by comparing the benefit that will be received by an employee at normal pension age from the Pension Plans with the benefit as
stipulated under the Labor Law No. 132003 after deducting accumulated employee contributions and the results of its investments. If the pension benefit from the Pension Plans is less than the
benefit as required by the Labor Law, the Bank and Subsidiaries will have to pay such shortage.
The pension plan based on the labor law is a defined benefit plan because the labor law requires a certain formula to calculate the minimum pension benefit. A defined benefit plan is a pension plan
that defines an amount of pension benefit to be provided, usually as a function of one or more factors such as age, years of service or compensation.
The liability recognised in the consolidated balance sheet in respect of defined benefit pension plans is the present value of the defined benefit obligation at the balance sheet date less the fair
value of plan assets, together with adjustments for unrecognised actuarial gains or losses and past service cost. The defined benefit obligation is calculated annually by independent actuaries using
the projected unit credit method. The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows using interest rates of high quality corporate
bonds that are denominated in the currency in which the benefit will be paid, and that have terms to maturity approximating the terms of the related pension liability.
Actuarial gains and losses arising from experience adjustments, changes in actuarial assumptions and amendments to pension plans when exceeding 10.00 of defined benefit or 10.00 of fair
value program’s asset are charged or credited to income or expense over the average remaining service lives of the related employees.
Other Post-Employment Benefit Obligations
The Bank provides benefit to employees prior to retirement age which employees are released from their active routine job and do not have to come to work, but they are still entitled to employee
benefits.
The entitlement to these benefits is usually based on the employee remaining in service up to retirement age and the completion of a minimum service period. The expected costs of these
benefits are accrued over the period of employment, using an accounting methodology similar but simplified to that for defined benefit pension plans. These obligations are valued annually by
independent qualified actuaries.
Tantiem Distribution
Bank Mandiri records tantiem on an accrual basis and charges it to the consolidated statements of income.