Aviva 2014 Annual Report Download - page 121

Aviva plc Annual report and accounts 2014
117
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, joint ventures, associates and
branches in the UK, Ireland, continental Europe, Canada, Asia
and other countries throughout the world.
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 2014. 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.
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 2014.
(i) Amendments to IAS 32, Financial Instruments:
Presentation – Offsetting Financial Assets and Financial
Liabilities
These amendments clarify the meaning of ‘currently legally
enforceable right to set-off’ to reinforce that a right to set-
off must not be contingent on any future event, including
counterparty default or bankruptcy. Additionally,
amendments to IAS 32 clarify that a settlement mechanism
must be in place to ensure settlement in practice that is
either simultaneous or sufficient to result in insignificant
credit and liquidity risk. The amendments to IAS 32 have
been applied retrospectively in accordance with the
transitional provisions of the standard. The primary impact
of the application of the amendments has resulted in the
grossing up of certain assets and liabilities related to
derivatives and repurchase arrangements in the statement
of financial position that were previously reported net.
There is no impact on the profit or loss or equity for any
period presented. The effect on amounts previously
reported at 1 January 2013 and 31 December 2013 is set
out in note 1.
(ii) Amendments to IAS 39, Financial Instruments – Novation
of Derivatives and Continuation of Hedge Accounting
The amendments provide an exemption from discontinuing
hedge accounting when novation of a derivative
designated as a hedging instrument meets certain criteria.
These amendments have no impact on the Group’s
consolidated financial statements in the current or prior
period as the Group has not novated its derivatives to a
central counterparty.
(iii) Amendments to IFRS 10, IFRS 12 and IAS 27 – Investment
Entities Exception
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. There
are no implications for the Group’s consolidated financial
statements as the Group does not meet the definition of
an investment entity.
(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 adoption of the amendment has no impact
for the Group’s consolidated financial statements.
(v) Annual Improvements to IFRSs 2010-2012
These improvements to IFRSs consist of amendments to
seven IFRSs including IFRS 2 Share-based Payment, IFRS 3
Business Combinations and IFRS 13 Fair Value
Measurement. The amendments clarify existing guidance
and there is no significant impact on the Group’s
consolidated financial statements.
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 not yet effective and
have not been adopted early by the Group:
(i) Amendments to IAS 19, Employee Benefits – Employee
Contributions
These narrow scope amendments simplify accounting for
contributions from employees or third parties to defined
benefit plans. It is not expected to have a significant impact
on the Group’s consolidated financial statements. The
amendments apply to annual reporting periods beginning
on or after 1 July 2014 and have been endorsed by the EU.
(ii) Annual Improvements to IFRSs 2011-2013
These improvements to IFRSs consist of amendments to
four IFRSs including IFRS 3 Business Combinations and
IFRS 13 Fair Value Measurement. The amendments clarify
existing guidance. The adoption of these amendments is
not expected to have a significant impact on the Group’s
profit or loss or equity. The amendments are effective for
annual periods beginning on or after 30 June 2015 and
have been endorsed by the EU.
Aviva plc Annual report and accounts 2014 |117
IFRS Financial statements