Chapter 2 - IAS 1 - Presentation of Financial Statements Flashcards
- Components of Financial Statements
- Statement of Financial Position
- Statement of Profit Loss
- Statement of Changes in Equity
- Statement of Cash Flows
- Notes to the Financial Statements
- Present Fairly
Requires the faithful representation of the effects of transactions:
- In accordance with the definitions and recognition criteria for assets liabilities, income and expenses set out in the conceptual framework
- The application of international financial reporting standards with additional disclosure when necessary
It is presumed to result in fair presentation of financial statements if the above standards are adhered to.
- Statement of Compliance
IAS 1 requires an entity whose financial statements comply with IFRSs to make and explicit and unreserved statement of compliance within the notes.
Financial Statements cannot be described as complying with IFRSs unless they comply with all the requirements,
- Important IAS 1 Requirements:
- GOING CONCERN: Management must disclose any uncertainties as the whether the entity is a going concern
- ACCRUALS: Accruals basis must be applied
- AGGREGATION: Each class of information must be presented separately if Material. Dissimilar information may be aggregated (grouped) if they are individually immaterial
- OFFSETTING: Items must not be offset unless required or permitted by IFRS
- COMPARATIVES: Comparative information must be disclosed in respect of the previous reporting period in the financial statements and notes
- CONSISTENCY: The presentation and classification of items in the financial statements should be retained from one period to another unless a change is justified
- ANNUAL REPORTING: Annual reports must be prepared at least annually. If reports are prepared for a different period, this must be made known and stated that reports are not entirely comparable
- Structure and Content of Financial Statements
- The Entity’s name
- The reporting period
- The currency
- The level of rounding
STATEMENT OF FINANCIAL POSITION:
- Property, Plant & Equipment
- Investment Property
- Intangible assets
- Other financial assets (ex. investments & Cash + TR)
- Inventories
- Trade and other receivables
- Cash and cash equivalents
- Trade and other payables
- Provisions
- Other financial liabilities
- Tax liabilities
- Issued capital and reserves
- Current Assets (12+ NCA)
- Current Liabilities (12+ NCL)
STATEMENT OF PROFIT LOSS:
- Revenue
- Gains and losses from disposals
- Finance costs
- Share of P/L of joint associates and ventures
- Gains or losses from revaluation
- Tax expense
- Single amount for discontinued items
Items cannot be presented as Extraordinary Items
EXPENSES SHOULD BE RECOGNISED BY:
NATURE = Raw materials, staffing costs, depreciation
FUNCTION = Cost of Sales, Sales and distribution, Administration
- Notes to the Financial Statements
- Basis of preparation and specific policies used
- Info required by IFRS not presented elsewhere
- Additional information that is not presented elsewhere in the FS but is relevant to understanding them
+ The measurement basis used in preparation
+ Accounting policies used in preparation
- Annual Reporting Requirements
Financial Statements must include:
- Statement of Profit Loss
- Statement of Financial Position
- Statement of Cash Flows
- Notes detailing Significant Accounting Policies
- Comparative prior period numbers
STRATEGIC REPORT:
- A fair review of the company’s business
- The risks and uncertainty facing the business
- Development and performance of the business
- The position of the business at year end
- Analysis using key performance indicators
DIRECTORS REPORT:
- The names of the directors during the year
- Recommended dividend payments
Other information related to the Financial Statements:
- A statement that all steps have been taken to make auditors aware of any relevant information
