Barclays 2013 Annual Report Download - page 288

Note 1: Significant accounting policies continued
5. New and amended standards and interpretations
The accounting policies adopted are consistent with those of the previous financial year, except where new standards and amendments to
IFRS effective as of 1 January 2013 have resulted in changes in accounting policy. The new amended standards that have material impact on
Barclays accounting policies are as follows:
IFRS 10
IFRS 10 replaced requirements in IAS 27 Consolidated and Separate Financial Statements and SIC 12 Consolidation – Special Purpose Entities.
This introduced new criteria to determine whether entities in which the Group has interests should be consolidated. The implementation of
IFRS 10 resulted in the Group consolidating some entities that were previously not consolidated and deconsolidating some entities that were
previously consolidated, principally impacting the consolidation of entities in the Investment Bank with credit market exposures.
IAS 19
IAS 19 (Revised 2011), amongst other changes, requires actuarial gains and losses arising from defined benefit pension schemes to be
recognised in full. Previously the Group deferred these over the remaining average service lives of the employees (known as the ‘corridor’
approach).
The effect of the adoption of these new or amended standards on the Group’s financial position, performance and cash flows is disclosed
in Note 46.
IFRS 13 Fair Value Measurement
IFRS 13 provides comprehensive guidance on how to calculate the fair value of financial and non-financial assets. The adoption of IFRS 13 did
not have a material financial impact on the Group.
IFRS 11 Joint Arrangements
IFRS 11 replaces IAS 31 Joint Ventures. The new rules change the definition of a joint operation, requiring the group to recognise its share of
income and expenses, and assets and liabilities for certain entities that were previously accounted for under the equity method. The new
standard also removed the option to proportionally consolidate joint arrangements, an option the Group did not use. The adoption of IFRS 11
did not have a material impact on the Group’s results or financial position.
IFRS 12 Disclosures of Interests in Other Entities
IFRS 12 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 on the Group.
Amendment to IAS 39: Novation of Derivatives and Continuation of Hedge Accounting
The amendment provides relief from discontinuing hedge accounting when novation of a hedging instrument to a central counterparty meets
specified critera. The Group applied the amendment in the current year, although it did not have a material impact on the Group’s results or
financial position.
6. Future accounting developments
There have been and are expected to be a number of significant changes to the Group’s financial reporting after 2013 as a result of amended or
new accounting standards that have been or will be issued by the IASB. The most significant of these are as follows:
IAS 32 Amendments to Offsetting Financial Assets and Financial Liabilities, is effective from 1 January 2014. The circumstances in which
netting is permitted have been clarified; in particular what constitutes a currently legally enforceable right of set-off and the circumstances in
which gross settlement systems may be considered equivalent to net settlement. The amendments, based on current assumptions and applied
to the 31 December 2013 balance sheet, are expected to gross up by approximately £35bn certain financial assets and financial liabilities in the
balance sheet (mainly derivatives, settlement balances and repurchase agreements) that were previously reported net. There will be no impact
on shareholders equity, profit or loss, other comprehensive income, or cash flows, and no significant impact on the Common equity Tier 1 ratio
or the CRD IV leverage ratio. The actual impact could differ to our current estimate as certain industry-wide application issues have yet to
be resolved.
IFRS 9 Financial Instruments will change the classification and therefore the measurement of the Group’s financial assets, the recognition of
impairment and hedge accounting. In addition to these changes, the effect of changes in the Group’s own credit risk on the fair value of
financial liabilities that the group designates at fair value through profit and loss will be included in other comprehensive income rather than
the income statement. A number of the significant proposals have yet to be finalised and it is therefore not yet possible to estimate the
financial effects. The effective date of IFRS 9 is still to be determined.
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.
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286 Barclays PLC Annual Report 2013
Notes to the financial statements
For the year ended 31 December 2013 continued