5. Key accounting policies, key estimates and judgments

The consolidated financial statements have been prepared using the following measurement principles:

• at fair value for derivatives, financial assets and liabilities held for trading, equity instruments, participation units and investment certificates of mutual funds, financial assets classified to a business model whose objective is achieved by obtaining contractual cash flows and from the sale of financial assets satisfying the SPPI test, other financial assets that do not satisfy the SPPI criterion;
• at amortized cost for financial assets classified to a business model whose objective is achieved by obtaining contractual cash flows and satisfying the SPPI test as well as other financial liabilities;
• at historical cost for non-financial assets and liabilities.

Preparation of the consolidated financial statements in accordance with IFRS requires that the PZU Management Board make professional judgment and estimates and assumptions, which impact the adopted accounting policy and the presented values of assets and liabilities, revenues and costs.

The estimates and the related assumptions are based on historical experience and other factors which are deemed reasonable in the given circumstances, and their results provide the basis for professional judgment regarding the carrying amount of the assets and liabilities which does not follow directly from other sources.

Making the judgments, estimates or assumptions the PZU Management Board may, in material issues, rely on the opinions of independent experts.

The actual value may differ from the estimate value. The judgments, estimates and related assumptions are subject to ongoing verification. Their changes are recognized in the manner described in section 5.2.

The key accounting policies and estimates and assessments used in preparation of the consolidated financial statements are described below and in individual notes, according to the table below.