IAS 1 and IAS 7

• In April 2001 the International Accounting Standards Board (Board) adopted IAS 1 Presentation of Financial Statements, which had originally been issued by the International Accounting Standards Committee in September 1997
• IAS 1 Presentation of Financial Statements replaced IAS 1 Disclosure of Accounting Policies (issued in 1975), IAS 5 Information to be Disclosed in Financial Statements (originally approved in 1977) and IAS 13 Presentation of Current Assets and Current Liabilities (approved in 1979)
• In December 2003 the Board issued a revised IAS 1 as part of its initial agenda of technical projects
• The Board issued an amended IAS 1 in September 2007, which included an amendment to the presentation of owner changes in equity and comprehensive income and a change in terminology in the titles of financial statements
• In June 2011 the Board amended IAS 1 to improve how items of other income comprehensive income should be presented
• In December 2014 IAS 1 was amended by Disclosure Initiative (Amendments to IAS 1), which addressed concerns expressed about some of the existing presentation and disclosure requirements in IAS 1 and ensured that entities are able to use judgement when applying those requirements
• In October 2018 the Board issued Definition of Material (Amendments to IAS 1 and IAS 8). This amendment clarified the definition of material and how it should be applied
• Other Standards have made minor consequential amendments to IAS 1
• Profit or loss


  One of the components of financial statements
• Other comprehensive income


  One of the components of financial statements
• An entity may use other terms to describe the totals as long as the meaning is clear, e.g. 'net income' to describe profit or loss
• Puttable financial instrument classified as an equity instrument


  Described in paragraphs 16A and 16B of IAS 32
• Instrument that imposes on the entity an obligation to deliver to another party a pro rata share of the net assets of the entity only on liquidation and is classified as an equity instrument


  Described in paragraphs 16C and 16D of IAS 32
• Purpose of financial statements

  • Provide information about the financial position, financial performance and cash flows of an entity that is useful to a wide range of users in making economic decisions
  • Show the results of the management's stewardship of the resources entrusted to it
• Information provided by financial statements


  • Assets
  • Liabilities
  • Equity
  • Income and expenses, including gains and losses
  • Contributions by and distributions to owners in their capacity as owners
  • Cash flows
• Complete set of financial statements

  Comprises: statement of financial position, statement of profit or loss and other comprehensive income, statement of changes in equity, statement of cash flows, notes, comparative information, statement of financial position at the beginning of the preceding period
• An entity may use titles for the statements other than those used in IAS 1, e.g. 'statement of comprehensive income' instead of 'statement of profit or loss and other comprehensive income'
• An entity may present a single statement of profit or loss and other comprehensive income, with profit or loss and other comprehensive income presented in two sections
• An entity shall present with equal prominence all of the financial statements in a complete set of financial statements
• Many entities present, outside the financial statements, a financial review by management that describes and explains the main features of the entity's financial performance and financial position, and the principal uncertainties it faces
• Many entities also present, outside the financial statements, reports and statements such as environmental reports and value added statements
• Fair presentation


  Requires the faithful representation of the effects of transactions, other events and conditions in accordance with the definitions and recognition criteria for assets, liabilities, income and expenses set out in the Conceptual Framework
• The application of IFRSs, with additional disclosure when necessary, is presumed to result in financial statements that achieve a fair presentation
• Explicit and unreserved statement of compliance with IFRSs


  An entity whose financial statements comply with IFRSs shall make this statement in the notes
• An entity shall not describe financial statements as complying with IFRSs unless they comply with all the requirements of IFRSs
• Requirements for a fair presentation

  • Select and apply accounting policies in accordance with IAS 8
  • Present information, including accounting policies, in a manner that provides relevant, reliable, comparable and understandable information
  • Provide additional disclosures when compliance with the specific requirements in IFRSs is insufficient to enable users to understand the impact of particular transactions, other events and conditions on the entity's financial position and financial performance
• An entity cannot rectify inappropriate accounting policies either by disclosure of the accounting policies used or by notes or explanatory material
• Departing from a requirement of an IFRS


  Disclose: that management has concluded that the financial statements present fairly, that it has complied with applicable IFRSs except for the departure, the title of the IFRS, the nature of the departure, the reason why the IFRS treatment would be so misleading, the treatment adopted, the financial effect of the departure
• When an entity has departed from a requirement of an IFRS in a prior period, and that departure affects the amounts recognised in the current period, it shall make the disclosures set out in paragraph 20(c) and (d)
• Departing from a requirement of an IFRS when the relevant regulatory framework prohibits such a departure


  Disclose: the title of the IFRS, the nature of the requirement, the reason why compliance would be so misleading, the adjustments that would be necessary to achieve a fair presentation
• Going concern


  When preparing financial statements, management shall make an assessment of an entity's ability to continue as a going concern
• When management is aware of material uncertainties related to events or conditions that may cast significant doubt upon the entity's ability to continue as a going concern, the entity shall disclose those uncertainties
• When an entity does not prepare financial statements on a going concern basis, it shall disclose that fact, together with the basis on which it prepared the financial statements and the reason why the entity is not regarded as a going concern
• Accrual basis of accounting


  An entity shall prepare its financial statements, except for cash flow information, using this basis
• When the accrual basis of accounting is used, an entity recognises items as assets, liabilities, equity, income and expenses when they satisfy the definitions and recognition criteria for those elements in the Conceptual Framework
• Materiality and aggregation


  An entity shall present separately each material class of similar items, and separately items of a dissimilar nature or function unless they are immaterial
• An entity shall not reduce the understandability of its financial statements by obscuring material information with immaterial information or by aggregating material items that have different natures or functions
• An entity need not provide a specific disclosure required by an IFRS if the information resulting from that disclosure is not material, even if the IFRS contains a list of specific requirements or describes them as minimum requirements
• Offsetting


  An entity shall not offset assets and liabilities or income and expenses, unless required or permitted by an IFRS
• Offsetting, except when it reflects the substance of the transaction or other event, detracts from the ability of users to understand the transactions and other events and conditions that have occurred and to assess the entity's future cash flows