BANK OF BAKU AUDITORS REPORT AND
FINANCIAL STATEMENTS AT
31 DECEMBER 1998
Note 12 - Accumulated Deficit / Retained earnings
In accordance with the Azeri Law on Banks and Banking Activity, the Bank distributes all profits as dividends or transfers them to reserves (fund accounts) on the basis of financial statements prepared in accordance with Azeri Accounting Rules. The Bank's reserves under Azeri Accounting Rules at 31 December 1998 are AZM 182,085 (1997: AZM 138,484).
Statutory profits are distributed on a quarterly basis. The Law on Amendments to the Profit Tax Law, dated 8 June 1997, requires banks to transfer amounts to statutory reserves up to 20% of the allowance for their bad and doubtful credits, which are determined on a quarterly basis in accordance with the statutory rules and regulations of the NBAR. Transfers to statutory reserves are fully tax deductible under the Azeri tax legislation.
The reconciliation to International Accounting Standards of the Bank's reserves and profit before taxation under Azeri Accounting Rules is given in Note 22.
