Presentation on theme: "International Accounting Standard 1 Presentation of Financial Statements."— Presentation transcript:
International Accounting Standard 1 Presentation of Financial Statements
Objective Basis for presentation of general purpose financial statements to ensure comparability with the entity’s financial statements of previous periods and with the financial statements of other entities Overall requirements for presentation of financial statements, guidelines for their structure and minimum requirements for their content
Scope Financial Statements in accordance with IFRS Interim Financial Reporting (IAS 34) – Only Para 15-35 applies All entities – CSF / SFS (IAS 27) Terminology used suitable for profit oriented entities Entities not having equity – FS presentation of members’ or unit holders’ interests
List of IFRS
List of IAS(IFRS) Contd…
Definitions General Purpose Financial Statements Those intended to meet the needs of users who are not in a position to require an entity to prepare reports tailored to their particular information needs ImpracticableApplying a requirement is impracticable when the entity cannot apply it after making every reasonable effort do so. IFRSsStandards and Interpretations adopted by the IASB. They comprises: IFRS, IAS, Interpretation by IFRIC, SIC. Material Omissions or misstatements of items Are material if they could, individually or collectively, influence the economic decisions that users make on the basis of financial statements. NotesContain information in addition to that presented in the statement of financial position, statement of comprehensive income, separate income statement(if presented), statement of changes in equity and statement of cash flows. Other comprehensive income Comprises items of income and expense (including reclassification adjustments) that are not recognized in profit or loss as required or permitted by other IFRSs.
Components of other comprehensive income Changes in revaluation surplus (IAS 16 Property, Plant and Equipment and IAS 38 Intangible Asset) Actuarial gains and losses on defined benefit plans recognized in accordance with para 93A of IAS 19 Employee Benefits Gains and losses arising from translating the financial statements of foreign operations (IAS 21 The Effects of Changes in Foreign Exchange Rates Gain and losses on remeasuring available for sale financial assets (IAS 39 Financial Instruments: Recognition and Measurement) The effective portion of gains and losses on hedging instruments in cash flow hedge (IAS 39)
Definitions OwnersAre holders of instruments classified as equity. Profit or LossIs the total of income less expenses, excluding the components of other comprehensive income. Reclassification adjustments are amounts reclassified to profit or loss in the current period that were recognized in the current or previous periods. Total Comprehensive Income Is the change in equity during a period resulting from transactions and other events, other than those changes resulting from transactions with owners in their capacity as owners. Total comprehensive income comprises all components of ‘profit or loss’ and of ‘other comprehensive income’.
Complete set of financial statements A statement of financial position as at the end of the period A statement of comprehensive income for the period A statement of changes in equity for the period A statement of cash flow for the period Notes, comprising a summary of significant accounting policies and other explanatory information A statement of financial position as at the beginning of the earliest comparative period
General Features Fair presentation and compliance with IFRSs Going Concern Accrual basis of accounting Materiality and aggregation Offsetting Frequency of reporting Comparative Information Consistency of presentation
Fair presentation and compliance with IFRS Financial position, financial performance and cash flowExplicit and unreserved statement of compliance Selection and application of Accounting policies (IAS 8), presenting information to provide relevant, reliable, comparable and understandable information and Additional Information Inappropriate Accounting Policies
Fair presentation and compliance with IFRS Management conclusion about fair presentation Compliance with IFRS, except departure from particular requirement to achieve fair presentation Title of departed IFRS, nature of departure, treatment IFRS requires, reason why treatment would mislead Financial effect of the departure on each item Departure from IFRS – Extreme Circumstances' (Disclosure) Departure from requirement of IFRS in prior period Title of IFRS, nature of the requirement, reason The adjustments to each item in the financial statements that management has concluded would be necessary to achieve fair presentation Departure from IFRS but regulatory framework prohibits departure
Going Concern Assessment of entity’s ability by management GCB unless contrary intention or no realistic alternative to liquidation Disclosure of Uncertainties Disclosure when financial statements are not on going concern basis
Accrual Basis of Accounting An entity shall prepare its financial statements, except for cash flow information using the accrual basis of accounting.
Materiality and aggregation An entity shall present separately each material class of similar items. It shall present separately items of a dissimilar nature or function unless they are immaterial.
Offsetting An entity shall not offset assets and liabilities or income and expense, unless required or permitted by an IFRS except: When offsetting reflects substance of the transaction or other event Detracts from ability of users both to understand the transaction, other events and conditions that have occurred and to assess the entity’s future cash flows.
Frequency of reporting At least annually The reason for using a longer or shorter period The fact that amounts presented in the financial statements are not entirely comparable In case change in end of reporting period and presents financial statement for period longer or shorter than one year – disclosure
Comparative Information For all amounts reported in current period’s financial statements except when IFRSs permit or require otherwise The nature of transaction The amount of each item or class of items that is reclassified; and The reason for reclassification When the entity changes the presentation or classification of items – Reclassification of comparative amounts – Disclosure: The reason for not reclassifying the amounts; The nature of adjustments that would have been made if the amounts had been reclassified When impracticable to reclassify comparative amounts, an entity shall disclose:
Consistency of presentation It is apparent, following a significant change in the nature of the entity’s operations or a review of its financial statements, that another presentation or classification would be more appropriate having regard to the criteria for the selection and appropriation of accounting policies in IAS 8 or An IFRS requires a change in presentation An entity shall retain the presentation and classification of items in financial statements from on period to the next unless:
Structure and content Introduction Identification of the financial statements Statement of financial position Statement of comprehensive income Statement of changes in equity Statement of cash flows Notes Other disclosures
Identification of the financial statements the financial statements and distinguish them from other information in the same published document each financial statement and the notes. An entity shall clearly identify The name of reporting entity or other means of identification, and changes in that information from the end of the preceding reporting period Whether the financial statements are of an individual entity or a group of entities The date of the end of the reporting period or the period covered by the set of financial statements or notes The presentation currency, as defined in IAS 21; and The level of rounding used in presenting amounts in the financial statements. Display of information prominently, and repeat it when necessary for the information presented to be understandable:
Statement of financial position Information to be presented in the statement of financial position Current / non current distinction Current assets Current liabilities Information to be presented either in the statement of financial position or in the notes
Information to be presented in the statement of financial position Property, plant and equipment Investment propertyIntangible assetsFinancial asses Investments accounted for using the equity method Biological assets Trade and other receivables Cash and cash equivalents Non current assets held for sale and discontinued operations Trade and other payables ProvisionsFinancial liabilities Liabilities and assets for current tax as defined in IAS 12 Deferred tax liabilities and deferred tax assets as defined in IAS 12 Liabilities included in disposal group classified as held for sale Non controlling interests, presented within equity; and Issued capital and reserves attributable to owners of the parent
Information to be presented in the statement of financial position Additional Line items, heading and subtotals in the statement of financial position when such presentation is relevant to an understanding of the entity Deferred tax assets (liabilities) not to be classified as current assets (liabilities)
Current / non current distinction when a presentation based on liquidity provides information that is reliable and more relevant. When exception applies, in order of liquidity. Presentation of financial position by classification in current and non current assets, and current and non-current liabilities except: No more than twelve months after the reporting period, and More than twelve months after the reporting period Disclose amount expected to be recovered or settled after more than twelve months for each asset and liability line item that combines amounts expected to be recovered or settled:
Current assets All other assets as non current The asset is cash or cash equivalent (IAS 7) unless the asset is restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period It expects to realize the asset within twelve months after reporting period; or It holds the asset primarily for the purpose of trading; Entity expects to realize the asset, or intends to sell or consume, in its normal operating cycle;
Current liabilities All other liabilities as non current The entity does not have an unconditional right to defer settlement of liability for at least twelve months after the reporting period The liability is due to be settled within twelve months after reporting period; or It holds the liability primarily for the purpose of trading; Entity expects to settle the liability in its normal operating cycle;
Specific Discussion (Para 70-76) Trade payables, accrual for employees and other operating costs – Normal operating cycle Other current liabilities – financial liabilities, bank overdrafts, current portion of NCL, dividends payable, income taxes and other non trade payables – Whether due for settlement within twelve months. Original term of liability, refinance, reschedule agreement after reporting period Discretion of entity to refinance / roll over obligationBreach of provision of long term loan arrangementEvents after the Reporting Period (IAS 1)
Information to be presented either in the statement of financial position or in the notes Entity shall disclose, either in the statement of financial position or in the notes, further sub classification of the line items presented, classified in a manner appropriate to the entity’s operations. Sub-classification depends on the requirement of IFRSs, size, nature, functions of the amounts involved. Information to be disclosed for each class of share capitalDescription of the nature and purpose of each reserve within equity
Statement of comprehensive income Information to be presented in the statement of comprehensive income Profit or loss for the period Other comprehensive income for the period Information to be presented in the statement of comprehensive income or in notes
Analysis of Expenses ‘Nature of expenses’ method ‘Function of expenses’ method
Statement of Changes in equity Total comprehensive income for the period Effect of retrospective application or retrospective restatement (IAS 8) Reconciliation between the carrying amount at the beginning and the end of the period Dividend distributed per share
Statement of cash flows – IAS 7
Notes Structure Disclosure of Accounting Policies Sources of estimation uncertainty Capital Other disclosures
Notes - Structure Basis of preparation of the financial statements and the specific accounting policies Information required by IFRSs that is not presented elsewhere in the financial statements Information relevant to an understanding of financial statements Systemic manner, cross reference
Notes: Disclosure of Accounting Policies Measurement basis used in preparing the financial statements Other accounting policies used that are relevant to an understanding of FS Judgments that management has made in the process of applying the entity’s accounting policies
Notes: Sources of estimation uncertainty Information about the assumption Major sources of estimation uncertainty Capital An entity shall disclose information that enables users of its financial statements to evaluate the entity’s objectives, policies and processes for managing capital
Notes: Other disclosures An entity shall disclose in the notes: –Dividend proposed or declared –Amount of any cumulative preference dividends not recognized Domicile and legal form of the entity, its country of incorporation and the address of its registered office Description of nature of the entity’s operations and its principal activities Name of the parent and the ultimate parent of the group