PAS 1 PRESENTATION OF FINANCIAL STATEMENTS

Objective and Scope

 To ensure comparability both with the entity’s financial statements of previous periods
and with the other entities
 Users cannot require reporting entities to provide information directly to them and must
rely on general purpose FS.
 Prepare for users who have:
o Reasonable knowledge of the business
o Review and analyse the information diligently
Financial statements (6)

 Structured representation of the SFP and SFP of an entity; end product of FAP
 Useful to a wide range of users in making economic decisions
 An entity may use titles other than those used in this standard
 FS shall present fairly the FS; faithful representation
o Select and apply AP in accordance with IAS 8
o Provides info; relevant, reliable comparable and understandable information
o Provide additional disclosures
 An entity whose FS comply with the IFRS shall make an explicit and unreserved
statement of such compliance in the notes.
 If compliance with a requirement in IFRS would be so misleading with the objective of
the FS set out in CF, entity shall depart from that requirement.
 If compliance with a requirement in IFRS would be so misleading with the objective of
the FS set out in CF but relevant regulatory framework prohibits departure, entity shall
reduce the perceived misleading aspects of compliance.
 Cannot rectify inappropriate AP either by disclosure or by notes/explanatory material
 Going concern is presumed; no need to disclose it in the notes; if FS are not prepared
on this basis; shall disclose the measurement basis and the reason thereof.
 GCB is appropriate if the entity:
o Has a history of profitable operations
o Ready access to financial resources
 Accrual basis of accounting except SCF
 Shall present separately each material class of similar items
 Offsetting may be done when it is permitted by another IFRS
 The reporting of assets net of valuation allowance is permitted because technically this
is not offsetting.
 Prepared annually; 52 week period is not precluded in this practice
 Shall present comparative information in respect of the preceding period for all amounts
reported in the current period’s FS
o Also included for narrative and descriptive information
 Shall present a third statement of SFP as at the beginning of the preceding period if:
o Applies an AP retrospectively
o Retrospective application/restatement has a material effect
 End of the CY, end of the PY, beginning of the PY
  Shall retain the presentation and classification of items in FS from one period to the next
unless:
o Another would be more appropriate in regards to IAS 8
o IFRS requires a change in presentation
Third statement of SFP

 Required when:
o Applies an AP retrospectively
o Makes retrospective restatement of items in FS
o Reclassifies items in FS
Identification of the financial statements

 Shall clearly identify the FS and distinguish them from other information in the same
published document
 Shall display the info prominently and repeat it when necessary for the info to be
understandable
 Judgement is required in determining the best way of presenting info
Responsibility for FS

 Management – primary responsibility for the preparation and presentation of the FS

 BOD – reviews and approves the FS before submitting it to shareholders of the entity
Current or non-current distinction

 Shall present CA/CL and NCA/NCL as separate classifications in its SFP

 EXCEPT when a presentation based on liquidity provides info that is reliable and more
relevant
 Information about expected dates of realisation of assets and liabilities is useful in
assessing the liquidity and solvency of an entity
CURRENT ASSETS CURRENT LIABILITIES
- Expects to realize, intends to sell or - Expects to settle the liability in its
consume the assets in its normal NOC
operating cycle - Hold for the purpose of trading
- Hold for the purpose of trading - Due to be settled within 12 months
- Listed in the order of liquidity after RP
- Expects; 12 months after the RP - Does not have an unconditional right
- Cash or CE is not restricted in its use CL even tho more than 12 months:
unless restricted from being - Trade payables
exchanged or used to settle a liability - Accruals for employee
- Operating costs

PAS 1 IAS 1
- CA, NCA, CL, NCL AND EQUITY - NCA, CA, EQUITY, NCL AND CL
Statement of financial position

 Shall present additional line items headings and subtotals in the statement of financial
position when such presentation is relevant to an understanding of an entity’s SFP
 Presents subtotals in:
o Amounts recognised and measured in accordance with IFRS
o In a manner that is clear and understandable
o Consistent from period to period
o Not be displayed with more prominence than the subtotals and totals
 Shall not classify deferred tax assets as current assets
 Entity makes judgement about whether to present additional line items separately on the
basis of an assessment of:
o Nature, function an liquidity of A
o Amounts, nature and timing of L
Information to be presented in SFP

 Shall disclose, either in SFP or in the notes, further subclassifications of the line items
presented, classified in a manner appropriate to the entity’s operations.
o Subclassifications – depends on the requirements of IFRS and on the size,
nature and function of the amounts involved.
 Shall disclose the ff either in the statement of financial position or the statement of
changes in equity or in the notes:
o For each class of share capital
o Description of the nature and purpose of each reserve within equity
 An entity w/o share capital, shall disclose info.
Statement of P/L and OCI

 Shall present in addition to the profit or loss and other comprehensive income section:
o Profit/loss
o Total OCI
o Comprehensive income for the period (total of both)
Information to be presented in SOP/L

 In addition to items required by other IFRS, entity shall include line items:
o Revenue
o Finance costs
o Share of the profit or loss of associates & joint ventures accounted for using the
equity method
o Tax expense
 Shall present an analysis of expenses recognised in P/L using a classification based on
either their nature or their function, whichever provides info that is more relevant and
reliable.
Information to be presented in SCI

 Additional line items, headings and subtotals shall be presented on the face of SCI when
such presentation is relevant to an understanding of the entity
 When items of income and expenses are materials, their nature and amount shall be
disclosed separately
 Shall not present any items of income or expense as extraordinary items
Profit or Loss for the period

 Shall recognise all items of income and expense in a period in profit or loss unless an
IFRS requires or permits otherwise
OCI for the period

 Shall disclose the amount of income tax, including reclassification adjustments, either in
the statement of profit or loss and OCI or in the notes
o Reclassification adjustment
 included w the related component of OCI in the period that the adjustment
is reclassified to P/L
 recognised as unrealised gains
 must be deducted to avoid including them in the total comprehensive
income twice
 will arise: on disposal of foreign operations and when some hedged
forecast cash flows affect P/L
Nature of Expense Method

 An entity aggregates expenses within P/L according to their nature

 Easiest method especially for smaller entities
 Useful in predicting cash flows
Function of Expense Method or Cost of Sales

 Classifies expenses according to their function as part of cost of sales

 Can provide more relevant information to user
 An entity classifying expenses by function shall disclose additional information on the
nature of expenses, including depreciation and amortisation expense and employee
benefits expense.
Decision of choice

 Depends on historical and industry factors

 Nature of entity
 PAS 1 does not prescribe any format; select the presentation that is reliable and more
relevant
Statement of changes in equity

 Shows the movement in the equity section of the SFP

 Shall present the amounts of dividends recognised as distributions to owners during the
period and the related amount of dividends per share
 Changes in an entity’s equity between the beginning and the end of the period reflect the
increase or decrease in its net assets during the period
Statement of cash flows

 Provides users of FS with a basis to assess the liability of the entity to generate cash
and CE and the needs of the entity to utilise those cash flows
 Most interesting; not presented in accrual basis
Notes

 Shall present info about the basis of preparation of the financial statements and the
specific accounting policies
 Disclose the information required by IFRS
 Provide information that is not presented elsewhere, but is relevant to an understanding
 Shall present notes in a systematic manner
Disclosure of accounting policies

 Shall disclose comprising:

o Measurement basis
o Other AP that are relevant to an understanding
 An AP may be significant because of the nature of the entity’s operations even if
amounts for current and prior periods are not material.
 Shall disclose the judgements apart from those involving estimations that mgt has made
in the process of applying the entity’s AP and that have the most significant effect on the
amounts recognised in the FS
Source of estimation uncertainty

 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 material adjustment to the carrying amounts of
assets and liabilities within the next FY.
 Shall include details of :
o Nature and their carrying amount as at the end of RP
 Shall present the disclosures in a manner that helps users of FS to understand the
judgements that management makes about the future and about other soucres of
estimation uncertainty.
Capital

 Shall disclose info that enables users of its FS to evaluate the entity’s objectives,
policies and processes for managing capital