Aviva 2013 Annual Report Download - page 113

Strategic report Governance IFRS Financial statements Other information
Aviva plc
Annual report and accounts 2013
111
Accounting policies continued
is the replacement of the interest cost on the defined
benefit obligation and the expected return on plan assets
with a net interest income (or expense). This is based on
the net defined benefit asset (or liability) at the start of the
year multiplied by the discount rate used at that point to
measure the pension obligation. There is no change in the
method to determine the discount rate. Net interest
income is credited to investment income, whereas net
interest expense is charged to finance costs. The revised
standard has introduced a new term “remeasurements”
comprised of actuarial gains and losses and the difference
between actual investment returns less investment
expenses and the return implied by the net interest cost.
These are recognised in other comprehensive income with
no subsequent recycling to the income statement.
Amounts recorded in the income statement are therefore
limited to service costs, and the net interest
income/expense. The revised standard has been applied
retrospectively in accordance with the transitional provision
of the standard. This has resulted in an increase in profit
before tax of £150 million for the year ended 31 December
2012 with a corresponding decrease in other
comprehensive income as the discount rate applied to
assets is higher than the previously applied expected return
on assets. There is no impact on reported equity in the
current or prior period. The effect on amounts previously
reported is set out in note 1.
(vii) Amendments to IFRS 7, Financial Instruments –
Disclosures
The amendments include enhanced disclosures to enable
users of the financial statements to evaluate the effect or
potential effect of netting arrangements in the statement
of financial position. The new disclosures are required for
all recognised financial instruments that are set off in
accordance with IAS 32, Financial Instruments:
Presentation. The disclosures also apply to recognised
financial instruments that are subject to an enforceable
master netting arrangement or similar agreement. The
standard has been applied retrospectively but has no
impact on the Group’s profit for the current or prior period
or on the equity reported. The new disclosures are
presented in note 60.
(viii) IAS 27, Separate Financial Statements (2011) and IAS 28,
Investments in Associates and Joint Ventures (2011)
IAS 27 Consolidated and Separate Financial Statements
was superseded by IFRS 10 which addresses the
requirements for consolidated financial statements and by
revised IAS 27 Separate Financial Statements (2011) which
addresses the amended requirements for separate financial
statements. IAS 28 has been revised to include the
application of the equity method for joint ventures as well
as associates. Joint ventures are required to be equity
accounted following the issuance of IFRS 11. There are
no implications for the Group’s consolidated financial
statements.
(ix) Improvements to IFRSs 2009-2011
These improvements to IFRSs consist of amendments to
five IFRSs, including IAS 1 Presentation of Financial
Statements, IAS 32 Financial Instruments – Presentation,
and IAS 34 Interim Financial Reporting. The amendments
clarify existing guidance and do not give rise to a change
in existing accounting practice. There is no impact on the
Group’s consolidated financial statements.
Standards, interpretations and amendments to published
standards that are not yet effective and have been adopted
early by the Group
The following amendments to existing standards have been
issued, are effective for accounting periods beginning on
or after 1 January 2014 and have been adopted early by
the Group:
(i) Amendments to IAS 36, Impairment of Assets
The amendments clarify disclosure requirements in respect
of the recoverable amount of impaired non-financial assets
if the amount is based on fair value less costs to sell. These
amendments have been early adopted by the Group, with
no significant impact on the Group’s consolidated financial
statements. The amendments have been endorsed by
the EU.
Standards, interpretations and amendments to published
standards that are not yet effective and have not been
adopted early by the Group
The following new standards, amendments to existing standards
and interpretations have been issued, are effective for
accounting periods beginning on or after the following date and
have not been adopted early by the Group:
Effective for annual periods beginning on or after
1 January 2014
(i) Amendments to IAS 32, Financial Instruments –
Presentation
The amendments to IAS 32 clarify the requirements for
offsetting financial assets and financial liabilities on the
statement of financial position. The adoption of these
amendments is not expected to have a significant impact
on the Group’s profit for the year or equity. The
amendments have been endorsed by the EU.
(ii) Amendments to IFRS 10, IFRS 12 and IAS 27 (2011)
The amendments provide an exemption from consolidation
of subsidiaries under IFRS 10 Consolidated Financial
Statements for entities which meet the definition of an
'investment entity', such as certain investment funds.
Instead, such entities would measure their investment in
particular subsidiaries at fair value through profit or loss in
accordance with IFRS 9 Financial Instruments or IAS 39
Financial Instruments: Recognition and Measurement.
There are no implications for the Group’s consolidated
financial statements, because the Group does not meet the
definition of an investment entity. The amendments have
been endorsed by the EU.
(iii) Amendments to IAS 39, Financial Instruments –
Recognition and Measurement
The amendments provide an exception to the requirement
to discontinue hedge accounting in certain circumstances
of novations in which there is a change in counterparty to
a hedging instrument in order to achieve clearing for that
instrument. The impact of the adoption of the amendment
is not expected to have a significant impact on the Group’s
consolidated financial statements. The amendments have
been endorsed by the EU.
(iv) IFRIC 21, Levies
The interpretation clarifies when an entity recognises a
liability for a levy imposed by government in accordance
with legislation (other than taxes and fines or other
penalties). The impact of the adoption of the amendment
has yet to be fully assessed but is not expected to be
significant for the Group’s consolidated financial
statements. The amendments have yet to be endorsed
by the EU.