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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*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.
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.
Which version of the standard?
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Full access to details of all the amendments is only available to Financial Reporting Faculty members. Find out how to join the faculty.
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. Agriculture: Bearer Plants amendments to IAS 16 and IAS 41
Effective for annual periods beginning on or after 1 January 2016. Earlier application is permitted.
A bearer plant is a plant that is held by an entity solely to grow produce over its productive life. Amendments remove such plants from the scope of IAS 41 and instead require that they are accounted for in accordance with IAS 16. A consequential amendment to IAS 1 clarifies that the biological assets that must be disclosed as a line item in the statement of financial position are those within the scope of IAS 41.
4. Disclosure Initiative – Amendments to IAS 1
To be applied to annual periods beginning on or after 1 January 2016. Earlier application is permitted.
The amendments clarify that:
- Aggregation or disaggregation of information should not obscure useful information.
- Materiality requirements apply to all financial statements, notes and specific disclosure requirements.
- Line items to be presented in the financial statements can be aggregated and disaggregated as relevant.
- There is flexibility as to the order of the notes to the accounts; understandability and comparability of financial statements should be considered when deciding the order.
- An entity should present its share of other comprehensive income of associates and joint ventures accounted for using the equity method by whether those items will be subsequently reclassified to profit or loss and presented in aggregate as a single line item within that classification.
In addition the amendments propose to:
- Remove guidance for identifying a significant accounting policy and remove potentially unhelpful examples.
6. Disclosure Initiative - Amendments to IAS 7
To be applied to periods beginning on or after 1 January 2017. Earlier adoption is permitted.
IAS 7 is amended to require additional disclosures that allow users of financial statements to evaluate changes in liabilities arising from financing activities. A consequential amendment is made to IAS 1 to refer to the disclosure requirements of IAS 7 in respect of capital disclosures.
6. 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.
7. IFRS 17 Insurance Contracts amendment to IAS 1*
To be applied to periods beginning on or after 1 January 2021. 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.
8. 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.
9. 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.
*Not EU endorsed as at 2 December 2019. Read more on EU endorsement.
The following interpretations relate to IAS 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. An amendment to IAS 1 is expected in 2019.
- A review is underway of general disclosure guidance in IAS 1 and IAS 8 with the objective of improving existing guidance. A discussion paper (Disclosure Initiative - Principles of Disclosure) was issued in March 2017 and feedback suggested that entities require guidance when determining which accounting policies to disclose. An exposure draft is expected in the second half of 2019 which will amend IAS 1 to require the disclosure of material rather than significant accounting policies.
- 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. The focus is on the statement of performance and an exposure draft or discussion paper is expected in 2019.
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
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
This page was last updated 25 March 2019