HONG KONG MONETARY AUTHORITY Annual Report 1996
NOTES ON THE ACCOUNTS*
- The Monetary Authority, under delegated authority from the Financial Secretary as Controller of the Exchange Fund, manages the Exchange Fund in accordance with the provisions of the Exchange Fund Ordinance.
- PRINCIPAL ACCOUNTING POLICIES
(a) Valuation of assets and liabilities
Financial assets and liabilities (defined as interest bearing monetary obligations due to and from the Exchange Fund) are valued in the accounts at market value at the Balance Sheet date determined on the bases set out below.The consequential change in value of the asset or liability is reflected in the carrying value of the relevant asset or liability in the Balance Sheet except in the case of balances due to the Fiscal Reserves Account which are stated in the Balance Sheet at the original amounts with the differences between the market values and the original amounts included in other liabilities.
Revaluation gains and losses are included in the Income and Expenditure Account.
Fixed deposits, certificates of deposit, Fiscal Reserves Account, placements by other statutory bodies and other borrowings are valued according to a price matrix of discounted cash flows using year end interest rates for discounting
Treasury bills, debt securities and Exchange Fund Bills and Notes are valued at the closing mid-market prices of the last business day of the year quoted on the respective securities markets
Equities are valued at the closing market prices on the last business day of the year quoted on the respective stock exchanges.
Gold is valued at the morning fix market price on the last business day of the year as quoted by the London Bullion Market.
(b) Foreign currency translation
Assets and liabilities denominated in foreign currencies are translated into Hong Kong dollars at the middle market rates at the close of business on the last business day of the year. Exchange gains and losses on foreign currency assets and liabilities are included in the Income and Expenditure Account.
* All amounts are in Hong Kong dollars, unless otherwise stated.