Barclays 2011 Annual Report Download - page 208

Notes to the financial statements
For the year ended 31 December 2011 continued
1 Significant accounting policies continued
5. Future accounting developments
As at 31 December 2011 the IASB had issued the following accounting standards. These are effective on 1 January 2013, subject to EU
endorsement, unless otherwise indicated:
– IFRS 10 Consolidated Financial Statements which replaces requirements in IAS 27 Consolidated and Separate Financial Statements and SIC 12
Consolidation – Special Purpose Entities. This introduces new criteria to determine whether entities in which the Group has interests should be
consolidated. The Group is considering the impact of the new standard and is currently unable to provide an estimate of the financial effects of its
adoption;
– IFRS 11 Joint Arrangements, which replaces IAS 31 Interests in Joint Ventures. This specifies the accounting for joint arrangements whether these
are joint operations or joint ventures. It is not expected to have a material impact on the Group;
– IFRS 12 Disclosures of Interests in Other Entities This specifies the required disclosures in respect of interests in, and risks arising, from
subsidiaries, joint ventures, associates and structured entities whether consolidated or not. As a disclosure only standard it will have no financial
impact;
– IFRS 13 Fair Value Measurement. This provides comprehensive guidance on how to calculate the fair value of financial and non-financial assets
and liabilities. It is not expected to have a material impact on the Group financial statements;
– IAS 19 Employee Benefits (Revised 2011). This requires that actuarial gains and losses arising from defined benefit pension schemes are
recognised in full. Previously the Group deferred these over the remaining average service lives of the employees (the ‘corridor’ approach). See
Note 39 for more information and an estimate of the financial effects of adoption; and
– IAS 32 and IFRS 7 Amendments Offsetting Financial Assets and Financial Liabilities. The circumstances in which netting is permitted have been
clarified and disclosures on offsetting have been considerably expanded. The amendments on offsetting are effective from 1 January 2014 and
those on disclosures from 1 January 2013.
In 2009 and 2010, the IASB issued IFRS 9 Financial Instruments which contains new requirements for accounting for financial assets and liabilities,
and will contain new requirements for impairment and hedge accounting, replacing the corresponding requirements in IAS 39. It will lead to
significant changes in the way that the Group accounts for financial instruments. The key changes issued and proposed relate to:
– Financial assets. Financial assets will bet held at either fair value or amortised cost, except for equity investments not held for trading, which may
be held at fair value through other comprehensive income;
– Financial liabilities. Gains and losses on fair value changes in own credit arising on non-derivative financial liabilities designated at fair value
through profit or loss will be excluded from the Income Statement and instead taken to other comprehensive income;
– Impairment. Expected losses (rather than only incurred losses) will be reflected in impairment allowances for financial assets that are not
classified as fair value through profit or loss; and
– Hedge accounting. Hedge accounting will be more closely aligned with financial risk management.
Adoption is not mandatory until periods beginning on or after 1 January 2015, subject to EU endorsement. Earlier adoption is possible, subject to
endorsement and finalisation of the standard. At this stage, it is not possible to fully determine the potential financial impacts of adoption of IFRS 9
on the Group.
In addition, the IASB has indicated that it will issue a new standard on accounting for leases. Under the proposals, lessees would be required to
recognise assets and liabilities arising from both operating and finance leases on the balance sheet. The IASB also plans to issue new standards on
insurance contracts and revenue recognition. The Group will consider the financial impacts of these new standards as they are finalised.
Critical accounting estimates and judgements
The preparation of financial statements in accordance with IFRS requires the use of estimates. It also requires management to exercise judgement in
applying the accounting policies. The key areas involving a higher degree of judgement or complexity, or areas where assumptions are significant to
the consolidated and individual financial statements are highlighted under the relevant note. Critical accounting estimates and judgements are
disclosed in:
Page Page
Credit in charges and impairment on available for sale assets 210 Goodwill and intangible assets 242
Tax 213 Provisions 246
Available for sale assets 224 Retirement benefit obligations 263
Fair value of financial instruments 225
206 Barclays PLC Annual Report 2011 www.barclays.com/annualreport