Ias1 2013

Presentation of Financial
Statements
IAS 1
IFRS Baseline 2013
January 2013
GLOBAL AUDIT L&D
FOR INTERNAL USE ONLY

What will you learn?
By completing this module,
you will be able to: 1) Identify the required components
of financial statements
2) Explain the overall considerations
and compliance requirements in
preparing financial statements
3) Describe the structure and content
of financial statements
4) Explain the broad principles in
respect of the notes to the
financial statements
FOR INTERNAL USE ONLY. © 2013 Manabat Sanagustin & Co., CPAs, a Philippine partnership and a
member firm of the KPMG network of independent member firms affiliated with KPMG International
Cooperative ("KPMG International"), a Swiss entity. All rights reserved. IFRS Baseline 2013 – Presentation of Financial Statements 2
Types of financial statements
Consolidated financial statements
Separate financial statements
Interim financial statements (IAS 34)
FOR INTERNAL USE ONLY. © 2013 Manabat Sanagustin & Co., CPAs, a Philippine partnership and a member firm of the KPMG network of independent member firms affiliated with
KPMG International Cooperative ("KPMG International"), a Swiss entity. All rights reserved. IFRS Baseline 2013 – Presentation of Financial Statements 3
Agenda
Components of financial statements

Overall considerations / compliance
Structure and content
Notes to the financial statements
The closing
IFRS Baseline 2013 – Presentation of Financial Statements 4

Statement of
profit or loss and Statement of
other changes in
comprehensive equity
income
Statement of Significant
financial accounting
position policies
Statement of
Other notes
cash flows
Identification of financial statements
Lila-Tech For the year ended

Consolidated financial statements 31 December 2012
Rounded to the nearest thousand

’000s Presented in Lila-Dollars (L$)
Reporting period
Financial statements presented at No prohibition on 52-week period

least annually for practicality
If shorter or longer period:

♦ Reason
♦ Fact that amounts may
not be comparable
A question for you: Reporting period
♦ Lila-Tech changes its date of the end of the reporting

period from 30 September to 31 December in
response to new legislation
♦ In the next period, Lila-Tech prepares 15-month
financial statements to 31 December and has 12-
month comparative figures
Is it correct to prepare 15-month financial
statements?
If so, what disclosures are required in these financial
statements?
FOR INTERNAL USE ONLY. © 2013 Manabat Sanagustin & Co., CPAs, a Philippine partnership and a member firm of the KPMG network of independent member firms affiliated
with KPMG International Cooperative ("KPMG International"), a Swiss entity. All rights reserved. IFRS Baseline 2013 – Presentation of Financial Statements 8
Agenda

The closing

Going concern
Going concern basis unless: Management assesses ability to

♦ Business expected to cease continue as going concern
♦ No realistic alternative but to
liquidate
Disclosures if not prepared

Disclosures if significant on going concern basis:
uncertainties regarding ability to ♦ Basis on which prepared
continue as going concern ♦ Reason for such basis
A question for you: Aggregation and offsetting
♦ Lila-Tech has an immaterial amount of prepaid expenses

and decides to aggregate these with trade receivables
♦ Lila-Tech has derivative assets of 200 and derivative
liabilities of 120. In its statement of financial position
Lila-Tech shows a net asset derivative position of 80 with
further information in the notes
♦ Lila-Tech offsets sundry income with sundry expenses in
the statement of profit or loss and other comprehensive
income
Is each of these allowable under IAS 1?
Consistency of presentation
…unless change
Retain same presentation
gives more appropriate
and classification of
presentation / is required
items…
by an IFRS
Comparative information for 1 year
Numerical comparatives unless an Narrative comparatives if relevant

IFRS permits otherwise to understanding current period
EXCEPTION: statement of financial

position at beginning of Comparatives restated / adjusted
comparative period in some cases in some cases
Changing comparative information
Restate / adjust comparatives

unless impracticable
Change in accounting policy
Correction of an error
Reclassification
Statement of financial position
at beginning of the preceding
period if impact material
Covered in separate e-learning module
Which statement is true?
A statement of compliance with IFRSs is required
The need for a statement of compliance depends on local laws etc.
Compliance with IFRSs is obvious based on the audit report
A statement of compliance is preferable but not critical
Fair presentation
Achieved by appropriate Requires faithful representation of

application of IFRSs effects of transactions, events and
conditions
If compliance with an IFRS is

misleading, departure requires
comprehensive disclosures (if If conflict between Framework and
regulator allows) and requires a Standard / Interpretation, the
consultation: EXTREMELY RARE Standard / Interpretation is applied
Agenda

The closing

Statement of financial position presentation
Present assets and liabilities in Disclose amounts due for recovery /

the statement of financial settlement > 12 months from the
position as: end of the reporting period
♦ Current / non-current
♦ Broadly in order of liquidity
when reliable and more
relevant
Exceptions:
♦ Deferred tax assets /
liabilities always non-current
♦ Post-employment benefits
may be non-current
Current vs non-current
Assets current if: Liabilities current if:

♦ Used in normal operating ♦ To be settled in normal
cycle operating cycle
♦ Held primarily for trading ♦ Held primarily for trading
purposes purposes
♦ Expected to be realised ♦ Due to be settled within
within 12 months 12 months
♦ Cash or cash equivalent ♦ No unconditional right to
defer settlement for at
least 12 months
All other assets and liabilities are non-current
Which is the odd one out?
Trade receivables
Inventories
Property, plant and equipment
Cash
Statement of profit or loss and other
comprehensive income
Statement of profit or loss

Statement of
profit or loss and other or &
Statement of
Examples of other comprehensive income
Revaluation of property, plant and Foreign exchange differences on

equipment translation of foreign operations
Remeasurement of available-for-
Cash flow hedging sale financial assets
Disclosure of expenses
On the face By nature

OR OR
In the notes By function
If by function, also disclose

information on nature of
expenses, including:
 Depreciation / amortisation
 Employee benefits expense
Which of these are not classified by nature?
Impairment expense Amortisation
Employee expenses Administration costs
Sales & marketing

Cost of sales
department
Raw materials and

Depreciation
consumables used
A question for you: Unusual / exceptional items
♦ Lila-Tech’s premises are damaged by an unexpected

meteor shower that breached the planetary shields.
Lila-Tech incurs L$ 350,000 in repair costs
♦ Lila-Tech discloses these costs as extraordinary costs in a
separate line item in the statement of profit or loss and
other comprehensive income
♦ Lila-Tech discloses information about the item and what it
considers to be “extraordinary” in the notes
Is this the correct approach? If not, what is?
Statement of changes in equity
Opening balance
Each item of
other Transactions
Profit or loss
comprehensive with owners
income
Closing balance
Agenda

The closing

Notes
Systematic presentation with Reporting entity

cross-references
Significant accounting policies Basis of preparation
Judgements and estimation uncertainty
Judgements in
Key assumptions
applying accounting
about the future and
policies with
key sources of
significant effects on
estimation uncertainty
amounts recognised
For example: For example:

♦ Lease classification ♦ Provisions and contingencies
♦ Commission revenue ♦ Utilisation of tax losses
♦ Classification of investment ♦ Assumptions used in discounted
property cash flow models
Agenda

The closing

Recap quiz…
IFRS
2011 Baseline
IFRS Baseline
2013 –– Presentation
Presentation of
of Financial
financial statements
Statements 32
Which statements are true?
All financial statements are prepared on an accruals basis
The reporting period cannot be longer than 15 months
The statement of changes in equity can be included in a

note to the financial statements if not material
There are 4 primary statements
Comparative information for 1 year is required

in most, but not all, cases
Items cannot be offset unless required or permitted by an IFRS
Financial statements cannot comply with IFRSs if

they are not on a going concern basis
The local risk management partner can sign off

on a true and fair override
Exceptional items are commonplace
A bank loan with an original term of 5 years that is maturing in 4

months is a non-current liability
The statement of profit or loss and other comprehensive income may

be presented in two statements
Expenses are classified by nature or function
The judgements disclosed are those that have the most

significant effect on amounts recognised
IFRSs include a list of the minimum

accounting policies to be disclosed
The notes to the financial statements are

presented in a systematic order
Estimation uncertainty arises from the risk of material

adjustment in the next financial year
1) Components: statement of profit or
loss and other comprehensive
income; statement of financial
position; statement of changes in
equity; statement of cash flows;
notes
2) One year of comparative
information generally is presented
3) The presentation of the financial
statements generally is consistent
year on year
4) Critical judgements and key
sources of estimation uncertainty
are disclosed
FOR INTERNAL USE ONLY. © [year] [legal member firm name], a [jurisdiction] [legal structure] and a member firm of
the KPMG network of independent member firms affiliated with KPMG International Cooperative ("KPMG
International"), a Swiss entity. All rights reserved. Printed in [Country]. IFRS Baseline 2013 – Presentation of Financial Statements 37
Thank you
FOR INTERNAL USE ONLY
© 2013 Manabat Sanagustin & Co., CPAs, a Philippine partnership and a member firm of the KPMG network of independent
member firms affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. All rights reserved.
The KPMG name, logo and "cutting through complexity" are registered trademarks or trademarks of
KPMG International Cooperative ("KPMG International").

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Presentation of Financial

IFRS Baseline 2013

GLOBAL AUDIT L&D

FOR INTERNAL USE ONLY

Consolidated financial statements

Separate financial statements

Interim financial statements (IAS 34)

Components of financial statements

IFRS Baseline 2013 – Presentation of Financial Statements 4

Lila-Tech For the year ended

Rounded to the nearest thousand

Financial statements presented at No prohibition on 52-week period

If shorter or longer period:

♦ Lila-Tech changes its date of the end of the reporting

Components of financial statements

IFRS Baseline 2013 – Presentation of Financial Statements 9

Going concern basis unless: Management assesses ability to

Disclosures if not prepared

♦ Lila-Tech has an immaterial amount of prepaid expenses

Numerical comparatives unless an Narrative comparatives if relevant

EXCEPTION: statement of financial

Restate / adjust comparatives

Covered in separate e-learning module

A statement of compliance with IFRSs is required

The need for a statement of compliance depends on local laws etc.

Compliance with IFRSs is obvious based on the audit report

A statement of compliance is preferable but not critical

Achieved by appropriate Requires faithful representation of

If compliance with an IFRS is

Components of financial statements

IFRS Baseline 2013 – Presentation of Financial Statements 17

Present assets and liabilities in Disclose amounts due for recovery /

Assets current if: Liabilities current if:

All other assets and liabilities are non-current

Property, plant and equipment

Statement of profit or loss

Revaluation of property, plant and Foreign exchange differences on

On the face By nature

If by function, also disclose

Impairment expense Amortisation

Employee expenses Administration costs

Sales & marketing

Raw materials and

♦ Lila-Tech’s premises are damaged by an unexpected

Components of financial statements

IFRS Baseline 2013 – Presentation of Financial Statements 28

Systematic presentation with Reporting entity

Significant accounting policies Basis of preparation

For example: For example:

Components of financial statements

IFRS Baseline 2013 – Presentation of Financial Statements 31

All financial statements are prepared on an accruals basis

The reporting period cannot be longer than 15 months

The statement of changes in equity can be included in a

There are 4 primary statements

Comparative information for 1 year is required

Items cannot be offset unless required or permitted by an IFRS

Financial statements cannot comply with IFRSs if

The local risk management partner can sign off

Exceptional items are commonplace

A bank loan with an original term of 5 years that is maturing in 4

The statement of profit or loss and other comprehensive income may

Expenses are classified by nature or function