Barclays 2014 Annual Report Download - page 264

262 I Barclays PLC Annual Report 2014 barclays.com/annualreport
Notes to the financial statements
For the year ended 31 December 2014
1 Significant accounting policies
This section describes Barclays’ significant accounting policies and critical accounting estimates that relate to the
financial statements and notes as a whole. If an accounting policy or a critical accounting estimate relates to a specific
note, the applicable accounting policy and/or critical accounting estimate is contained within the relevant note.
1. Reporting entity
These financial statements are prepared for Barclays PLC and its subsidiaries (the Barclays PLC Group or the Group) under Section 399 of the
Companies Act 2006. The Group is a major global financial services provider engaged in retail banking, credit cards, wholesale banking,
investment banking, wealth management and investment management services. In addition, individual financial statements have been
presented for the holding company.
2. Compliance with International Financial Reporting Standards
The consolidated financial statements of the Group, and the individual financial statements of Barclays PLC, have been prepared in accordance
with International Financial Reporting Standards (IFRS) and interpretations (IFRICs) issued by the Interpretations Committee, as published by
the International Accounting Standards Board (IASB). They are also in accordance with IFRS and IFRIC interpretations endorsed by the
European Union. The principal accounting policies applied in the preparation of the consolidated and individual financial statements are set out
below, and in the relevant notes to the financial statements. These policies have been consistently applied.
3. Basis of preparation
The consolidated and individual financial statements have been prepared under the historical cost convention modified to include the fair
valuation of investment property, and particular financial instruments, to the extent required or permitted under IFRS as set out in the relevant
accounting policies. They are stated in millions of pounds Sterling (£m), the functional currency of Barclays PLC.
4. Accounting policies
Barclays prepares financial statements in accordance with IFRS. The Group’s significant accounting policies relating to specific financial
statement items, together with a description of the accounting estimates and judgements that were critical to preparing them, are set out
under the relevant notes. Accounting policies that affect the financial statements as a whole are set out below.
(i) Consolidation
Barclays applies IFRS 10 Consolidated Financial Statements.
The consolidated financial statements combine the financial statements of Barclays PLC and all its subsidiaries. Subsidiaries are entities over
which Barclays PLC has control. The Group has control over another entity when the Group has all of the following:
1) power over the relevant activities of the investee, for example through voting or other rights;
2) exposure to, or rights to, variable returns from its involvement with the investee; and
3) the ability to affect those returns through its power over the investee.
The assessment of control is based on the consideration of all facts and circumstances. The Group reassesses whether it controls an investee if
facts and circumstances indicate that there are changes to one or more of the three elements of control.
Intra-group transactions and balances are eliminated on consolidation and consistent accounting policies are used throughout the Group for
the purposes of the consolidation.
Changes in ownership interests in subsidiaries are accounted for as equity transactions if they occur after control has already been obtained
and they do not result in loss of control.
Details of the principal subsidiaries are given in Note 36.
(ii) Foreign currency translation
The Group applies IAS 21 The Effects of Changes in Foreign Exchange Rates. Transactions and balances in foreign currencies are translated into
Sterling at the rate ruling on the date of the transaction. Foreign currency balances are translated into Sterling at the period end exchange rates.
Exchange gains and losses on such balances are taken to the income statement.
The Group’s foreign operations (including subsidiaries, joint ventures, associates and branches) based mainly outside the UK may have different
functional currencies. The functional currency of an operation is the currency of the main economy to which it is exposed.
Prior to consolidation (or equity accounting) the assets and liabilities of non-Sterling operations are translated at the closing rate and items of
income, expense and other comprehensive income are translated into Sterling at the rate on the date of the transactions. Exchange differences
arising on the translation of foreign operations are included in currency translation reserves within equity. These are transferred to the income
statement when the Group loses control, joint control or significant influence over the foreign operation or on partial disposal of the operation.
As the consolidated financial statements include partnerships where the Group member is a partner, advantage has been taken of the
exemption under Regulation 7 of the Partnership (Accounts) Regulations 2008 with regard to preparing and filing of individual partnership
financial statements.