NOTES TO THE FINANCIAL STATEMENTS AT 31ST DECEMBER, 2013
(continued)
2.
SIGNIFICANT ACCOUNTING POLICIES (continued)
(g) Provision for loan losses
Allowance for doubtful loans are based on the requirements of the Co-operative Societies Act - 1996 and the PEARLS Standards which recommends that delinquent loans less than three hundred and sixty-five (365) days in arrears are provided
for to the extent of 35% while those in excess of that period are provided for in full. This relates to loans which have no
“property” as security. For loans that are secured by property a forced sale value of 70% of the market value is taken into
consideration. Therefore if the 70% of forced sale value is greater or equal to 110% of the loan balance no provision is made.
However, if the forced sale value is less than 110% of the loan balance for arrears between 61-365 days and over 365 days
provision is made for the difference between the loan balance and the forced sale value.
(h) Cash and Cash Equivalents
For the purposes of the cash flow statements, cash and cash equivalents comprises of cash on hand and at ban