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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. 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.

4. 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. 

5. 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.

 

6. 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.

7. 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.

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

To be applied to periods beginning on or after 1 January 2022. 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.

*Not EU endorsed as at 30 January 2020. Read more on EU endorsement.

The following interpretations relate to IAS 1

Current proposals

  1. 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. In response to this feedback the Board issued ED/2019/6 Disclosure of Accounting Policies in August 2019. It proposes that IAS 1 is amended to require the disclosure of material (rather than significant) accounting policies. The amendments would also clarify that:
    • accounting policies relating to immaterial transactions or events need not be disclosed
    • accounting policies relating to material transactions are not necessarily material themselves

    New paragraphs would also be added to IAS 1 to provide guidance on determining whether an accounting policy is material.

  2. 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
  3. ED/2019/4 Amendments to IFRS 17 was issued in June 2019. A minor consequential amendment is proposed to IAS 1 with th result that it would refer to portfolios rather than groups of contracts within the scope of IFRS 17.

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This pages was last updated on 30 January 2020