RULES IN FAR

FINANCIAL STATEMENTS
† FS are the “structured representation of an entity’s financial position and results of its operations (PAS 1.9)
† General purpose FS are those intended to meet the needs of users who are not in a position to require an
entity to prepare reports tailored to their particular information needs (PAS 1.7) and it cater to most of the
common needs of a wide range of external users
† Purpose of FS:
-(Primary objective) To provide information about the financial position, financial performance, and cash flows of an entity that is useful to
a wide range of users in making economic decisions
-(Secondary objective) To show the results of management’s stewardship over the entity’s resources
† Complete set of FS
-Statement of Financial Position
-Statement of Profit or Loss and other Comprehensive Income
-Statement of Changes in Equity
-Statement of Cash Flows
-Notes (Comparative information)
-Additional Statement of Financial Position (required only when certain instances occur)
 When an entity applies an accounting policy retrospectively, makes a retrospective restatement of items in the FS or reclassifies
items in FS
 When the instance mentioned above has a material effect on the information in the Statement of Financial Position at the
beginning of the preceding period
 Three Statements is made: Previous Year at Opening Date, Previous Year at Year End, and Current Year at Year End
† Fair Presentation and Compliance with PFRS
-PAS 1 requires an entity whose financial statements comply with PFRS to make an ELICIT and UNRESERVED STATEMENT of such
compliance in the notes. However, it shall not make such statement unless it complies with all the requirements of PFRS
-In cases where compliance with PFRS requirement would results in a misleading presentation, PAS 1 permits a DEPARTURE from PFRS
requirement if the relevant regulatory framework requires or allow such a departure
† Going Concern
-Management shall assess the entity’s ability to continue as a going concern taking into account of all available information about the
future, which is at least, but not limited to, 12 months from the reporting date
-Any material uncertainties are needed to be disclosed and if the entity is not a going concern, its FS shall be prepared using another basis
which also needed to be disclosed and the reasons behind
† Accrual Basis of Accounting
-All FS are prepared using accrual basis of accounting EXCEPT for the Statement of Cash Flows which is
prepared using cash basis
† Materiality and Aggregation
-material class of similar items is presented separately. A class of similar items is called a “line item”. Dissimilar items are presented
separately unless they are immaterial, which may be aggregated with other items
† Offsetting
-Assets and liabilities are not offset, unless offsetting is required or permitted by PFRS. Offsetting is permitted when it reflects the
substance of the transaction: (Example)
 Presenting gains or losses from sales of assets NET of the related selling expenses
 Presenting at NET amount the unrealized gains and losses arising from trading securities and from translation of foreign
currency denominated assets and liabilities, except if they are material
 Presenting a loss from a provision NET of reimbursement from a third party
(Note: Measuring assets net of valuation allowances is not offsetting e.i. allowance for doubtful accounts, accumulated depreciation)
† Frequency of Reporting
-At least ANNUALLY
-If an entity uses a period longer or shorter than 1 year it shall disclose:
 Period covered by FS
 Reason for using such period
 The fact that amounts presented in FS are not entirely comparable
† Comparative Information
-as a minimum, entity presents TWO of each of the statements and related notes
† Consistency of Presentation
-is applied unless a change is:
 Required by PFRS
 Results in information that is reliable and more relevant