PAS 1 - Presentation of Financial Statements

Issue date – 1975

Re-issue date – 2007, followed by amendments
Effective date – January 1, 2009

Introduction/ Overview of PAS 1:

 Basis of the whole PFRS reporting
 Sets the overall:
1. Requirements for the preparation and presentation of general purpose f/s
2. Guidelines for their structure, and
3. Minimum requirements for their content to ensure “comparability”

Financial Statements – structured representation of an entity’s financial position and result of

operation
General Purpose F/S
- Intended to meet the needs of users who are not in position to require an entity to prepare reports
tailored to their particular information needs
- Cater to most of the common needs of a wide range of external users
- Subject matter of the Conceptual Framework and the PFRSs
Objectives:
Primary Objective: Provide information about financial position, financial performance, and cash flows
of an entity useful to a wide range of users in making economic decisions
Secondary Objective: Show the management’s stewardship over the entity’s resources

To meet the objectives, Financial Statements provide the following information:

o Assets, liabilities, and equity
o Income and expenses, including gains and losses
o Contributions by and distributions to owners
o Cash flows

Comparability – requires consistency in the adoption and application of accounting policies and in the
presentation of F/S
 Terminology used in PAS 1 – suitable for profit- oriented entities (if non-profit, may need to
amend the line-item and F/S descriptions)
2 Types of Comparability:
(1) Intra-comparability (horizontal or inter-period) – F/S of same entity from one period to another
[2001 and 2002]
(2) Inter-comparability (dimensional) – F/S of different entities for the same period
[ABC F/S and XYZ F/S of 2001]
Complete Sect of Financial Statements compliant with PFRS
1. Statement of Financial Position (balance sheet) as at the end of the period
2. Statement of Profit or Loss (income statement) and other comprehensive income for the period
3. In general, known as Statement of Financial Performance
4. Statement of Changes in Equity for the period
5. Statement of Cash Flows for the period
6. Notes to F/S – containing summary of significant accounting policies and other explanatory
information
7. Additional Statement of Financial Position (as at the beginning of the earliest comparative period)
Shall be presented for certain instances:
(1) Retrospective Application of Accounting Policy – going back to previous reporting periods and
restating every single component of equity as if new policy had always been in place and
comparatives must be restated.
- Applying new accounting policy to transactions, other events an conditions as if that policy had
always been applied
 Retrospective Restatement – correcting the recognition, measurement, and disclosure of
amounts of elements of financial statements as if a prior period had never occurred.
 Prospective Application – a change in accounting policy and of recognizing the effect of
a change in an accounting estimate
 Applying new accounting policy to transactions, other events and conditions occurring after the
date at which the policy is changed
 Recognizing the effect of the change in the accounting estimate in the current and future periods
affected by the change
Take note: If a retrospective application is impracticable, the entity is allowed to account for the
change “prospectively”
(2) Has material effect on the information in the statement of financial position at the beginning of
the preceding period

8 General Features of Financial Statements

1. Fair presentation and compliance with IFRS
 All transactions, events and conditions are reflected in accordance with the definition and
recognition criteria of the elements set out in the Framework
 Fair presentation = proper selection and application of accounting policies, proper
presentation of information, and provision of additional disclosures whenever relevant to
the understanding of F/S
 PAS 1 REQUIRES – F/S complying with PFRS to make an explicit and unreserved
statement of such compliance in the notes (shall not make such statement if it does not
comply with ALL the requirements of PFRS)
2. Going Concern
 Going concern – the ability of the entity to continue its operations for a period at least,
but not limited to twelve (12) months
 F/S shall be prepared on a “going concern basis” unless the management plans to
liquidate the enterprise or has no other alternative to do so.
 Taking into account future information (at least 12 mos. from the reporting date)
  Assumptions: a) entity has history of profitable operations and b.) ready access to
financial resources
 If not going concern, use another basis and shall be disclosed including the reason for
not regarding the entity as “going concern”
3. Accrual Basis of Accounting
 FS/ a prepared using accrual basis except cash flows (cash-basis)
 Transactions and events are recognized when they occur and not when cash is received or
paid
4. Materiality and Aggregation
 Each material item of the same class – presented separately
 Dissimilar items – presented separately unless they are immaterial
 Immaterial amounts of similar nature – grouped together as one-line item (details of
which is presented in the notes)
5. Offsetting
 Assets and Liabilities or Income and Expenses = presented separately and NOT
OFFSET unless permitted by the PFRS
Examples of Offsetting:
a. Gains or losses from sales of assets net of related selling expenses
b. Immaterial presentation of unrealized gains and losses arising from trading securities
and from translation of foreign currency denominated assets and liabilities at net
amount.
c. Loss from provision net of reimbursement from a 3rd party
Take note: Measuring assets net of valuation allowances is NOT Offsetting (i.e.
deducting ADA from A/R or deducting Accumulated Depreciation from a building
account – building measured initially at acquisition cost)
6. Frequency of Reporting
 F/S should be presented at least annually
 Exception: If presented shorter or longer than 1 year, entity shall disclose the following:
a. Period covered by the F/S
b. Reason
c. Fact that amounts presented in the F/S are not entirely comparable
7. Comparative Information
 Presenting the F/S for the current year and the prior year (as a minimum) for all financial
information except when the PFRSs require otherwise (also in the notes)
 PAS also permits to provide comparative information in addition to the minimum
requirement (2) (e.g. may provide 3rd statement of comprehensive income – need not
provide a third statement for other F/S but must provide notes)
8. Consistency of Presentation
 Presentation and classification of items should be the same (retained) from period to
period unless:
a. Required by PFRS or
b. Results in information that is reliable and more relevant
c. Change in presentation requires reclassification. If reclassification is material (more
useful to the users) shall provide “additional statement of financial position”
Structure and Content
 PAS 1 requires the clear identification and distinguishment of F/S from other information in
the same published document
Annual Financial Report = F/S and other information
Take note: PFRS only applies to F/S not to other information
Each F/S shall be presented with equal prominence
 Each F/S shall display the ff. information prominently and repeatedly (whenever relevant):
a. Name of the reporting entity
b. Information whether the F/S are of an individual or of a group
c. Date of the reporting entity (end of reporting period) or period covered
d. Presentation currency and
e. Level of rounding (thousands, millions,...)
Take note:
 PAS 1 lists the minimum content to be presented in the F/S except for statement of cash
flows
 PAS 1 requires disclosures to be presented either in notes or on face of the other
statements
 Other disclosures are addressed by PFRSs

Management’s Responsibility for Financial Statements

 Preparation and fair presentation of the F/S in accordance with the PFRSs – Chief Financial
Officer (CFO) and the Chief Executive Officer (CEO)
 Internal control over the financial reporting
 Going concern assessment
 Oversight of the financial reporting process and review and approval of F/S - Board of Directors
(Chairman)
 Responsibilities are clearly stated in the “Statement of Management Responsibility” for F/S
attached as a cover letter to the audited F/S

Statement of Financial Position (“as at December 31, 2020”)

 Before amendments of PAS 1 , it was called “balance sheet”
 Required line items:
1.) Current assets
2.) Current liabilities
3.) Non-current assets
4.) Non-current liabilities
“Current” – expected to be recovered or settled within 12 mos. after the reporting period.