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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 unitholders’ interests
List of IFRSIFRS 1 First Time Adoption of International
Financial Reporting Standards
IFRS 2 Share based Payment
IFRS 3 Business Combination
IFRS 4 Insurance Contracts
IFRS 5 Non current assets held for sale and
discontinued operations
IFRS 6 Exploration for and Evaluation of Mineral
Resources
IFRS 7 Financial Instruments: Disclosure
IFRS 8 Operating Segments
List of IFRS (IAS)IAS 1 Presentation of Financial Statements
IAS 2 Inventories
IAS 7 Statement of Cash Flows
IAS 8 Accounting Policies, Changes in Accounting
Estimates and Errors
IAS 10 Events after Reporting Periods
IAS 11 Construction Contracts
IAS 12 Income Taxes
IAS 16 Property, Plant and Equipment
IAS 17 Leases
IAS 18 Revenue
IAS 19 Employee Benefits
IAS 20 Accounting for Governemnt Grants and
Disclosure of Government Assistance
List of IFRS (IAS)IAS 21 The Effect of Changes in Foreign Exchange Rates
IAS 23 Borrowing Costs
IAS 24 Related Party Disclosure
IAS 26 Accounting and Reporting by Retire Benefit Plans
IAS 27 Consolidated and Separate Financial Statements
IAS 28 Investment in Associates
IAS 29 Financial Reporting in Hyperinflationary Economies
IAS 31 Interests in Joint Ventures
IAS 32 Financial Instruments: Presentation
IAS 33 Earnings Per Share
IAS 34 Interim Financial Reporting
IAS 36 Impairment of Assets
IAS 37 Provisions, Contingent Liabilities and Contingent Assets
List of IFRS (IAS)
IAS 38 Intangible Assets
IAS 39 Financial Instruments: Recognition and Measurement
IAS 40 Investment Property
IAS 41 Agriculture
DefinitionsGeneral 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
Impracticable Applying a requirement is impracticable when the entity
cannot apply it after making every reasonable effort do
so.
IFRSs Standards and Interpretations adopted by the IASB. They
comprises: IFRS, IAS, Interpretation by IFRIC, SIC.
Material Omissions
or misstatements
of items
Are materail if they could, individually or collectively,
influence the economic decisions that users make on the
basis of financial statements.
Notes Contain 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
Owners Are holders of instruments classified as equity.
Profit or Loss Is 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 ConcernAccrual basis of
accounting
Materiality and aggregation
OffsettingFrequency of
reporting
Comparative Information
Consistency of presentation
Fair presentation and compliance with IFRS
Financial position, financial performance and cash flow
Explicit 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 InformationFor 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 significantchange in the nature of the entity’soperations or a review of its financialstatements, that another presentationor classification would be moreappropriate having regard to the criteriafor the selection and appropriation ofaccounting policies in IAS 8 or
• An IFRS requires a change inpresentation
An entity shall retain the
presentation and
classification of items in financial
statements from on
period to the next unless:
Structure and content
IntroductionIdentification of
the financial statements
Statement of financial position
Statement of comprehensive
income
Statement of changes in
equity
Statement of cash flows
NotesOther
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 property Intangible assets Financial asses
Investments accounted for using the equity method
Biological assetsTrade and other
receivablesCash and cash
equivalents
Non current assets held for sale and
discontinued operations
Trade and other payables
Provisions Financial 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 obligation
Breach of provision of long term loan arrangement
Events 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 capital
Description 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 thatenables users of its financial statements toevaluate the entity’s objectives, policies andprocesses 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