The new International Financial Reporting Standards, the EU's preferred accounting standard, has caused UK insurer Aviva to wipe 5% off its 2004 profits under the old UK accounting system.
Aviva, the UK’s largest insurance company, has this year been engaged in the process of switching to the internationally preferred IFRS system of calculating and presenting financial results. Previously, the insurer has used the UK GAAP standards.
Having already reported under the UK system, Aviva has now revealed that the impact of IFRS has reduced statutory operating profit before tax by 5% to GBP1,766 million, while it increased statutory profit before tax by 10% to GBP1,642 million. Meanwhile, statutory shareholders’ funds were reduced by 3% to GBP8,083 million under the new system.
In the future Aviva intends to use the new standard in accordance with EU rules that state all public companies within the EU must use the IFRS system from 2005 onwards. The UK insurer said it chose to present its 2004 figures in the new format for the benefit of comparisons next year.