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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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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.

The International Accounting Standards Board (IASB) provides free access to the consolidated unaccompanied international accounting standards for the current year through its website. Free registration is required.

This unaccompanied version does not include additional content that accompanies the full standard, such as illustrative examples, implementation guidance and bases for conclusions.

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Recent amendments

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*Not UK endorsed as at 3 February 2022. Read more on UK endorsement of IFRS standards. Endorsed for use in the EU as at 3 February 2022. Read more on EU endorsement.

**Not UK endorsed or EU endorsed as at 3 February 2022.

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
    • Distinguishing 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
  2. ED/2021/9 Non-current Liabilities with Covenants was issued in November 2021. It proposes to amend IAS 1 to:
    • Specify that conditions with which an entity must comply within 12 months after the reporting period do not affect the classification of a liability as current or non-current;
    • Require that entities instead present separately, and disclose information about, liabilities with such conditions;
    • Defer the effective date of the 2020 amendments (amendment 5 above) so that entities are not required to change their assessment of the classification of liabilities before the proposed amendments in ED/2021/9 are in effect.

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.