Barclays 2009 Annual Report Download - page 205

www.barclays.com/annualreport09 Barclays PLC Annual Report 2009 203
Changes to Accounting Policy
The Group has continued to apply the accounting policies used for the 2008
Annual Report and has adopted the following:
– The 2008 amendments to IFRS 2 – Shared-Based Payment-Vesting
Conditions and Cancellations which has led to a change in accounting for
share-based payments to employees. As a result, non-vesting conditions
are taken into account in estimating the grant date fair value and the
timing of recognition of charges. No prior year adjustments have been
made as the impact on previous years is immaterial
– IFRS 7 – Improving Disclosures about Financial Instruments, an
amendment to IFRS 7 – Financial Instruments: Disclosures, which has
resulted in additional disclosures being made regarding liquidity risk and
fair value of financial instruments
– IAS 1 – Presentation of Financial Statements (revised), which has resulted
in the reformatting of the statement of recognised income and expense
into a statement of comprehensive income and the addition of a
statement of changes in equity. This does not change the recognition,
measurement or disclosure of specific transactions and events required by
other standards
Future accounting developments
Consideration will be given during 2010 to the implications, if any, of the
following revised standards as follows:
– IFRS 3 – Business Combinations and IAS 27 – Consolidated and Separate
Financial Statements are revised standards issued in January 2008. The
revised IFRS 3 applies prospectively to business combinations first
accounted for in accounting periods beginning on or after 1st July 2009
and the amendments to IAS 27 apply retrospectively to periods beginning
on or after 1st July 2009. The main changes in existing practice resulting
from the revision to IFRS 3 affect acquisitions that are achieved in stages
and acquisitions where less than 100% of the equity is acquired. In
addition, acquisition-related costs – such as fees paid to advisers – must
be accounted for separately from the business combination, which means
that they will be recognised as expenses unless they are directly connected
with the issue of debt or equity securities. The revisions to IAS 27 specify
that changes in a Parent’s ownership interest in a subsidiary that do not
result in the loss of control must be accounted for as equity transactions.
Until future acquisitions take place that are accounted for in accordance
with the revised IFRS 3, the main impact on Barclays will be that, from
2010, gains and losses on transactions with non-controlling interests that
do not result in loss of control will no longer be recognised in the income
statement but directly in equity. In 2009, gains of £3m were recognised in
income relating to such transactions.
The following standards and amendments to existing standards have been
published and are mandatory for the Group’s accounting periods beginning
on or after 1st January 2010 or later periods, but have not been adopted.
They are not expected to result in significant changes to the Group’s
accounting policies.
– Embedded derivatives: Amendments to IFRIC 9 and IAS 39
– Group cash-settled share-based payment transactions:
Amendments to IFRS 2
– Eligible Hedged Items (an amendment to IAS 39)
– IFRS classification of rights issues: Amendment to IAS 32
– IAS 24 Related Party Disclosures
– Prepayments and minimum funding requirements
(Amendments to IFRIC 14)
– IFRIC 17 – Distribution of non-cash assets to owners
– IFRIC 18 – Transfers of assets from customers
– IFRIC 19 – Extinguishing financial liabilities with equity instruments
– Improvements to IFRS 2008
– Improvements to IFRS 2009
IFRS 9 ‘Financial Instruments: Classification and Measurement’ was
published on 12th November 2009. It is the first phase of a project to replace
IAS 39 and will ultimately result in fundamental changes in the way that the
Group accounts for financial instruments. Adoption of the standard is not
mandatory until accounting periods beginning on or after 1st January 2013
but early adoption is permitted. However, it is not available for adoption in
the EU until it has been endorsed.
The main differences from IAS 39 are as follows:
– All financial assets, except for certain equity investments, would be
classified into two categories:
– amortised cost, where they generate solely payments of interest and
principal and the business model is to collect contractual cash flows that
represent principal and interest; or
– fair value through profit or loss.
– Certain non-trading equity investments would be classified at fair value
through profit or loss or fair value though Other comprehensive income
with dividends recognised in net income.
– Embedded derivatives are no longer considered for bifurcation but are
included in the assessment of the cash flows for the classification of the
financial asset as a whole.
– Financial assets which meet the requirements for classification at
amortised cost are optionally permitted to be measured at fair value if that
eliminates or significantly reduces an accounting mismatch.
– Reclassifications are required if, and only if, there is a change in the
business model.
Aspects of financial instrument accounting which will be addressed in
future phases of the project include the accounting for financial liabilities,
impairment of amortised cost financial assets and hedge accounting.
The Group is assessing the impacts of the first phase in the project, as
well as following developments in the future phases.
Consolidated accounts Barclays PLC
Accounting developments