INSTRUCTION OF CENTRAL BANK OF THE RUSSIAN FEDERATION

of June 21, 2018 No. 4828-U

About modification of the Provision of the Bank of Russia of October 2, 2017 No. 606-P "About procedure for reflection on accounts of financial accounting by credit institutions of transactions with securities"

1. According to article 57 of the Federal Law of July 10, 2002 No. 86-FZ "About the Central bank the Russian Federation (Bank of Russia)" (The Russian Federation Code, 2002, No. 28, Art. 2790; 2003, No. 2, Art. 157; No. 52, Art. 5032; 2004, No. 27, Art. 2711; No. 31, Art. 3233; 2005, No. 25, Art. 2426; No. 30, Art. 3101; 2006, No. 19, Art. 2061; No. 25, Art. 2648; 2007, No. 1, Art. 9, Art. 10; No. 10, Art. 1151; No. 18, Art. 2117; 2008, No. 42, Art. 4696, Art. 4699; No. 44, Art. 4982; No. 52, Art. 6229, Art. 6231; 2009, No. 1, Art. 25; No. 29, Art. 3629; No. 48, Art. 5731; 2010, No. 45, Art. 5756; 2011, No. 7, Art. 907; No. 27, Art. 3873; No. 43, Art. 5973; No. 48, Art. 6728; 2012, No. 50, Art. 6954; No. 53, Art. 7591, Art. 7607; 2013, No. 11, Art. 1076; No. 14, Art. 1649; No. 19, Art. 2329; No. 27, Art. 3438, Art. 3476, Art. 3477; No. 30, Art. 4084; No. 49, Art. 6336; No. 51, Art. 6695, Art. 6699; No. 52, Art. 6975; 2014, No. 19, Art. 2311, Art. 2317; No. 27, Art. 3634; No. 30, Art. 4219; No. 40, Art. 5318; No. 45, Art. 6154; No. 52, Art. 7543; 2015, No. 1, Art. 4, Art. 37; No. 27, Art. 3958, Art. 4001; No. 29, Art. 4348, Art. 4357; No. 41, Art. 5639; No. 48, Art. 6699; 2016, No. 1, Art. 23, Art. 46, Art. 50; No. 26, Art. 3891; No. 27, Art. 4225, Art. 4273, Art. 4295; 2017, No. 1, Art. 46; No. 14, Art. 1997; No. 18, Art. 2661, Art. 2669; No. 27, Art. 3950; No. 30, Art. 4456; No. 31, Art. 4830; No. 50, Art. 7562; 2018, No. 1, Art. 66; No. 9, Art. 1286; No. 11, Art. 1584, Art. 1588; No. 18, Art. 2557; No. 24, the Art. 3400), part 6 of article 21 of the Federal Law of December 6, 2011 No. 402-FZ "About financial accounting" (The Russian Federation Code, 2011, No. 50, Art. 7344; 2013, No. 26, Art. 3207; No. 27, Art. 3477; No. 30, Art. 4084; No. 44, Art. 5631; No. 51, Art. 6677; No. 52, Art. 6990; 2014, No. 45, Art. 6154; 2016, No. 22, Art. 3097; 2017, No. 30, Art. 4440; 2018, No. 1, the Art. 65) and the solution of the Board of directors of the Bank of Russia (the minutes of the Board of directors of the Bank of Russia of June 15, 2018 No. 21) to bring in the Provision of the Bank of Russia of October 2, 2017 No. 606-P "About procedure for reflection on accounts of financial accounting by credit institutions of transactions with securities", registered by the Ministry of Justice of the Russian Federation on December 12, 2017 No. 49215, the following changes.

1.1. State Item 1.4 in the following edition:

"1.4. The income added in the form of percent, the coupon, discount belongs to interest incomes on securities (further - interest incomes).

Recognition in financial accounting of interest incomes on securities is performed according to the Provision of the Bank of Russia of December 22, 2014 No. 446-P "About procedure for determination of the income, expenses and other comprehensive income of credit institutions", the registered Ministry of Justice of the Russian Federation on February 6, 2015 No. 35910, on December 8, 2015 No. 40025, on December 12, 2017 No. 49219 (further - the Provision of the Bank of Russia No. 446-P).

Depreciated cost is determined by straight-line method or effective interest rate method (further - EPS) according to IFRS (IFRS) 9.

Methods of determination of depreciated cost affirm credit institution as accounting policy.

When calculating depreciated cost with use of straight-line method of recognition of interest income percent and coupons are charged at the rate established by conditions of release of the debt security, the amounts of discount and award belong into the balance sheet account on accounting of interest incomes regularly during circulation period and (or) repayment of the debt security.

Need of application of the EPS method to securities if the repayment period of securities from the date of their acquisition does not exceed one year or if the difference between the depreciated cost of securities determined by the EPS method, and the depreciated cost of securities determined by straight-line method is not essential, is determined by credit institution.

Criteria of materiality are developed taking into account Item 7 of the International accounting standard (IAS) 1 "Accounts presentation" enacted in the territory of the Russian Federation by the order of the Ministry of Finance of the Russian Federation No. 217n with the amendments enacted in the territory of the Russian Federation by the order of the Ministry of Finance of the Russian Federation No. 98n, the order of the Ministry of Finance of the Russian Federation No. 111n (further - IFRS (IAS) 1), and affirm credit institution as accounting policy.

When calculating depreciated cost with use of the EPS method interest incomes are charged on EPS. EPS for calculation of depreciated cost is determined according to Appendix A of IFRS (IFRS) 9.

Depreciated cost is determined by banks with the universal license at least once a month the last calendar day of month, and also for date of derecognition of debt securities.

Depreciated cost of debt securities will be determined by banks with the basic license and non-bank credit institutions at least once a quarter the last calendar day of quarter, and also for date of derecognition of debt securities.

Frequency of determination of depreciated cost of security affirms credit institution as accounting policy.

The credit institution shall review the expected cash flows according to debt securities depending on change of estimations of payments and receipts.

Change of depreciated cost of debt securities as a result of review of the expected cash flows is reflected taking into account the following.

Increase in depreciated cost of debt securities is reflected accounting entry:

The debit of the balance sheet account on accounting of the adjustments increasing the cost of debt securities

The account No. 70601 credit "Income" (in the report on financial results (further - OFR) on symbols of the Section 2 "Income (except Percentage) from Transactions with the Acquired Debt Securities" of part 2 "Operating incomes").

Reduction of depreciated cost of debt securities is reflected accounting entry:

The debit of the account No. 70606 "Expenses" (in OFR on symbols of the Section 2 "Expenses on Transactions with the Acquired Debt Securities" of part 4 "Operating expenses")

The credit of the balance sheet account on accounting of the adjustments reducing the cost of debt securities.

If necessary recalculation of provision under the expected credit losses is made.

The value adjustment of debt securities is performed in case of difference of EPS used for calculation of depreciated cost in the accounting period from the interest rate established by conditions of release of the debt security.".

1.2. In Items 11.2 - 11.4:

shall be replaced with words the words "on permanent basis (daily)" "at least once a quarter the last calendar day of quarter";

add with the paragraph of the following content:

"Frequency of calculation of provision under the expected credit losses affirms credit institution as accounting policy.".

2. This Instruction is subject to official publication and becomes effective since January 1, 2019.

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