Annual Financial Statements of the Bank of Lithuania
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Annual Financial Statements of the Bank of Lithuania 2018 ANNUAL FINANCIAL STATEMENTS OF THE BANK OF LITHUANIA ISSN 1822-8240 (online) © Lietuvos bankas, 2019 2 ANNUAL FINANCIAL STATEMENTS OF THE BANK OF LITHUANIA CONTENTS INDEPENDENT AUDITOR’S REPORT TO THE SEIMAS OF THE REPUBLIC OF LITHUANIA ................ 4 BALANCE SHEET OF THE BANK OF LITHUANIA .......................................................................... 6 PROFIT AND LOSS ACCOUNT OF THE BANK OF LITHUANIA ........................................................ 8 EXPLANATORY NOTES ............................................................................................................. 9 1. BASIS FOR PREPARATION AND PRESENTATION OF THE ANNUAL FINANCIAL STATEMENTS 9 2. ACCOUNTING POLICY ................................................................................................. 9 3. FINANCIAL RISK MANAGEMENT ................................................................................. 14 4. FINANCIAL ACCOUNTING PRINCIPLES ON OPERATIONS RELATED TO PARTICIPATION IN THE EUROSYSTEM ........................................................................................................ 15 5. POST-BALANCE SHEET EVENTS ................................................................................. 19 6. NOTES ON THE BALANCE SHEET ................................................................................ 19 7. NOTES ON THE PROFIT AND LOSS ACCOUNT .............................................................. 29 8. OTHER NOTES .......................................................................................................... 32 3 UAB „Ernst & Young Baltic" Ernst & Young Baltic UAB Subačiaus g. 7 Subačiaus t. 7 EY L T-01302 Vilnius L T-01302 Vilnius Building a better Lietuva Lithuania working world Tel.: (8 5) 274 2200 Tel.: +370 5 274 2200 Faks.: (8 5) 274 2333 Fa x: +370 5 274 2333 [email protected] [email protected] www.ey.com/lt www.ey.com/lt Juridinio asmens kodas 110878442 Code oi legal entity 110878442 PVM mokėtojo kodas L T108784411 VAT payer code L T108784411 Juridinių asmenų registras Register oi Legal Entities INDEPENDENT AUDITOR'S REPORT To the Seimas of the Republic of Lithuania Opinion We have audited the accompanying financial statements of the Bank of Lithuania (hereinafter the Bank), which comprise the balance sheet as at 31 December 2018, the profit and loss account for the year then ended and notes to the financial statements, including a summary of significant accounting policies. ln our opinion, the accompanying Bank's financial statements give a true and fair view of the financial position of the Bank as at 31 December 2018 and its financial performance for the year then ended in accordance with Guideline CEU) 2016/2249 of the European Centrai Bank (ECB) on the legal framework for accounting and financial reporting in the European System of Centrai Banks (ECB/2016/34) adopted by the Governing Council of the ECB, the Law on the Bank of Lithuania and the Accounting Policy of the Bank approved by the Board of the Bank of Lithuania. Basis for opinion We conducted our audit in accordance with lnternational Standards on Auditing (ISAs). Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the Bank in accordance with the lnternational Ethics Standards Board for Accountants' Code of Ethics for Professional Accountants (IESBA Code) together with the requirements of the Law on Audit of the financial statements of the Republic of Lithuania that are relevant to the audit in the Republic of Lithuania, and we have fulfilled our other ethical responsibilities in accordance with the Law on Audit of the financial statements of the Republic of Lithuania and the IESBA Code . We believe that the audit evidence we have obtained is sufficient and apprapriate to provide a basis for our opinion . Other matter The financial statements of the Bank for the year ended 31 December 201 7 were audited by another auditor who expressed an unmodified opinion on them on 3 April 2018. Responsibilities of management and those charged with governance for the financial statements Management is responsible for the preparation and fair presentation of the financial statements in accordance with Guideline CEU) 2016/2249 of the European Centrai Bank CECB) on the legal framework for accounting and financial reporting in the European System of Centrai Banks CECB/2016/34) adopted by the Governing Council of the ECB, the Law on the Bank of Lithuania and the Accounting Policy of the Bank approved by the Board of the Bank of Lithuania, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether dueto fraud or error. ln preparing the financial statements, management is responsible for assessing the Bank's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Bank or to cease operations, or has no realistic alternative but to do so. Those charged with governance are responsible for overseeing the Bank's financial reporting process. Auditor's responsibilities for the audit of the financial statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether dueto fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. A member firm oi Ernst & Young Globa i Limited EY Building a better working world As part of an audit in accordance with ISAs, we exercise prafessional judgment and maintain prafessional skepticism thraughout the audit. We also: • ldentify and assess the risks of material misstatement of the financial statements, whether dueto fraud or errar, design and perform audit pracedures responsive to those risks, and obtain audit evidence that is sufficient and apprapriate to pravide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting fram error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. • Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are apprapriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Bank's internal control. • Evaluate the apprapriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management. • Conclude on the apprapriateness of management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant daubt on the Bank's ability to continue as a going concern. lf we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Bank to cease to continue as a going concern. • Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation. We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. UAB ERNST & YOUNG BAL TIC Audit Company's license No. 001335 ~- /·~ as Akelis / / Auditor's licen· š"~ ( _. No . 000003 19 April 2019 A member firm of Ernst & Young Global Limited ANNUAL FINANCIAL STATEMENTS OF THE BANK OF LITHUANIA Balance Sheet of the Bank of Lithuania EUR thousands 31 December 31 December Notes 2018 2017 ASSETS 1. Gold and gold receivables 1 209,811 202,484 2. Claims on non-euro area residents denominated in 5,461,691 4,003,379 foreign currency Receivables from the IMF 2 200,940 163,092 Balances with banks and security investments, external loans and 3 5,260,751 3,840,288 other external assets 3. Claims on euro area residents denominated in foreign 4 71,990 9 currency 4. Claims on non-euro area residents denominated in euro 5 1,006 8,934 5. Lending to euro area credit institutions related to 6 189,166 303,000 monetary policy operations denominated in euro Main refinancing operations – – Longer-term refinancing operations 173,000 303,000 Fine-tuning reverse operations – – Structural reverse operations – – Marginal lending facility 16,166 – Credits related to margin calls – – 6. Other claims on euro area credit institutions 7 360 12,077