Preparation of financial statements based on the current purchasing power of Turkish lira:
Financial Reporting in Hyperinflationary Economies Standard stated in the Communiqué 14 on the Accounting Application Regulation (“AAR 14”) has become effective as of 1 July 2002.
In accordance with AAR 14, the Bank should prepare its financial statements in the purchasing power of the Turkish lira at the balance sheet date. The corresponding figures for previous periods are restated in the same terms. According to the related communiqué, certain criteria are used to classify an economy as hyperinflationary and one of these criteria is a cumulative three-year inflation rate announced by State Institute of Statistics approaching or exceeding 100%. Inflation adjustments have been performed in accordance with the standards indicated in AAR 14 and by using the wholesale price indices published in the appendix to the AAR 14 and announced by State Institute of Statistics. Detailed information related to the application of inflation accounting is presented in the “Explanation related to inflation accounting” section of the notes to the financial statements.
