IAS 1 Presentation of Financial Statements

Topics to be covered
IAS 1 – PRESENTATION OF
FINANCIAL STATEMENTS • Objective, scope and definitions
• Financial Statements
• Structure and Content
• Notes
Step-by-step guide to:
• Take you through the Standard; and
• Help you to understand the theory and application.

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Please DON’T highlight

these in your books! Don’t
Excluded content waste time on these Objective of IAS 1
paragraphs!
• Partial Par 4: Interim Financial Reporting (IAS 34) IAS 1.1 The objective of IAS 1 is to prescribe the
• Par 6: Mutual funds and co-operative entities
basis for presentation of general-purpose
• Partial of "Other comprehensive income definition":
(c) Gains or losses from translating the financial statements of foreign
financial statements, to ensure comparability
operations both with
(e) Gains or losses on hedging instruments
(g) Hedging instruments
(h) Forward contracts a) the entity's financial statements of
(i) Insurance
(j) Re-Insurance
previous periods and
b) with the financial statements of other
• Partial Par 114 (iv) (2) entities.
• Par 134 - 136: Capital
• Par 136A: Puttable financial instruments
• Partial Par 138(d): Limited life entity
• Presentation and disclosure of any item excluded in other Standard
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Objective of IAS 1 Scope of IAS 1

• IAS 1 sets out the overall requirements for • Applies to all general purpose financial
• the presentation of financial statements, statements based on International Financial
• guidelines for their structure and Reporting Standards (IAS1.2)
• minimum requirements for their content. • Standards for recognising, measuring, and
disclosing specific transactions are
addressed in other Standards and
Interpretations (IAS 1.3).

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IAS 1 Presentation of Financial Statements

Financial Statements – Purpose of

Definitions financial statements (IAS1.9)
• Let’s open our standard and look at some of the
definitions • To 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.
• To show the results of management’s
stewardship of the resources entrusted to it.

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Purpose of financial statements IAS1.9 (a) – (f)

Components of Financial Statements
assets
A complete set of financial statements should include (IAS 1.10):
To meet a) Statement of Financial Position at the end of the period,
that cash flows liabilities b) Single Statement of Profit or Loss and Other Comprehensive
objective, Income for the period (or two statements: Statement of Profit or
financial Loss and Statement of Other Comprehensive Income),
statements c) Statement of Changes in Equity for the period,
provide contributions by d) Statement of Cash Flows for the period,
and distributions equity
information to owners e) Notes, comprising material accounting policy information and
about an other explanatory information,
entity's: income and
expenses, including ea) Comparative information in respect of the preceding period as
gains and losses specified in paragraphs 38 and 38A; and

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Components of Financial Statements – IAS Components of Financial Statements

1.10 continued: continued:
• 1.10 (f) An entity must also present a statement • An entity may present a single statement of
of financial position as at the beginning of the profit or loss and other comprehensive income
earliest comparative period when: OR present profit or loss section separate
• an accounting policy is applied (IAS1.10A)
retrospectively; or
• items are restated retrospectively; or • Principle of equal prominence (IAS 1.11) Do you
• when items are reclassified know what this mean? What can influence equal
prominence?

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IAS 1 Presentation of Financial Statements

Components of Financial Statements – Fair Presentation and

IAS1.14 Compliance with IFRSs
Consistency of
Going Concern
Presentation
Reports that are presented
outside of the financial
statements – Including financial Comparative General Accrual Basis
reviews by management, Information Features of Accounting
environmental reports, and
value added statements – are
Frequency of Materiality and
outside the scope of IFRSs. Reporting Aggregation

Offsetting
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General Features General Features

• In extremely rare cases compliance with an IFRS requirement
Fair Presentation and Compliance with IFRSs would be so misleading as to conflict with the objective of
financial statements set out in “The Framework” IAS1.19
• The financial statements must "present fairly" the financial
position, financial performance and cash flows of an entity Fair Presentation and
IAS1.15.
Compliance with IFRSs
• Fair presentation requires the faithful representation of the
effects of transactions, other events, and conditions in • Inappropriate accounting
accordance with the definitions and recognition criteria for policies are NOT rectified
assets, liabilities, income and expenses set out in the either by
Framework IAS1.15. • disclosure of the
• IAS 1 requires that an entity whose financial statements accounting policies used
comply with IFRSs make an explicit and unreserved or
statement of such compliance in the notes IAS1.16. • by notes or explanatory
material IAS 1.18
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General Features
General Features
Going Concern – IAS1.25-26

• When preparing financial statements, management shall make

Accrual Basis of Accounting IAS1.27-28
an assessment of the entity’s ability to continue as a going
concern.
• If management has significant concerns about the entity's
ability to continue as a going concern, the uncertainties must
be disclosed. IAS 1 requires that an entity prepare its financial statements,
• If management concludes that the entity is NOT a going except for cash flow information, using the accrual basis of
concern, the financial statements should NOT be prepared on a accounting  look at recognition and measurement criteria
going concern basis, in which case IAS 1 requires a series of
disclosures.
• Take into account all available info about the future, at least,
but not limited to 12 months from the end of the reporting
period.

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IAS 1 Presentation of Financial Statements

General Features General Features

Materiality and Aggregation IAS 1.29-31
Offsetting – IAS1.32-35
• Each material class of similar items must be
presented separately •Assets and liabilities, and
• Items of a dissimilar nature or function must be
presented separately unless they are immaterial income and expenses, must
• If a line item is not individually material it is
aggregated with other items
not be offset unless required
• A specific disclosure requirement in IFRS need or permitted by IFRS
not be satisfied if the information is not material
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General Features General Features

Comparative Information IAS1.38-44

Frequency • A complete set of financial statements (including

• IAS 1 requires that comparative information shall be disclosed in
respect of the previous period for all amounts reported in the
comparative information) will be prepared at least
of annually.
• When an entity changes the end of its reporting
financial statements, both face of financial statements and
notes, unless another Standard requires otherwise.
reporting period (resulting in financial statements covering
a period longer or shorter than one year) it must
• IAS1.38A – 2 sets of all primary statements presented with
disclose: related notes
IAS1.36- • the reason for using a longer or shorter period,
and
• If comparative amounts are changed or reclassified, various
disclosures are required.
37 • the fact that amounts presented in the financial
statements are not entirely comparable
• Refer to IAS1.40A – third statement of financial position as at
the beginning of the preceding period in the case of changes in
accounting policies and reclassifications.

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General Features General Features – Structure and Content

Consistency of presentation – IAS1.45 - 46
• An entity shall retain the presentation and classification of items
in the financial statements from one period to the next unless:
(a) 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 application of accounting policies in IAS 8 or
(b) an IFRS requires a change in presentation.
Identification of financial statements - IAS1.49-53
• The financial statements must be clearly identified and distinguished from
other information in the same published document.
• Each financial statement and the notes must be clearly identified
• In addition, the following must be displayed prominently:
• name of the reporting entity;
• whether the financial statements are of an individual entity or a group;
• The date of the end of the reporting period;
• presentation currency (as defined in IAS 21); and
• level of rounding used (thousands, millions, etc.)

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IAS 1 Presentation of Financial Statements

Statement of Financial Position IAS1.54-55 Statement of Financial Position IAS1.54-80A

Refer to IAS1.54 (a) – (r) for a list of An entity shall present a statement of financial
position, separating current and noncurrent
the line items that is prescribed by assets and liabilities. NB – deferred tax assets /
IAS 1. liabilities = always non-current

Additional line items, headings and Only if a presentation based on liquidity provides
information that is reliable and more relevant
subtotals may be presented if it is may the current/noncurrent split be omitted
relevant IAS1.60
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Statement of Financial Position

An entity shall classify an asset as current when (IAS1.66):
• it expects to realise/intends to sell/consume the asset in normal operation cycle
(IAS1.68),
• it holds asset primarily for the purpose of trading,
• it expects to realise the asset within 12 months after reporting period, or
• the asset is cash and cash equivalents.
All other assets = non-current
An entity shall classify a liability as current when (IAS1.69):
• it expects to settle the liability within the entity's normal operating cycle,
• it holds the liability primarily for the purpose of trading,
• the liability is due to be settled within 12 months after the reporting period, or
• It does not have the right at the end of the reporting period to defer settlement
for at least 12 months after reporting period.
All other liabilities = non-current.
Statement of Financial Position
• If a liability has become payable on demand because an entity
has breached an undertaking under a long-term loan agreement
on or before the reporting date, the liability is CURRENT, even if
the lender has agreed, after the reporting date and before the
authorization of the financial statements for issue, NOT to
demand payment as a consequence of the breach.
• However, the liability is classified as NON-CURRENT if the lender
agreed by the reporting date to provide a period of grace ending
at least 12 months after the end of the reporting period, within
which the entity can rectify the breach and during which the
lender cannot demand immediate repayment.
• Please go and read through IAS1.74 and 75!

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Statement of Financial Position – Information to be Statement of Financial Position – Information to be

presented either on the face or in the notes presented either on the face or in the notes

 IAS1.77 n entity shall disclose, either in the statement of  IAS1.79 – mandates certain disclosures for share capital
financial position or in the notes, further subclassifications and reserves
of the line items presented, classified in a manner
appropriate to the entity’s operations. Let’s look at DA example 3.4

Refer to IAS1.78 for examples of sub-classifications

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IAS 1 Presentation of Financial Statements

Statement of Profit or Loss and other Statement of Profit or Loss and other
Comprehensive Income Comprehensive Income

Other
An entity has a choice of presenting:
Comprehensive
Profit or Loss
Income
for that period
recognised in a single statement of profit or loss and other
that period
comprehensive income or two statements:

a statement of other
a statement of profit or loss comprehensive income that
Total Comprehensive displaying components of profit begins with profit or loss and
income for a period or loss and displays components of other
comprehensive income
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Statement of Profit or Loss and other Statement of Profit or Loss and other
Comprehensive Income Comprehensive Income
• IAS 1.81A  The statement of profit or loss and other • IAS 1.81B states:
comprehensive income (statement of comprehensive An entity shall present the following items, in addition to the
income) shall present, in addition to the profit or loss and profit or loss and other comprehensive income sections, as
other comprehensive income sections: allocation of profit or loss and other comprehensive income for
the period:
(a) profit or loss for the period attributable to:
(a) profit or loss;
(i) non-controlling interests, and
(b) total other comprehensive income;
(ii) owners of the parent.
(c) comprehensive income for the period, being the total of (b) comprehensive income for the period attributable to:
profit or loss and other comprehensive income.
(i) non-controlling interests, and
(ii) owners of the parent.
If an entity presents a separate SPL, it does not present the
P&L section in the statement presenting comprehensive
income. If profit or loss is presented in a separate statement – (a) is
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Statement of Profit or Loss and other Statement of Profit or Loss and other
Comprehensive Income Comprehensive Income
Information to be presented in the profit or loss section or statement of
profit or loss IAS1.82: Information to be presented in the OCI section:
• Revenue;
• Presenting separately interest revenue calculated using the effective interest method;
• The OCI section consists of items that:
• Gains and losses arising from the derecognition of financial assets measured at • will NOT subsequently be reclassified to P&L AND
amortised cost;
• Finance cost; • items that will be reclassified to P/L when specific
• Impairment losses (including reversals) determined in accordance with Section 5.5 of criteria are met
IFRS9;
• The share of the profit or loss of associates and joint ventures accounted for using the • Each item of OCI is shown net of tax (tax effect in notes)
equity method; OR gross, with a separate line item for the income tax on
• When a financial asset is reclassified so that it is measured at fair value, any gain or loss
arising from a difference between the previous carrying amount and its fair value at the
the face
reclassification date (refer to IFRS 9, Financial Instruments); • Reclassification adjustments may be presented on the
• Income tax expense (this line item includes only taxes that are income taxes within the
scope of IAS 12 Income Taxes); face or in the notes
• A single amount for the total of discontinued operations (refer to IFRS 5 Non-current
Assets Held for Sale and Discontinued Operations);
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IAS 1 Presentation of Financial Statements

Statement of Profit or Loss and other Statement of Profit or Loss and other
Comprehensive Income Comprehensive Income
Information to be presented separately in the statement • No items may be presented in the statement of profit or loss
of profit or loss and OCI or in the notes: and other comprehensive income (or in the statement of
profit or loss, if separately presented) or in the notes as
• the write-down of inventories to net realisable value, or of property, ‘extraordinary items’.
plant and equipment to the recoverable amount, as well as the
reversal of such write-downs; • Expenses recognised in profit or loss should be analysed
• the restructuring of the activities of an entity and the reversal of any either by nature (raw materials, staffing costs, depreciation,
provisions for the cost of restructuring; etc.) or by function (cost of sales, selling, administrative,
• the disposal of property, plant and equipment; etc). IAS1.99
• the disposal of investments; • If an entity categorizes by function, then additional
• discontinued operations; information on the nature of expenses – at a minimum
• the settlement of litigation; and depreciation, amortization and employee benefits expense –
• other reversals of provisions. must be disclosed in the notes. IAS1.104
• Let’s look at DA example 3.5
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Statement of changes in equity

Statement of Changes in Equity

Information to be presented in the SoCE: Information to be presented in the statement of

changes in equity or in the notes:
- Total comprehensive income for the period, showing separately the total
amounts attributable to owners of the parent and to the non-controlling
interests
- For each component of equity, the effects of retrospective
application/restatements (IAS8)
- For each component of equity, a reconciliation between opening and
closing carrying amounts disclosing changes resulting from
- profit or loss,
- OCI and
- transactions with owners in their capacity as owners (issue of shares, buy back
of shares, dividends paid, transfers between reserves, changes in ownership
interests)
• for each component of equity an entity shall present, either
in the statement of changes in equity or in the notes, an
analysis of other comprehensive income by item
• An entity shall present, either in the statement of changes
in equity or in the notes, the amount of dividends
recognised as distributions to owners during the period, and
the related amount of dividends per share.
• Let’s look at DA example 3.6

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Notes to the Financial Statements

Statement of Cash Flows
IAS 1.114(c) suggests that the notes should normally be presented in the
IAS 1 refers to IAS 7 following order:
Statement of Cash Flows • A statement that the financial statements comply with IFRS;
• material accounting policy information;
• supporting information for items that are presented in the statement of
financial position, statement of profit or loss and other comprehensive
income, statement of changes in equity, or statement of cash flows;
We will do IAS 7 later in 2023
• additional information on items that are not presented in the statement
of financial position, statement of profit or loss and other comprehensive
income, statement of changes in equity, or statement of cash flows; and
• other disclosures, such as contingencies, commitments and disclosures
of a financial and a non-financial nature, for example financial risk
management targets.

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IAS 1 Presentation of Financial Statements
Notes to the Financial Statements –
accounting policies
The notes on AP should disclose the following:
• An entity shall disclose material accounting policy
information.
• Accounting policy information is material if, when
considered together with other information included in
an entity’s financial statements, it can reasonably be
expected to influence decisions that the primary users of
general purpose financial statements make. IAS1.117
• The judgements that management made in applying the
entity’s material accounting policy information. IAS 1.122
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Notes to the Financial Statements – Sources
of estimation uncertainty
IAS 1.125:
• An entity shall disclose information about the
assumptions it makes about the future, and other
major sources of estimation uncertainty at the end of
the reporting period, that have a significant risk of
resulting in a material adjustment to the carrying
amounts of assets and liabilities within the next
financial year.
• In respect of those assets and liabilities, the notes shall
include details of their nature and carrying amount at
the end of the reporting period
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Notes to the Financial Statements – Other
disclosures:
IAS1.138 indicates the following additional
information should be provided:
• the domicile of the entity;
• the legal form of the entity;
• the country of incorporation;
• the address of the registered office;
• a description of the nature of the entity’s
operations and its principal activities; and
• the name of the parent and the ultimate parent
entity of the group.
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Notes to the Financial Statements –
accounting policies
The notes on AP should disclose the following:
• An entity shall disclose material accounting policy
information.
• Accounting policy information is material if, when
considered together with other information included in
an entity’s financial statements, it can reasonably be
expected to influence decisions that the primary users of
general purpose financial statements make. IAS1.117
• The judgements that management made in applying the
entity’s material accounting policy information. IAS 1.122
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Notes to the Financial Statements – Other
disclosures:
IAS1.137:
• An entity shall disclose in the notes:
(a) the amount of dividends proposed or
declared before the financial statements
were authorised for issue but not recognised
as a distribution to owners during the period,
and the related amount per share; and
(b) the amount of any cumulative
preference dividends not recognised.
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The IG includes an illustrative presentation of
financial statements. Let us take a look.
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IAS 1 Presentation of Financial Statements

You can now attempt the following homework,

refer to your index of questions:

GQ 4.1
GQ 4.6
GQ 4.10 – revision of principles you have covered
in prior years’ studies 

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