Presentation of

financial
statements and
statutory
requirements (IAS
1)
Learning Unit 2
 • Discuss the reporting environment.
• Discuss the history of accounting.
• Describe accounting standards, interpretations
and compliance with IFRS.
• Discuss the companies act and related
regulations.
Learning • Differentiate between IFRS and IFRS for SMEs.
• Discuss the JSE listing requirements.
Outcomes • Explain the objective of financial statements.
• Explain the purpose of financial statements.
• Discuss the scope of IAS.
• Describe a complete set of financial statements.
 • Describe the general features of financial statements.
• Discuss the following in relation to financial statements:
offsetting,
frequency of reporting,
comparative information, and
consistency of presentation.

Learning
• Discuss the structure, content and presentation of the various
statements included in a complete set of financial statements.

Outcomes • Discuss the components of statements included in financial.

• statements (e.g. current vs non- current).

cont… • Discuss the difference between expenses by nature and function.

• Discuss disclosure in a completed set of financial statements.
• Prepare the various statements included in a complete set of financial
statements.
• Explain accounting policies.
history of accounting.
• Accounting was the first business language
• Accounting has developed over thousands of years
• Accounting first started as a basic record of items such as cattle
and stores of grain, using notches in clay tablets and sticks.
• Over time, this became more detailed where it then involved a
written record of business transactions.
• And then came the double-entry system.
• A = OE + L
The reporting • Self study

environment. • Chapter 1
 • The Companies Act of 2008 regulates
companies and their conduct.
• It is separated into nine chapters and
five schedules.
• Two different categories of companies.
• profit companies; and
The companies act • non-profit companies.
and related Profit companies
regulations…Chapter • A state-owned company

1.9 • A private company

• A personal liability company
• A public company
Non-profit companies
• it is incorporated for a public benefit
 • The objective of the JSE is to provide
facilities for the listing of securities.
• The objective of the JSE is to provide the
JSE users with an orderly market place for
trading in such securities and to regulate
the market accordingly

The JSE listing • The Listing Requirements of the JSE is

made up of 22 sections containing the
requirements…Chapter rules and procedures governing new
applications, all corporate actions and
1.10 continuing obligations applicable to issuers
of securities.
The scope of IAS

• An entity shall apply this standard in

preparing and presenting general
purpose financial statements in
Accordance with IFRS.
 • Financial statements should have eight
general features, which are that they should;
• be fairly presented and comply with IFRSs
• be presented on the going concern basis

The general • be prepared using accrual accounting

• be presented with items of a similar nature or
features of function

financial • not offset assets and liabilities or income and

expenses unless required or permitted by IFRSs

statements • be presented annually

• include comparatives
• present and classify items consistently
Frequency of reporting

Entities are required to produce financial statements at least

annually.

Entities are allowed, for practical reasons, to report on a 52-week

period rather than a 365-day period.
 Comparative information
comes in three forms:

Minimum comparative
Comparative information;
information Voluntary additional
comparative information; and

Compulsory additional
comparative information.
 • Items should be presented and
classified consistently (in the same
way) from one period to the next
unless.
• the current presentation/classification is no
Consistency of longer the most appropriate
• an IFRS requires a change in presentation;
presentation • the revised presentation and classification
is likely to continue
• he revised presentation and classification
is reliable and more relevant to users.
The structure, content
and presentation of the
various statements
included in a complete set
of financial statements.

Self study - Chapter 3.8

Difference between
expenses by nature and
function