TD Bank 2014 Annual Report Download - page 130

TD BANK GROUP ANNUAL REPORT 2014 FINANCIAL RESULTS128
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
NOTE 2
The preparation of financial statements requires that management
make estimates, assumptions and judgments regarding the reported
amount of assets, liabilities, revenue and expenses, and disclosure of
contingent assets and liabilities, as further described in Note 3. Accord-
ingly, actual results may differ from estimated amounts as future
confirming events occur.
The accompanying Consolidated Financial Statements of the Bank
were approved and authorized for issue by the Bank’s Board of Direc-
tors (the “Board”), in accordance with the recommendation of the
Audit Committee, on December 3, 2014.
Certain disclosures are included in the shaded sections of the
“Managing Risk” section of the accompanying 2014 Management’s
Discussion and Analysis (MD&A), as permitted by IFRS, and form
an integral part of the Consolidated Financial Statements. Certain
comparative amounts have been restated to conform with the
presentation adopted in the current year. The Consolidated Financial
Statements were prepared under a historical cost basis, except for
certain items carried at fair value as discussed in Note 2.
CORPORATE INFORMATION
The Toronto-Dominion Bank is a bank chartered under the Bank Act.
The shareholders of a bank are not, as shareholders, liable for any
liability, act, or default of the bank except as otherwise provided under
the Bank Act. The Toronto-Dominion Bank and its subsidiaries are
collectively known as TD Bank Group (“TD” or the “Bank”). The Bank
was formed through the amalgamation on February 1, 1955 of The
Bank of Toronto (chartered in 1855) and The Dominion Bank (chartered
in 1869). The Bank is incorporated and domiciled in Canada with its
registered and principal business offices located at 66 Wellington Street
West, Toronto, Ontario. TD serves customers in three business segments
operating in a number of locations in key financial centres around the
globe: Canadian Retail, U.S. Retail, and Wholesale Banking.
BASIS OF PREPARATION
The accompanying Consolidated Financial Statements and accounting
principles followed by the Bank have been prepared in accordance
with International Financial Reporting Standards (IFRS), as issued by
the International Accounting Standards Board (IASB), including the
accounting requirements of the Office of the Superintendent of Finan-
cial Institutions Canada (OSFI). The Consolidated Financial Statements
are presented in Canadian dollars, unless otherwise indicated.
The Bank may consolidate certain subsidiaries where it owns 50%
or less of the voting rights. Most of those subsidiaries are structured
entities as described in the following section.
Structured Entities
Structured entities, including special purpose entities (SPEs), are entities
that are created to accomplish a narrow and well-defined objective.
Structured entities may take the form of a corporation, trust, partner-
ship, or unincorporated entity. They are often created with legal
arrangements that impose limits on the decision making powers of
their governing board, trustee, or management over the operations of
the entity. Typically, structured entities may not be controlled directly
through holding more than half of the voting power of the entity as
the ownership of voting rights may not be aligned with the
variable
returns absorbed from the entity. As a result, structured entities
are
consolidated when the substance of the relationship between the Bank
and the structured entity indicates that the entity is controlled by the
Bank. When assessing whether the Bank has to consolidate a structured
entity, the Bank evaluates three primary criteria in order to conclude
whether, in substance:
• The Bank has the power to direct the activities of the structured
entity that have the most significant impact on the entity’s risks and/
or returns;
• The Bank is exposed to significant variable returns arising from the
entity; and
• The Bank has the ability to use its power to affect the risks and/or
returns to which it is exposed.
BASIS OF CONSOLIDATION
The Consolidated Financial Statements include the assets, liabilities,
results of operations, and cash flows of the Bank and its subsidiaries
including certain structured entities which it controls. The Bank
controls an entity when (1) it has the power to direct the activities of
the entity which have the most significant impact on the entity’s risks
and/or returns; (2) it is exposed to significant risks and/or returns
arising from the entity; and (3) it is able to use its power to affect the
risks and/or returns to which it is exposed.
The Bank’s Consolidated Financial Statements have been prepared
using uniform accounting policies for like transactions and events
in similar circumstances. All intercompany transactions, balances,
and unrealized gains and losses on transactions are eliminated
on consolidation.
Subsidiaries
Subsidiaries are corporations or other legal entities controlled by the
Bank, generally through directly holding more than half of the voting
power of the entity. Control of subsidiaries is determined based on the
power exercisable through ownership of voting rights and is generally
aligned with the risks and/or returns (collectively referred to as “vari-
able returns”) absorbed from subsidiaries through those voting rights.
As a result, the Bank controls and consolidates subsidiaries when it
holds the majority of the voting rights of the subsidiary, unless there is
evidence that another investor has control over the subsidiary. The
existence and effect of potential voting rights that are currently exer-
cisable or convertible are considered in assessing whether the Bank
controls an entity. Subsidiaries are consolidated from the date the
Bank obtains control and continue to be consolidated until the date
when control ceases to exist.
NATURE OF OPERATIONS
NOTE 1