IAS 1 — Presentation of Financial Statements
Overview
IAS 1 Pre¬sen¬ta¬tion of Financial State¬ments sets out the overall re¬quire¬ments for financial state-ments, including how they should be struc¬tured, the minimum re¬quire¬ments for their content and over¬rid¬ing concepts such as going concern, the accrual basis of accounting and the current/non-cur-rent dis¬tinc¬tion. The standard requires a complete set of financial state¬ments to comprise a statement of financial position, a statement of profit or loss and other com¬pre¬hen¬sive income, a statement of changes in equity and a statement of cash flows.
IAS 1 was reissued in September 2007 and applies to annual periods beginning on or after 1 January 2009.
Summary of IAS 1
Objective of IAS 1
The objective of IAS 1 (2007) is to prescribe the basis for pre¬sen¬ta¬tion of general purpose financial state¬ments, to ensure com¬pa¬ra¬bil¬ity both with the entity's financial state¬ments of previous periods and with the financial state¬ments of other entities. IAS 1 sets out the overall re¬quire¬ments for the pre-sen¬ta¬tion of financial state¬ments, guide¬lines for their structure and minimum re¬quire¬ments for their content. [IAS 1.1] Standards for recog¬nis¬ing, measuring, and dis¬clos¬ing specific trans¬ac¬tions are addressed in other Standards and In¬ter¬pre¬ta¬tions. [IAS 1.3]
Scope
IAS 1 applies to all general purpose financial state¬ments that are prepared and presented in ac¬cor-dance with International Financial Reporting Standards (IFRSs). [IAS 1.2]
General purpose financial state¬ments are those intended to serve users who are not in a position to require financial reports tailored to their par¬tic¬u¬lar in¬for¬ma¬tion needs. [IAS 1.7]
Objective of financial state¬ments
The objective of general purpose financial state¬ments is to provide in¬for¬ma¬tion about the financial position, financial per¬for¬mance, and cash flows of an entity that is useful to a wide range of users in making economic decisions. To meet that objective, financial state¬ments provide in¬for¬ma¬tion about an entity's: [IAS 1.9]
o assets
o li¬a¬bil¬i¬ties
o equity
o income and expenses, including gains and losses
o con¬tri¬bu¬tions by and dis¬tri¬b¬u¬tions to owners (in their capacity as owners)
o cash flows.
That in¬for¬ma¬tion, along with other in¬for¬ma¬tion in the notes, assists users of financial state¬ments in pre¬dict¬ing the entity's future cash flows and, in par¬tic¬u¬lar, their timing and certainty.
Com¬po¬nents of financial state¬ments
A complete set of financial state¬ments includes: [IAS 1.10]
o a statement of financial position (balance sheet) at the end of the period
o a statement of profit or loss and other com¬pre¬hen¬sive income for the period (presented as a single statement, or by pre¬sent¬ing the profit or loss section in a separate statement of profit or loss, im¬me¬di¬ately followed by a statement pre¬sent¬ing com¬pre¬hen¬sive income beginning with profit or loss)
o a statement of changes in equity for the period
o a statement of cash flows for the period
o notes, com¬pris¬ing a summary of sig¬nif¬i¬cant accounting policies and other ex¬plana¬tory notes
o com¬par¬a¬tive in¬for¬ma¬tion pre¬scribed by the standard.
An entity may use titles for the state¬ments other than those stated above. All financial state¬ments are required to be presented with equal promi¬nence. [IAS 1.10]
When an entity applies an accounting policy ret¬ro¬spec¬tively or makes a ret¬ro¬spec¬tive re¬state¬ment of items in its financial state¬ments, or when it re¬clas¬si¬fies items in its financial state¬ments, it must also present a statement of financial position (balance sheet) as at the beginning of the earliest com¬par¬a-tive period.
Reports that are presented outside of the financial state¬ments – including financial reviews by man-age¬ment, en¬vi¬ron¬men¬tal reports, and value added state¬ments – are outside the scope of IFRSs. [IAS 1.14]
Fair pre¬sen¬ta¬tion and com¬pli¬ance with IFRSs
The financial state¬ments must "present fairly" the financial position, financial per¬for¬mance and cash flows of an entity. Fair pre¬sen¬ta¬tion requires the faithful rep¬re¬sen¬ta¬tion of the effects of trans¬ac¬tions, other events, and con¬di¬tions in ac¬cor¬dance with the de¬f¬i¬n¬i¬tions and recog¬ni¬tion criteria for assets, li¬a-bil¬i¬ties, income and expenses set out in the Framework. The ap¬pli¬ca¬tion of IFRSs, with ad¬di¬tional dis-clo¬sure when necessary, is presumed to result in financial state¬ments that achieve a fair pre¬sen¬ta-tion. [IAS 1.15]
IAS 1 requires an entity whose financial state¬ments comply with IFRSs to make an explicit and un¬re-served statement of such com¬pli¬ance in the notes. Financial state¬ments cannot be described as complying with IFRSs unless they comply with all the re¬quire¬ments of IFRSs (which includes International Financial Reporting Standards, International Accounting Standards, IFRIC In¬ter¬pre¬ta-tions and SIC In¬ter¬pre¬ta¬tions). [IAS 1.16]
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