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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.

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*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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1. IFRS 9 Financial Instruments amendment to IAS 1

Effective for annual periods beginning on or after 1 January 2018. Earlier application is permitted.

IFRS 9 amends IAS 1 to include reference to financial instruments classified in accordance with IFRS 9 and delete reference to financial instruments as classified by IAS 39.

2. IFRS 15 Revenue from Contracts with Customers amendments to IAS 1

Effective for annual periods beginning on or after 1 January 2018. Earlier application is permitted.

As a result of the issue of IFRS 15, IAS 1 is amended to refer to IFRS 15 rather than IAS 18 in respect of the measurement of revenue.

3. IFRS 16 Leases amendment to IAS 1

To be applied to periods beginning on or after 1 January 2019. Earlier adoption is permitted.

IAS 1 is amended to refer to an assessment of the transfer of risks and rewards being a judgement that must be made by lessors. 

4. IFRS 17 Insurance Contracts amendment to IAS 1*

To be applied to periods beginning on or after 1 January 2023 (originally 2021, subsequently deferred). Earlier adoption is permitted.

IAS 1 is amended to :

(a) Add finance income and expenses to the list of components of other comprehensive income;
(b) Require line items to be presented in the statement of financial position in respect of contracts that are within the scope of IFRS 17;
(c) Require line items to be presented in the statement of profit or loss in respect of amounts related to contracts within the scope of IFRS 17.

 

5. Amendments to References to the Conceptual Framework in IFRS Standards – amendment to IAS 1

Effective for annual periods beginning on or after 1 January 2020. Earlier application is permitted, if at the same time an entity also applies the amendments to other IFRS Standards.

IAS 1 is updated to refer to the 2018 Conceptual Framework rather than the Framework for the Preparation and Presentation of Financial Statements when referring to materiality, definitions of elements and their recognition criteria and the objective of financial statements.

6. Definition of Material amendments to IAS 1

To be applied to annual periods beginning on or after 1 January 2020. Earlier application is permitted.

The definition of material is amended to be as follows:

Information is material if omitting, misstating or obscuring it could reasonably be expected to influence decisions that the primary users of general purpose financial statements make on the basis of those financial statements, which provide financial information about a specific reporting entity.

Examples of circumstances that may result in material information being obscured are added to the standard as a result of the amendment, as is guidance on users of financial statements.

7. Classification of Liabilities as Current or Non-current amendment to IAS 1*

To be applied to periods beginning on or after 1 January 2023 (originally 2022, subsequently deferred). Earlier adoption is permitted.

IAS 1 is amended to clarify that the classification of liabilities as current or non-current should be based on rights that exist at the end of the reporting period. Expectations about whether an entity will exercise a right to defer settlement of a liability do not affect its classification. The amendments also clarify that settlement is the transfer of cash, equity instruments, other assets or services.

8. Amendments to IFRS 17 amendment to IAS 1*

To be applied to periods beginning on or after 1 January 2023. Earlier adoption is permitted.

IAS 1 is amended to refer to portfolios of contracts rather than groups of contracts within the scope of IFRS 17.

9. Disclosure of Accounting Policies amendment to IAS 1*

To be applied to annual periods beginning on or after 1 January 2023. Earlier application is permitted.

The amendments to IAS 1:

  • Require an entity to disclose material accounting policy information rather than significant accounting policies.
  • Explain that accounting policy information is material if, together with other information in the financial statements, it can reasonably be expected to influence decisions that primary users make.
  • Provide examples of material accounting policies.
  • Clarify that accounting policy information relating to immaterial transactions need not be disclosed.

*Not UK endorsed as at 21 June 2021. Read more on UK endorsement of IFRS standards. Not EU endorsed as at 21 June 2021. Read more on EU endorsement

The following interpretations relate to IAS 1

Current proposals

  1. ED/2019/7 General Presentation and Disclosures was issued in December 2019. This is the exposure draft of a proposed new standard that would replace IAS 1. The standard would carry forward most of the current requirements of IAS 1 and add supplementary requirements, including:
    • Categorising items in profit or loss as operating, investing or financing
    • Requiring additional profit subtotals
    • Distiguishing between integral and non-integral associates and joint ventures
    • Removing the choice of how to present cash flows from dividends and interest
    • Requiring additional disclosure about unusual items
    • Providing disclosure of management performance measures

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.

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, 38A-D, 40A-D, 111, 134-6.