4.3
THE BRITISH ACCOUNTING
4.3.1 HSBC Bank
Presentation Of Financial
Statements
HSBC`S annual reports and accounts contain the presentation of
both qualitative and quantitative information with regards to the overall
operational and other performance evaluations for the business. The company has
prepared its consolidated financial statement for all its business operations
for the whole of the year 2000. Its consolidated financial statements comprise
financial statements of HSBC and its subsidiaries. A case in point is the
subsidiary in Argentina (HSBC BANK ARGENTINA) whose financial statements are
made by June 30th to comply with local regulations; HSBC used its
audited interim financial statements drawn up to 31st December.
To enhance an understanding of both the companies present and
future financial environment, the company provides a financial highlight of the
operating performance of the firm for a particular period. A five-year
comparison also details the activities of the firm. The financial statements
have been prepared in accordance with UK GAAP and where deviations exist to the
US GAAP, a reconciliatory note is explained in the notes for the financial
statements.
Measurement
Practice
Several items in the financial statements have been valued
using different valuation methods but, generally, the financial statements have
been prepared under the historical cost convention. Tangible fixed assets, land
and buildings have been valued using the valuation or historic cost (less
depreciation), which is calculated to write off the assets over their estimated
useful life. Equipment, fixtures and fittings are also stated at cost, less
depreciation, and are depreciated using their estimated useful life. Assets and
liabilities denominated in foreign currencies are translated into US dollars at
the rate of exchange ruling at the year-end (i.e. the closing day rate).
Goodwill capitalized is amortized over its estimated life on a
straight-line basis. Preparation requires the use of estimates and assumption
for the future, with issues relating to bad and doubtful debts.
Bad debts are written off in parts or in whole when the loss
is confirmed. If the collection of interest in bad debts is considered to be
doubtful, it is suspended and excluded from interest income in the profit and
loss account.
Consolidation
Accounting
The banks consolidated financial statement has been prepared
in accordance with the special Provisions of part VII Chapter II of the UK
Company's Act (1985) relating to banking groups. The consolidated financial
statements comply with schedule 9 and the financial statements of HSBC holdings
(the parent) comply with schedule 4 of the act. As permitted by section 230 of
the act, no profit and loss account of the holdings is presented.
The consolidated financial statements included the financial
statements of HSBC holdings and its subsidiaries. Investments in subsidiary
undertakings were stated at net asset values, including attributable goodwill.
Changes in net assets is accounted for as movements in the revaluation
reserves. Interest in joint ventures is stated as the HSBC share of gross
assets. Goodwill is included in balance sheets as intangible fixed assets.
Capitalized goodwill is amortized over its estimated useful life on a
straight-line basis.
| 
