Page 69 - Annual Report 2022

7 Banka Kombëtare Tregtare Annual Report 2022

Banka Kombëtare Tregtare Sh.a.
Notes to the Consolidated Financial Statements for the year ended
31 December 2022 (Amounts in USD, unless otherwise stated)

2. Basis of preparation
(a) Statement of compliance and going concern assumption
The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards
(IFRSs). They have been prepared under the assumption that the Bank operates on a going concern basis.
The Bank has considered the impact of Covid-19 in preparing their financial statements. While the specific areas of judgement
may not change, the impact of Covid-19 resulted in the application of further judgement within those areas due to the evolving
nature of the pandemic and the limited recent experience of the economic and financial impacts of such an event.
(b) Basis of measurement
The consolidated financial statements have been prepared on the historical cost basis except for trading and available-for-sale
financial assets, which are measured at fair value.
In addition, for financial reporting purposes, fair value measurements are categorised into Level 1, 2 or 3 based on the degree to
which the inputs to the fair value measurements are observable and the significance of the inputs to the fair value measurement
in its entirety, which are described as follows:
• Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the
measurement date;
• Level 2 inputs are inputs, other than quoted prices included within Level 1, that are observable for the asset or liability, either
directly or indirectly; and
• Level 3 inputs are unobservable inputs for the asset or liability.
(c) Functional and presentation currency
These consolidated financial statements are presented in USD. Albanian Lek (“Lek”) is the Bank’s functional currency.
The Bank has chosen to present its financial statements in USD, as its equity is wholly owned by international investors, who
have issued the start-up capital in USD and view the performance of the investment in terms of USD.
(d) Use of estimates and judgements
The preparation of consolidated financial statements requires management to make judgements, estimates and assumptions
that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual
results may differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in
the period in which the estimate is revised and in any future periods affected.
Information about significant areas of estimation uncertainty and critical judgements in applying accounting policies that have
the most significant effect on the amounts recognised in the consolidated financial statements are described in notes 4 and 5.

3. Significant accounting policies
The accounting policies set out below have been applied consistently to all periods presented in these consolidated financial
statements, and have been applied consistently by Bank entities.
(a) Basis of consolidation

(i) Subsidiaries
Subsidiaries are entities controlled by the Bank. Control exists when the Bank has power over the investee; is exposed, or has
rights, to variable returns from its involvement with the investee; and has the ability to use its power to affect its returns. The
Company reassesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or
more of the three elements of control listed above.