IAS 1 Presentation of Financial Statements

*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.

• Read the unaccompanied version of IAS 1

Which version of the standard?

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Recent amendments

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

The following interpretations relate to IAS 1

• IFRIC 17 Distribution of Non-cash Assets to Owners
  Addresses the accounting for dividends of non-cash assets, including those where there is a cash alternative.

• IFRIC 19 Extinguishing Financial Liabilities with Equity Instruments
  Addresses the accounting by an entity which issues equity instruments in order to settle, in full or part, a financial liability.

• IFRIC 20 Stripping Costs in the Production Phase of a Surface Mine
  Addresses the accounting treatment of mine waste materials, which are the materials removed by mining entities in order to gain access to mineral ore deposits.

• IFRIC 21 Levies
  Provides guidance on when to recognise liability for a levy imposed by a government.

• IFRIC 23 Uncertainty over Income Tax Treatments
  Clarifies how to apply the recognition and measurement requirements of IAS 12 when there is uncertainty over income tax treatments.

• SIC 27 Evaluating the Substance of Transactions in the Legal Form of a Lease
  Addresses issues that may arise when an arrangement between an entity and investor involves the legal form of a lease.

• SIC 29 Disclosure – Service Concession Arrangements
  Prescribes disclosures required by a concession operator and concession provider joined by a service concession arrangement.

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.

   • Read DP/2017/1 Disclosure Initiative - Principles of Disclosure
   • Read ED?2019/6 Disclosure of Accounting Policies
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
   • Read ED/2019/7 General Presentation and Disclosures
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.
   • Read ED/2019/4 Amendments to IFRS 17
     
     

Other resources

Articles:

• Financial statement disclosures provides more information on the disclosure initiative

Factsheets:

• 2019 IFRS Factsheets - provides more information on amendment 7