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IAS 1 Presentation of Financial Statements

Presentation of Financial Statements sets out the overall requirements for the presentation of financial statements, guidelines for their structure, and minimum requirements for their content.

Revised September 2007. Effective 1 January 2009.

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Financial Reporting Faculty members get full access. Login to get the version of the standard relevant to specific time periods via eIFRS.

ICAEW members and non-members can view a brief synopsis, amendments and details of current proposals.

*UK qualifying parents and subsidiaries can take advantage of FRS 101 Reduced Disclosure Framework. Find out more on which entities qualify and the criteria to be met.

Synopsis

A complete set of financial statements includes:

  • A statement of financial position (balance sheet) at the end of the period
  • A statement of profit or loss and other comprehensive income (income statement) for the period
  • A statement of changes in equity for the period
  • A statement of cash flows (cash flow statement) for the period
  • Notes to the accounts

The names of the main statements are not mandatory.

IAS 1 Revised also requires a statement of financial position at the start of the earliest comparative period where there has been a retrospective adjustment to the accounts or reclassification of items.

The statement of profit or loss and other comprehensive income, as the name suggests, presents profit and loss for the period as well as other comprehensive income. Other comprehensive income includes income and expenses not recognised in profit or loss such as revaluation surpluses. The statement of profit or loss and other comprehensive income may be presented either as one statement or a separate statement of profit or loss and statement showing other comprehensive income.

The standard provides guidance on the form and content of the financial statements and the underlying accounting concepts. It also requires financial statements to present fairly the position, performance and cash flows of an entity. This is normally achieved by the application of IFRS.

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Recent amendments

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*Not EU endorsed as at 6 June 2017. Read more on EU Endorsement.

The following interpretations relate to IAS 1

Current proposals

  1. ED/2015/1 Classification of Liabilities was issued in February 2015. The proposed amendments to IAS 1 clarify that the classification of a liability as either current or non-current is based on the entity’s rights at the end of the reporting period. The proposed amendments also make clear the link between the settlement of the liability and the outflow of resources from the liability. Analysis is currently ongoing
  2. As a result of the IASB’s ongoing Disclosure Initiative, two projects are active in relation to IAS 1:
    • A review of general disclosure guidance in IAS 1 and IAS 8 with the objective of improving existing guidance. A discussion paper was issued in March 2017.
    • A project to refine the definition of materiality and clarify its characteristics, resulting in amendments to IAS 1 and IAS 8. An exposure draft is expected in 2017.
  3. The IASB is in the early stages of a research project on primary financial statements examining possible changes to the structure and content of the primary financial statements including the implications of digital reporting.

UK reduced disclosures

UK qualifying parents and subsidiaries can take advantage of FRS 101 Reduced Disclosure Framework. Find out more on which entities qualify and the criteria to be met.

Amendments to the standard

Where an entity applies FRS 101, it is preparing Companies Act accounts rather than IAS accounts. Therefore the following amendments must be made to IAS 1 in order to achieve compliance with the Companies Act and related Regulations:

  • The statement of financial position must comply with the balance sheet format requirements of the Companies Act.
  • The statement of profit or loss and other comprehensive income must comply with the profit and loss account format requirements of the Companies Act.
  • Ordinary activities of an entity are defined and extraordinary items are described as highly abnormal material items arising from events falling outside an entity’s ordinary activities.
  • It is clarified that items of income or expense are not recognised in profit or loss where such recognition is prohibited by the Companies Act.

From 1 January 2016 the following apply to companies that adopt FRS 101 and apply Schedule 1 of The Companies, Partnerships and Groups (Accounts and Reports) Regulations 2015 (SI 2015/980):

  • Qualifying entities that apply paragraph 1A of Schedule 1 must apply the IAS 1 presentation requirements to the statement of financial position and statement of profit or loss and other comprehensive income rather than Companies Act formats
  • No item may be presented as an extraordinary item

Disclosure exemptions

FRS 101 paragraph 8(f) states that a qualifying entity is exempt from the IAS 1 requirement to present the following within a set of financial statements:

  • A statement of cash flows for the period;
  • A third statement of financial position when a retrospective adjustment or reclassification is made;
  • A statement of compliance with IFRS;
  • A reconciliation of property, plant and equipment, intangible assets, investment properties, biological assets and the number of shares outstanding at the beginning and end of the comparative period;
  • Capital management disclosures (this exemption is not available to a financial institution);
  • All remaining IAS 1 disclosures must be applied.

IAS 1 paragraphs for which exemption is available: 10(d), 10(f), 16, 38, 38A-D, 40A-D, 111, 134-6

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This page was last updated 6 June 2017.