Barclays 2004 Annual Report Download - page 205

Barclays PLC Annual Report 2004
203
52 Differences between UK GAAP and US GAAP accounting principles (continued)
Applicable developments in US GAAP
FIN 46-R: Consolidation of Variable Interest Entities
In December 2003, the Financial Accounting Standards Board (FASB) issued FASB Interpretation No. 46(R) (Revised December 2003)
‘Consolidation of Variable Interest Entities, an interpretation of ARB No. 51’ (FIN 46-R). FIN 46-R is an update of FASB Interpretation No. 46
‘Consolidation of Variable Interest Entities, an interpretation of ARB No. 51’ (FIN 46) and contains different implementation dates based on the
types of entities subject to the standard and based on whether a company had already adopted FIN 46. The Group originally adopted FIN 46 for
all Variable Interest Entities (VIEs) created or acquired after 31st January 2003 during the year ended 31st December 2003. The Group has
adopted FIN 46-R for all VIEs, including those created or acquired prior to 31st January 2003 from 1st January 2004.
The impact of the adoption of FIN 46-R in 2004 was a net credit to pre-tax income of £138m, resulting from the release of the majority of the
shareholders’ equity adjustment for leasing-lessor to income (£123m) offset by an additional adjustment under US GAAP from differing
consolidation treatment of certain entities which gave rise to a pre-tax credit of £15m included in the consolidation adjustment.
For additional information on VIEs see Note 52 on pages 216 and 217.
SFAS 150: Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity
Statement of Financial Accounting Standards No. 150 (SFAS 150) was issued in May 2003. The Statement sets out the accounting for certain
financial instruments that, under previous guidance, issuers could account for as equity and requires that these instruments be classified as
liabilities in statements of financial position. The Group adopted the Statement prospectively for financial instruments entered into or modified
after 31st May 2003 during the year ended 31st December 2003. It has adopted the Statement for all other financial instruments from
1st January 2004. Adoption did not have a material effect on the Group’s results of operations or financial condition as determined under
US GAAP for the year ended and as of 31st December 2004.
SOP 03-01: Accounting and Reporting by Insurance Enterprises for Certain Non traditional Long-Duration Contracts and for Separate Accounts
The Statement of Position 03-01 (SOP 03-01) provides guidance on the classification and valuation of long-duration contract liabilities, the
accounting for sales inducements and separate account presentation and valuation. The Group adopted SOP 03-01 from 1st January 2004.
Adoption did not have a material impact on the Group’s results of operations or financial condition as determined under US GAAP for the year
ended and as of 31st December 2004.
SFAS 132: Employers’ disclosures about pensions and other post-retirement benefits
In December 2003, the FASB issued SFAS No. 132 (revised 2003), ‘Employers’ Disclosures about Pensions and Other Post-Retirement Benefits.’
SFAS No. 132 revises employers’ disclosures about pension plans and other post-retirement benefits by requiring additional disclosures such as
descriptions of the types of plan assets, investment strategies, measurement dates, plan obligations, cash flows and components of net periodic
benefit costs recognised during interim periods. The statement does not change the measurement or recognition of the plans.
The additional disclosures for plans established in the UK were required for the year ended 31st December 2003. The remaining disclosures are
required for years ending after 15th June 2004 and therefore included in Note 52 (c) below.
SOP 03-03: Accounting for Certain Loans or Debt Securities Acquired in a Transfer
The Statement of Position 03-03 (SOP 03-03) addresses accounting for differences between the contractual cash flows and cash flows expected
to be collected from an investor’s initial investment in loans or debt securities acquired in a transfer if those differences are attributable to credit
quality. This SOP is effective for loans acquired in accounting periods beginning after 15th December 2004. Barclays is currently assessing the
impact of this SOP on its US GAAP reconciliations.
SAB 105: Application of Accounting Principles to Loans Commitments
In March 2004, the SEC issued Staff Accounting Bulletin No. 105 (SAB 105). The SAB addresses the initial recognition and measurement of loan
commitments that meet the definition of a derivative. The SAB is effective for all applicable loan commitments entered into, or substantially
modified, on or after 1st April 2004. Adoption did not have a material effect on the Group’s results of operations or financial condition as
determined under US GAAP for the year ended and as of 31st December 2004.
EITF Issue 03-01: The Meaning of Other-Than-Temporary Impairment and its Application to Certain Investments
The EITF Issue 03-01 (EITF 03-01) provides guidance on recognising other-than-temporary impairments on securities classified as either available
for sale or held to maturity under SFAS 115 and for investments accounted for under the cost method. In September 2004, the FASB issued FSP
EITF 03-01-1 which delayed the effective date of EITF 03-01 until the FASB staff addresses additional measurement issues affecting the consensus.