Barclays 2012 Annual Report Download - page 242

1 Significant accounting policies continued
5. Future accounting developments
As at 31 December 2012 the IASB had issued the following accounting standards. These are effective on 1 January 2013, 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 implementation of IFRS 10 will result in the Group consolidating some entities that were previously not
consolidated and deconsolidating some entities that were previously consolidated. The financial impact on the Group as at 31 December
2012 if IFRS 10 had been adopted at that date would have been to decrease assets by £144m, increase liabilities by £333m and decrease
total shareholders’ equity by £477m. Consolidated profit after tax for the year ended 31 December 2012 would have increased by £439m
(calculated by applying the transition relief guidance set out in the June 2012 Amendment to IFRS 10 for interests in entities disposed
of prior to 1 January 2013). The impact on the Core Tier 1 ratio would have been a 12bps decrease.
 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 37 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 be held at either fair value or amortised cost, except for equity investments not held for trading and
certain eligible debt instruments, 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. Credit losses expected (rather than only losses incurred in the year) on loans, debt securities and loan commitments not
held at fair value through profit or loss will be reflected in impairment allowances; 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. At this stage, it is not possible to determine the potential financial impacts of adoption 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 impairment charges and impairment on
available for sale investments 245 Goodwill and intangible assets 275
Tax 247 Provisions 279
Available for sale investments 257 Pensions and post-retirement benefits 296
Fair value of financial instruments 258
barclays.com/annualreport240 I Barclays PLC Annual Report 2012
Notes to the financial statements
For the year ended 31 December 2012 continued