Table Of ContentThe Chart of Accounts
for banks and other financial institutions
of the Republic of Moldova
INTRODUCTION
The more consolidated role and independence of financial institutions within
conditions of market economy and their effort to apply international experience and
practice at national level have determined the transition of the internal accounting
system towards international accepted accounting standards for bookkeeping and
analysis of conducted transactions.
The Chart of Accounts for banks and other financial institutions of the
Republic of Moldova (hereinafter - the Chart of Accounts) and the description of
accounts have been developed with the view to reorganising the internal accounting
system.
The Chart of Accounts is aimed at organising bookkeeping procedures,
informing the public about any economic and administrative information needed, as
well as elaborating financial statements and other established reports.
The Chart of Accounts is worked out based on international accounting
standards, norms, rules, regulations and practice.
The Chart of Accounts has following structure:
1. Accounts are grouped in classes:
Class 1 - Assets
Class 2 - Liabilities
Class 3 - Equity capital and reserves
Class 4 - Incomes
Class 5 - Expenses
Class 6 - Contingent accounts
Class 7 - Memorandum accounts
2. Accounts within classes "Assets" and "Expenses" are assets; accounts within
classes "Liabilities", "Equity capital and reserves", "Incomes" are liabilities.
3. Within each class, accounts are incorporated into groups as in accordance
with their economic purpose.
4. Accounts within "Assets" are distributed following decreasing liquidity
principle.
5. The hierarchical principle is used to allocate groups of accounts within
classes and separate accounts within groups.
6. The hierarchy of classes, groups and accounts is reflected by means of the
digital designations system.
7. The four-digit number is used to designate the accounts.
The first digit of the account number reflects the class of account, specifying
the belonging of the relevant account to Assets, Liabilities, Equity capital and
reserves, Incomes, Expenses, Contingent accounts or Memorandum accounts.
The second and third digits reflect the group of account, which groups the
accounts with homogeneous economic belonging.
The fourth digit reflects the concrete object of bookkeeping.
Within the framework of given structure each group can include up to 9
accounts. At the same time, in order to prevent the division of accounts with general
economic content, separate groups include a larger number of accounts. At the same
time, one group includes those accounts, which (according to the second and third
digits) should be reported to different groups.
8. The accounts are held in multiple currencies.
9. The use of the Chart of Accounts can de simplified by applying the principle
of synchronisation of the last three digits of the account numbers within classes
"Incomes" - "Assets" and "Expenses" - "Liabilities".
10. The balances on accounts within "Assets", "Liabilities", "Equity capital and
reserves" are used to draw up the Report on Financial Condition (accounting balance
sheet); balances on accounts within classes "Incomes" and " Expenses " are used to
draw up the Report on Income and Expense.
11. The bookkeeping of accounts within first five classes is conducted based on
double recording method.
12. The bookkeeping of contingent accounts is divided into debit and credit
accounts according to the destination of conducted operation. The bookkeeping is
based on record of operation to account debit / credit and write-offs following reverse
accounting. The method of double recording is not applied.
13. Memorandum accounts are used for accounting of values and documents,
which are important or related to bank’s activity. The accounting of memorandum
accounts is conducted based on the scheme: incoming, outgoing and balance.
Alongside with the Chart of Accounts and the description of accounts, banks
should also apply in their everyday activity other normative acts of the National Bank
of Moldova, the Regulation on Accounting, as well as the National Accounting
Standards.
14. The Chart of Accounts specifies the account number and name. The
Description of accounts specifies the account number and shortened characteristics,
as well as the application and reflection on accounts (to debit and to credit) of
conducted operations.
TERMS AND BASIC CONCEPTS
Within the context of the Chart of Accounts in banks and other financial
institutions of the Republic of Moldova following terms and definitions are used:
"REPO" agreement - agreement to trade securities under condition to buy/sell
these securities at certain date and certain price.
Intangible assets – items without material expression (patents, licenses, trade
marks, inventions, rights of ground, building use etc.).
Assets accepted under possession - assets (securities, property, etc.), accepted
under possession by a bank as fulfilment of debtor’s outstanding commitments
related to credit repayment.
Stocks authorised for placement – stocks, determined by the company’s
constituent assembly or general meeting of shareholders, registered in the state
Register of Securities, which the company is allowed to issue as additional stocks.
Placed stocks - stocks completely paid by their first purchasers (subscribers),
registered in the State Register of Securities and in the register of company’s
shareholders.
Stocks in circulation - placed stocks belonging to company’s shareholders.
Treasury stocks – company’s placed stocks, bought or redeemed by company’s
shareholders.
Other material assets – material goods stored for further use (office
accessories, building materials, spare parts, packaging, blanks, etc.).
Endorsement - transfer inscription on bill, securities, check, etc. certifying the
succession of ownership rights over this document to another person.
Untied side banks - banks and other financial institutions that do not belong to
related parties (see "related side bank ").
Related side banks - banks authorised to exercise control over another party or
that may have significant impact upon economic and financial decision of this party,
or that are under common supervision of the head bank (associated companies,
affiliated companies, joint ventures, other related parties).
Significant influence - participation in elaboration of bank’s policy, but not
monitoring over policy implementation. Influence might be exerted by different
methods: acting as member of the Board of Directors; participation at bank’s policy
elaboration; conducting significat transactions between companies; interchange with
managing personnel; dependence on IT environment; share possession; statute or
agreement.
Broker – professional participant in the (securities, real estate, forex etc.)
market that activates as mandatory or commissionaire in conducting selling/buying
transactions.
Commercial discount bills - liabilities released following selling / purchasing
of goods and services acquired by bank before expiry of validity term (with
discount).
Certificate of Deposit – transmissible certificate issued to individuals and legal
persons as confirmation of deposit placement.
"Loro" accounts - accounts of other banks opened with a certain bank;
accounts of branches subordinated to the head bank opened in internal registers of the
head bank.
"Nostro" accounts - accounts of a certain bank opened with other banks;
accounts of branches subordinated to the head bank opened in internal registers of
branches.
Conditional accounts – accounts used for accounting of commitments
dependent on certain eventual circumstances.
Documentary settlements – settlements conducted based on financial and
commercial documents (settlements against documentary letters of credit, collection,
checks, bills, etc.).
Savings deposits - demand and time deposits without established initial
minimal amount, placed for saving purpose of money means for which a savings
book may be issued.
Special deposits – deposits attracted under special conditions different from
common conditions applied for other deposits.
Guarantee deposits - deposits accepted from clients, banks as a guarantee to
the bank upon performance of operations related to purchase of securities, currencies,
precious metals, credit provision.
Accrued interest payables - interest accumulated during the accounting period,
but not yet paid.
Accrued interest receivables - interest earned during the accounting period, but
not yet received.
Factoring - irrevocable sale of debt to the counterpart that assumes the risk
upon collection. Purchase is made on discount.
Guarantees and bails – issued financial instruments through which the bank
guarantees to another part the execution of certain obligation.
Land improvement – amelioration and other works related to the increase of
soil fertility.
Improvement of rented property - capital expenses aimed at increasing the
value of rented fixed means. These improvements may be returned to tenant upon
termination of rented period. In view of their significant volume, repair expenses are
accounted as assets and gradually depreciated.
Loans – money market instruments representing funds borrowed from other
individuals or legal persons for a set period of time and certain payment.
Daughter companies – entities under the control of the parent company
Monetary precious metals - precious metals, as gold bullion and coins, which
can be valued with current selling price, i.e. which hold declared value at the moment
of sale.
Cash money means – cash in Moldovan Lei, foreign currency and traveller’s
checks in foreign currency.
Trust operations – bank’s services related to goods’ management (portfolio of
securities and of other assets).
Overdraft - situation when the borrower uses money within pre-established
credit line or has negative balance in the account as result of payments exceeding the
account balance.
Deposits/loans overnight – deposits or loans that according to contractual
provisions represent a short term (overnight) placed deposit or granted loan at an
established interest rate.
Placements - money market instrument in form of deposits placed with other
banks as in accordance with contractual provisions at an established interest rate.
Allowance for other losses - allowance for possible sum of overdue debts,
except for loans.
Premium - difference between acquisition price of a security and its nominal
value, if the latter is lower.
Nondistributed profit (uncovered loss) – net income (net loss) after deduction
of current and postponed income tax sum.
Allowance for loan losses (risk fund) - money means reserved to cover eventual
credit losses.
Discount - difference between acquisition price of a security and its nominal
value, if the latter is higher.
Consulting services – consulting services received or rendered.
Distant bank division - division of bank, representing bank’s interests within a
territory distant from the bank head office, providing services to clients and not
holding own balance sheet.
Capital surplus – money means received from shareholders and exceeding the
nominal value of stocks.
Arbitration transaction – foreign currency transaction representing purchase /
sale of a foreign currency against another foreign currency.
Forward transaction - (time operation), sale / purchase of currency, following
which settlement is conducted after two working days from transaction conclusion
date. Forward transactions related payments are conducted following a specified
number of days / months after the second working day from the date of transaction
conclusion.
Spot transaction - (sight operation), sale / purchase of currency within which
settlement is conducted during the second working day after the date of transaction
conclusion.
Bill of exchange – international settlement instrument representing buyer’s
obligation to conduct payment to seller in a provided amount at a set date.
Contingent incomes (expenses) - incomes (expenses) registered as result of rare
and unusual events on essence or operations, not related to bank’s financial and
economic activity.
Reserve capital - money means paid from bank’s retained earnings used to
cover other losses (except losses incurred from outstanding credits) as in accordance
with provisions of the Law on Joint Stock Companies.
Contra-account - account of liabilities opened within the class of assets (or
account of assets – within the classes of liabilities, capital and reserves) which
reduces the amount of assets (or liabilities, capital and reserves).
Multi – currency account – synthetic account on which analytical accounts in
various currencies may be opened.
Deferred receivables on income tax – amount of income tax to be received by
the bank within further periods of time as in accordance with provisions of legislative
and normative acts.
Current receivables on income tax – amount of income tax to be received by
the bank within current accounting period.
Deferred liabilities on income tax - amount of income tax to be paid by the
bank within further periods of time as in accordance with provisions of legislative
and normative acts.
Current liabilities on income tax - amount of income tax calculated for
payment from taxable income of current accounting period.
Associated entity – entity over which the bank exerts notable influence, but
which is neither a branch, nor joint company of the bank. Significant influence
assumes a share of participation accounting for 25% to 50 % of entity’s authorised
capital.
Branch – entity under the control of bank (parent company). Control assumes a
share of participation accounting for more than 50% of entity’s authorised capital.
Memorandum account – account provided for off-balance recording of values
and documents important in the bank’s activity.
Short term loan – loan granted by a bank for a term till one year, including.
Medium term loan – loan granted by a bank for a term of over one year and till
five years, including.
Long-term loan – loan granted by a bank for a term of over five years.
Non-accumulation loan – loan extended by the bank, for which income interest
accrual ceased.
Investment securities – securities (stocks, state securities, bonds etc.) kept in
the bank’s portfolio till maturity.
Securities for selling – securities including state securities purchased by the
bank for purposes of their selling in a short time.
Securities for transactions – securities including state securities, owned for
purposes of obtaining income before due, usually following modification of price or
intermediary margin.
