IAS

1
Presentation of financial statements

By
Yona Killagane

Treasury Square , Kambarage Hall, Dodoma 31st August 2nd September 2016
 IAS 1 Presentation of Financial Statements

qIAS 1 issued in 1997 is a predecessor of IASC is a

consolidation of:
IAS 1 Disclosure of Accounting Policies (issued in 1975),
IAS 5 Information to be Disclosed in Financial Statements
(originally approved in 1977); and
IAS 13 Presentation of Current Assets and Current Liabilities
(approved in 1979).
Several subsequent amendments
qClosely linked with:
Preface to IFRS
Conceptual Framework for Financial Reporting; and
IAS 8 Accounting Policies, Changes in Accounting Estimates
and Errors
 Objective and Scope
qApplies to all entities

Presentation Within Entity

Requirement over time

Guidelines for Comparability

Structure

Across
Minimum
Entities
content

qOther standards sets out recognition, measurement and

disclosure requirements.
qException: IAS 34 Interim Financial Reporting
qModify terminology for non-profit and non-equity entities
 Purpose of Financial Statements

General
Users
Financial position Assets

Liabilities
Make
Economic Equity
Decisions
Financial Income & Expenses
Performance (gains & Losses)
Discharge
Stewardship
role Owners contributions

Cash flows Cash flow

Predictions
Notes
 Complete set of financial statements
Statement of Financial Position as at x 2

Statement of profit or loss and other

comprehensive income for the period x 2

Statement of changes in equity for the period x 2

1. Other Titles are
acceptable
Statement of cash flows for the period x2 2. Equal prominence
3. Reports and statements
Notes, comprising accounting policies and presented outside
other explanatory information x 2 financial statements are
outside the scope of
IFRSs.
Statement of financial position as at the
beginning of the preceding period
(Accounting policy change or error correction)
 General features

qFair presentation and compliance with IFRS

qGoing concern
qAccrual basis of accounting
qMateriality and aggregation
qOffsetting
qFrequency of reporting
qComparative information
qConsistency of presentation
 General features (cont.)

Accounting policies base on IAS 8

Comply with IFRS unless exception
Fair
Comply with Conceptual Framework
Presentation &
Full IFRS compliance disclosure
Compliance
Deviation be disclosed
with IFRS

Management assessment of the entitys ability to continue

as a going concern
Uncertainties about going concern should be disclosed
FS must be prepared on going concern basis unless
Going Concern management intends to liquidate or cease trading and there
is no realistic alternative other than doing so
Disclose if FS not prepared on going concern basis
 General features (cont.)

FS be prepared under accrual basis except for Cash Flow

information
Accruals
Recognize items as assets, liabilities, equity, income and
Accounting
expenses (the elements of financial statements) when
they satisfy the definitions and recognition criteria for
those elements in the Framework.

Material items shown separately

Immaterial items may be aggregated
Materiality Items of a dissimilar nature or function be presented
and separately unless they are immaterial
aggregation specific disclosure required by an IFRS is not required if
the information is not material
 General features (cont.)

No offset of assets and liabilities or income and

expenses, unless required or permitted by an IFRS.
Offsetting allowed
Offsetting Trade and volume discounts
Gain or loss on disposal of non current asset
Reimbursement under IAS 37 Provisions if
reimbursement is certain i.e. Setting of warranty
claims against provisions made towards warranty

Annual reporting presumed

Longer or shorter period is permitted
If the annual reporting period is changed and the FS is
Reporting prepared for a different period , reasons and the fact that
frequency FS is not comparable should be disclosed
 General features (cont.)

Same format as for previous years

Be on the face of FS or notes
Comparative
As a minimum present, two statements FP, PL&OCI, CF,
information
SCE , SFPbeginning

Retain the presentation and classification of items in the

financial statements from one period to the next.
Changes allowed if changed presentation provides
Consistency of
information that is reliable and more relevant to users of
presentation
the financial statements and the revised structure is likely
to continue, so that comparability is not impaired
 Change in accounting policy, retrospective restatement or
reclassification

qPresent a third statement of financial position as at the

beginning of the preceding period in addition to the
minimum comparative financial statements if:
there is a change in accounting policy with retrospective
application; and
there is retrospective application, retrospective restatement or
the reclassification has a material effect on the information in
the statement of financial position at the beginning of the
preceding period.
qThe three statements of financial position are as at:
(a) the end of the current period;
(b) the end of the preceding period; and
(c) the beginning of the preceding period.
 Change in accounting policy, retrospective restatement or
reclassification (cont.)

qWhen reclassification is made for comparative amounts,

disclose:
the nature of the reclassification;
the amount of each item or class of items; and
the reason for the reclassification.
qIf it is impracticable to reclassify the comparative
amounts, disclose:
the reason for not reclassifying the amounts, and
the nature of the adjustments that would have been made if
the amounts had been reclassified.
qComply with IAS 8 adjustments to comparative
information required when an entity changes an
accounting policy or corrects an error.
 Consistency of presentation - changes

qInstances where Change is allowed:

There is a significant change in the nature of the entity's operations
or 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
an IFRS requires a change in presentation.
 Identification of the financial statements

qTwo types of disclosures:

Disclosures under IAS 1 Presentation of financial statements
Disclosures under specific IFRS
qIdentify financial statements clearly from other
information presented
qComponents should be clearly identified
qProminent Disclosures:
Identify each Financial statements
Name of the reporting enterprise, changes if any from
previous year
Individual entity reporting or group
Date, period and presentation currency
Level of rounding off
 Statement of Financial Position
qPresent additional line items, headings and subtotals when such
presentation is relevant to an understanding of the entity's financial
position.
qUnder current and non-current assets/liabilities, deferred tax assets
(liabilities) is not current assets (liabilities)
qNo specific format or order of presentation
qClassification of assets and liabilities under current and non current
categories Exception liquidity presentation if more relevant.
qLiquidity presentation for more relevant and reliable information (but
no operating cycle)
qMinimum line items to be presented
qBasis of classification is on Size, nature or function decides the line
items and aggregation of similar items
qMinimum line items (see over)

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 Minimum Line Items in SF Position
1) property, plant and 11) trade and other payables;
equipment;
12) provisions;
2) investment property;
13) financial liabilities (excluding
3) intangible assets; amounts shown under (11)
4) financial assets (excluding and (12));
amounts shown under (5), (8) 14) liabilities and assets for
and (9)); current tax;
5) investments accounted for 15) deferred tax liabilities and
using the equity method;
deferred tax assets;
6) biological assets;
16) liabilities included in disposal
7) inventories; groups classified as held for
8) trade and other receivables; sale ;

9) cash and cash equivalents; 17) non-controlling interests,

10) the total of assets classified as
held for sale and assets;
presented within equity; and
18) issued capital and reserves
attributable to owners of the
parent.
 Current and Non current Distinction

qArrange on current and non current amount that will be

recovered or settled within 12 months and those beyond
12 months.
qWhere liquidity provides more reliable and relevant
information arrange on increasing or decreasing
liquidity
qWhen an entity supplies goods or services within a
clearly identifiable operating cycle, separate classification
of current and non-current assets and liabilities provides
useful information by distinguishing the net assets that
are continuously circulating as working capital from
those used in the entity's long-term operations.
 Current assets

qConditions
the asset will be realised, or intends to sell or consume
it, in its normal operating cycle;
the asset is held primarily for the purpose of trading;
the asset will be realised within twelve months after
the reporting period; or
the asset is cash or a cash equivalent (as defined in
IAS 7) unless the asset is restricted from being
exchanged or used to settle a liability for at least twelve
months after the reporting period.
qAn entity shall classify all other assets as non-
current.
qIf operating cycle is not determinable assume I is
12 months
 Current liabilities
qTo fulfill the following conditions
Expected to be settled in the entitys normal operating cycle
Primarily held for trading
Due to be settled within 12 months from the balance sheet date
Entity does not have unconditional right to defer settlement of the liability for at least 12
months after the balance sheet date
qAll other liabilities are non-current
qLiabilities forming normal operating cycle e.g. payables employees dues are
current even if are payable beyond 12 months.
qLiabilities are classified as current if :
Payable during current year even if they were of a long term nature.
an agreement to refinance, or to reschedule payments, on a long-term basis is completed after
the reporting period and before the financial statements are authorized for issue.
q Borrower has discretion, to refinance or roll over an obligation for at least
twelve months after the reporting period under an existing loan facility, it
classifies the obligation as non-current, even if it would otherwise be due within
a shorter period.
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 Current liabilities (cont.)
q when refinancing or rolling over the obligation is not at the discretion of the borrower,
the entity classifies the obligation as current.
qWhen an entity breaches a provision of a long-term loan arrangement on or
before the end of the reporting period with the effect that the liability becomes
payable on demand, it classifies the liability as current,
q If the lender agreed by the end of the reporting period to provide a period of grace
ending at least twelve months after the reporting period, within which the entity can
rectify the breach and during which the lender cannot demand immediate repayment
classify as non-current
q loans classified as current liabilities, if the following events occur between the end of
the reporting period and the date the financial statements are authorised for issue,
those events are disclosed as non-adjusting events in accordance with IAS 10 Events
after the Reporting Period:
refinancing on a long-term basis;
rectification of a breach of a long-term loan arrangement; and
the granting by the lender of a period of grace to rectify a breach of a long-term loan arrangement ending at
least twelve months after the reporting period.

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 Information to be presented either on face or in the notes

qDisclose in sub-classifications of line items

in an appropriate manner :
either in the statement of financial position or
in the notes.
qThe detail sub-classifications depends on:
the requirements of IFRSs;
on the size , nature and function of the amounts involved.
the nature and liquidity of assets;
the function of assets within the entity; and
the amounts, nature and timing of liabilities.:
 Information to be presented either on face or in the notes

qDisclose either in the statement of financial position or the

statement of changes in equity, or in the notes:
(a) for each class of share capital:
(i)the number of shares authorised;
(ii)the number of shares issued and fully paid, and issued but not fully paid;
(iii) par value per share, or that the shares have no par value;
(iv) a reconciliation of the number of shares outstanding at the beginning and at the end of the
period;
(v)the rights, preferences and restrictions attaching to each class;
(vi) shares in the entity held by the entity or by its subsidiaries or associates; and
(vii) shares reserved for issue under options and contracts for the sale of shares, including terms and
amounts; and
(b) a description of the nature and purpose of each reserve within equity.

q An entity without share capital, disclose information equivalent to the above showing
changes during the period in each category
q If an entity has reclassified
(a)a puttable financial instrument classified as an equity instrument, or
(b)an instrument that imposes an obligation to deliver to another party a pro rata share of the net assets of
the entity only on liquidation and is classified as an equity instrument.
 Statement of profit or loss and other comprehensive income (Statement of
comprehesive Income)

OR SEPARATE
EITHER COMBINED

Statement of
Profit or loss profit or loss
Section 1 Show: 1
Non controlling interest
Parent share

Section 2 Total other comprehensive Statement of

income Total other
2 comprehensive
income

Section 3
Comprehensive income for the period
1 +2 Show:
Non controlling interest 3
Parent share
 Information to be presented in the profit or loss section or the statement of
profit or loss

qrevenue;
qgains and losses arising from the derecognition of financial assets
measured at amortised cost;
qfinance costs;
qshare of the profit or loss of associates and joint ventures
accounted for using the equity method;
qif 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 reclassification date (as
defined in IFRS 9);
qtax expense;
qa single amount for the total of discontinued operations
 Information to be presented in the statement(s) of profit or loss and other
comprehensive income or in the notes

qWhen items of income or expense are material

qseparate disclosure of items of income and expense include:
write-downs of inventories to net realisable value or of property, plant and
equipment to recoverable amount, as well as reversals of such write-
downs;
restructurings of the activities of an entity and reversals of any provisions
for the costs of restructuring;
disposals of items of property, plant and equipment;
disposals of investments;
discontinued operations;
litigation settlements; and
other reversals of provisions.
qNo extraordinary items
 Presentation of P & L section or statement of profit or loss

Expenses classified by Type Expenses classified by Functions

Shs. Shs. Shs.
Revenue X
Revenue X
Other Income X
Total Income XX
Cost of sales (X)
Changes in inventories of finished goods Gross profit X
and work in progress X Other income X
Raw materials and consumables used X Distribution costs (X)
Employee benefits expenses X Administrative expenses (X)
Depreciation and armotisation expense X
Other expenses (X)
Other expenses X
XX
Finance expenses (X)
Profit before tax XX Profit before tax X
Analyze by type of expenses in notes
 Information to be presented in the other comprehensive income
OCI items
1. Changes in revaluation surplus on PPE and intangibles
2. Remeasurements of a net defined benefit liability or asset
3. Exchange differences from translating functional currencies into presentation
currency
4. Gains and losses on remeasuring available-for-sale financial assets
5. The effective portion of gains and losses on hedging instruments in a cash flow
hedge.
6. Gains and losses on remeasuring an investment in equity instruments where the
entity has elected to present them in other comprehensive income in accordance
with IFRS 9
7. The effects of changes in the credit risk of a financial liability designated as at fair
value through profit and loss under IFRS 9.
qInclude OCI from associated entities as a single line
qReclassify OCI items:
Reversing to Profit and loss; and
Not capable of reversing.
qShow tax on each OCI item (gross or net of tax)
qNo extraordinary items in OCI or Statement of profit and loss
 Profit or loss for the period

qRecognize all items of income and expense in a period in profit or

loss unless an IFRS requires or permits otherwise.
qExample of IFRS is IAS 8 on Accounting policies
the correction of errors and
the effect of changes in accounting policies.
qOther IFRSs require or permit components of other comprehensive
income that meet the Framework's definition of income or
expense to be excluded from profit or loss (see paragraph 7).
 Statement of changes in equity

qShows movement of equity interest during the year

qDisclose:
total comprehensive income for the period, showing separately the total
amounts attributable to owners and to non-controlling interests;
for each component of equity, the effects of retrospective application or
retrospective restatement recognised in accordance with IAS 8; and
for each component of equity, a reconciliation of the carrying amount at
the beginning and the end of the period, separately (as a minimum)
disclosing changes resulting from:
profit or loss;
other comprehensive income; and
transactions with owners in their capacity as owners, showing
separately contributions by and distributions to owners and changes in
ownership interests in subsidiaries that do not result in a loss of
control.
Show on the face or notes
Dividend paid to owners
 Notes to accounts
qTo include information in a systematic manner
qCross reference to notes should be given against items
presented on the face of financial statements
qUsed to disclose post balance sheet date events
having material bearing on the financial statements

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 Notes to accounts
qBasis of preparation of FS and specific accounting
policies
qInformation required by IFRS and not presented
elsewhere in FS
qAny other additional relevant information

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 Notes to accounts

qStatement of compliance with IFRS

qSignificant accounting policies
qSupporting information to items presented in FS
qOther disclosures including contingent liabilities and
unrecognised contractual commitments
qNon financial information eg risk management policy
of the entity

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 Disclosure of accounting policies
qMeasurement bases used in preparing FS
qOther accounting policies relevant to understanding
the FS
qJudgements made in applying the accounting policies
which have most significant effect on the amounts
recognised in FS

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 Estimation uncertainty

qKey assumptions about the future and major sources

of estimation uncertainty that have significant risk of
causing material adjustment to the carrying amount of
assets and liabilities within next year
qIn relation to those assets and liabilities their nature
and carrying amount

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 Capital disclosures

qEntity's objectives, policies and processes for

managing capital
qIt includes:
qQualitative information like what is capital, capital
adequacy requirements , how the management of
capital objectives is met
qQuantitative data about components of capital
qAny changes in capital from the PY
qWhether capital adequacy norms have been met
qConsequences of not meeting it
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 Other disclosures

qDomicile of the entity

qLegal form
qAddress of registered office
qNature of operations or principal activities or both
qName of the parent and ultimate parent
qDisclosure of proposed and paid dividend

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