ECCB
ANNUAL REPORT 2014/2015
67
EASTERN CARIBBEAN CENTRAL BANK
2.
Summary of significant accounting policies
…continued
r) Leases
The leases entered into by the Bank are primarily operating leases. The total payments made under operating leases are
charged to the consolidated statement of income or loss on a straight-line basis over the period of the lease.
When an operating lease is terminated before the lease period has expired, any payment required to be made to the
lessor by way of penalty is recognised as an expense in the period in which termination takes place.
(i) Operating leases
Leases in which a significant portion of the risks and rewards of ownership are retained by another party, the lessor, are
classified as operating leases. Payments, including pre-payments, made under operating leases (net of any incentives
received from the lessor) are charged to the consolidated statement of income or loss on a straight-line basis over the
period of the lease.
(ii) Finance leases
Leases of property, plant and equipment, where the Bank has substantially all the risks and rewards of ownership are
classified as finance leases. Finance leases are capitalised at the inception of the lease at the lower of the fair value
of the leased asset or the present value of the minimum lease payments. Each lease payment is allocated between the
liability and finance charges so as to achieve a constant rate on the finance balance outstanding.
The corresponding rental obligations, net of finance charges, are included in payables. The interest element of the
finance cost is charged to the consolidated statement of income or loss over the lease period so as to produce a constant
periodic rate of interest on the remaining balance of the liability for each period. Property, plant and equipment
acquired under finance leases are depreciated over the shorter of the useful life of the asset or the lease term.
s) Employee benefits
Staff pension plan
The Bank operates a defined benefit pension scheme for its eligible employees. The assets of the plan are held in
a single trustee administered fund, established by the Eastern Caribbean Central Bank. A defined benefit plan is a
pension plan that defines an amount of pension benefit that an employee will receive on retirement, usually dependent
on one or more factors such as age, years of service and compensation. The pension benefit is based on the final salary
of the employee.
An asset or liability recognised in the consolidated statement of financial position in respect of defined benefit pension
plans is the present value of the defined benefit obligation at the reporting date less the fair value of plan assets. An
approximate value of the defined benefit obligation is calculated every year by independent actuaries using the projected
unit credit method based on detailed calculations carried out for the most recent triennial funding valuation. Under
this method, the cost of providing pensions is charged to the statement of comprehensive income so as to spread the
regular cost over the service lives of employees in accordance with the advice of qualified actuaries who carry out a
full valuation of the plan every three years.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(expressed in Eastern Caribbean dollars)
March 31, 2015
