Aviva 2013 Annual Report Download - page 112

Aviva plc
Annual report and accounts 2013
110
Accounting policies
Aviva plc (the ‘Company’), a public limited company
incorporated and domiciled in the United Kingdom (UK),
together with its subsidiaries (collectively, the ‘Group’ or ‘Aviva’)
transacts life assurance and long-term savings business, fund
management and most classes of general insurance and health
business through its subsidiaries, associates and branches in the
UK, Ireland, continental Europe, Canada, Asia and other
countries throughout the world, and until October 2013, the
United States (US).
The principal accounting policies adopted in the preparation
of these financial statements are set out below. These policies
have been consistently applied to all years presented, unless
otherwise stated.
(A) Basis of preparation
The consolidated financial statements and those of the
Company have been prepared and approved by the directors in
accordance with International Financial Reporting Standards
(IFRS) as issued by the International Accounting Standards Board
(IASB) and as endorsed by the European Union (EU), and those
parts of the Companies Act 2006 applicable to those reporting
under IFRS. In addition to fulfilling their legal obligation to
comply with IFRS as adopted by the EU, the Group and the
Company have also complied with IFRS as issued by the IASB
and applicable at 31 December 2013. The consolidated financial
statements have been prepared under the historical cost
convention, as modified by the revaluation of land and
buildings, investment property, available-for-sale financial
assets, and financial assets and financial liabilities (including
derivative instruments) at fair value through profit or loss.
In accordance with IFRS 4 Insurance Contracts, the Group
has applied existing accounting practices for insurance and
participating investment contracts, modified as appropriate to
comply with the IFRS framework and applicable standards.
Further details are given in accounting policy G.
Items included in the financial statements of each of the
Group’s entities are measured in the currency of the primary
economic environment in which that entity operates (the
functional currency). The consolidated financial statements are
stated in pounds sterling, which is the Company’s functional
and presentational currency. Unless otherwise noted, the
amounts shown in these financial statements are in millions of
pounds sterling (£m). The separate financial statements of the
Company are on pages 238 to 246.
See note 3 for presentation changes to the consolidated
financial statements.
New standards, interpretations and amendments to
published standards that have been adopted by the Group
The Group has adopted the following new standards or
amendments to standards which became effective for financial
years beginning on or after 1 January 2013.
i) IFRS 10, Consolidated Financial Statements
IFRS 10 replaces the portion of IAS 27 Consolidated and
Separate Financial Statements that addressed the
accounting for consolidated financial statements. It also
supersedes SIC-12 Consolidation – Special Purpose Entities
and establishes a single control model that applies to all
entities. IFRS 10 sets out the requirements for the
preparation and presentation of consolidated financial
statements, requiring an entity to consolidate entities it
controls. The standard changes the definition of control
and the new criteria for control is outlined in accounting
policy D. In line with the transitional provisions the
requirements have been retrospectively applied at the
beginning of the immediate preceding period. The
application of IFRS 10 has resulted in the consolidation of
investment vehicles that were not previously consolidated,
and deconsolidation of investment vehicles that were
previously consolidated. There is no impact on the profit or
loss for the current or prior year or on equity reported.
There is no material impact on the total assets or liabilities
in the comparative period. The effect on amounts
previously reported at 31 December 2012 is set out in
note 1.
ii) IFRS 11, Joint Arrangements
IFRS 11 replaces IAS 31 Interests in Joint Ventures and SIC-
13 Jointly-controlled Entities – Non-monetary Contributions
by Venturers. IFRS 11 defines and establishes accounting
principles for joint arrangements. The standard
distinguishes between two types of joint arrangements –
joint ventures and joint operations – based on how rights
and obligations are shared by parties to the arrangements.
The adoption of IFRS 11 has no impact on the consolidated
financial statements in the current or prior period.
iii) IFRS 12, Disclosure of Interests in Other Entities
IFRS 12 includes the disclosure requirements for all forms
of interests in other entities, including joint arrangements,
associates, and structured entities. The adoption of IFRS 12
has resulted in significant additional disclosures in respect
of these interests. The standard has been applied
retrospectively, with disclosure for the comparative period
(except for disclosure on interests in unconsolidated
structured entities) in line with the transitional provision of
the standard. There is no impact on the Group’s profit or
loss for the current or prior period or on the equity
reported. The additional disclosures are included in notes
4, 19, 20, 26, 39 and 62.
iv) IFRS 13, Fair Value Measurement
IFRS 13 establishes a single standard for all fair value
measurements. The standard does not change the scope of
fair value measurement, but provides further guidance on
how fair value should be determined. The changes have no
significant impact on the Group’s application of fair value
measurements and have no impact on the profit or loss for
the current or prior period or on equity reported. IFRS 13
also requires enhanced disclosures about fair value
measurement, some of which replace existing disclosure
requirements in other standards, including IFRS 7 Financial
Instruments: Disclosures and are set out in note 23. IFRS 13
has been adopted and applied prospectively in accordance
with the standard.
v) IAS 1, Presentation of Financial Statements (Amended)
The amendments to IAS 1 require the grouping of items
presented in other comprehensive income according to
whether they will subsequently be reclassified (or recycled)
to income statement in the future. The criteria when items
are required to be reclassified from other comprehensive
income to income statement are set out in the accounting
policies below. The adoption of the amendments to IAS 1
results in a revised presentation of the statement of
comprehensive income and is applied retrospectively. It has
no impact on the profit or loss for the current or prior
period or on equity reported.
vi) IAS 19, Employee Benefits (Revised)
The amendment revises requirements for pensions and
other post-retirement benefits, termination benefits and
other employee benefits. The key changes include the
revision of the calculation of the finance cost, enhanced
disclosures surrounding the characteristics and risk profile
of defined benefit plans, and a requirement to include all
actuarial gains and losses immediately in other
comprehensive income which is already in line with the
Group’s current policy. The key impact of the revised
standard on the Group’s consolidated financial statements