IAS 1 Presentation of Financial Statement

Transcription

1 IAS 1 Presentation of Financial Statement 1 By : Mehul Shah mehul@raseshca.comcom

2 IASB Structure 2 IASC Foundation appoints oversees funds reports SAC advises IASB interprets IFRIC creates IFRS high quality, enforceable and global 2

3 Principles vs. Rules 3 Principles Only IFRS US U.S. GAAP Rules Only 3

4 IASB Standards and History International Accounting Standards (IAS) 2001 SIC Interpretations (SIC) 2001 International Financial Reporting Standards (IFRS) Present IFRIC Interpretations (IFRIC) 4

5 Features of IFRS 5 Globally accepted Simplified ( but significant subjectivity involved) Substance over form Time value of money Fair value Restatement More disclosure and reporting requirements 5

6 Movement toward one set of standards - benefits 6 Greater transparency Greater Geae cedb credibility Greater comparability between companies wherever they are Greater cross-border capital flows Greater Investor confidence and understanding Thriving economies 6

7 IAS -1 General Features Fair presentation and compliance with IFRS Going concern Accrual basis of accounting except for statement of cash flows Materiality and aggregation Consistency Offsetting Frequency of reporting Comparative information Consistency of presentation 7 7

8 IAS -1 Complete set 8 A complete set of financial i statements comprises: A statement of financial position as at the end of the period A statement of comprehensive income for the period A statement of changes in equity for the period A statement of cash flows for the period Notes, comprising a summary of significant accounting policies and other explanatory information 8

9 Statement of Financial Position 9 One year comparatives required for all amounts reported in the financial i statements,( including notes ) A statement of financial position as at the beginning of the earliest comparative period is required when an entity makes any changes therein pursuant to Retrospective application of a new accounting policy; or Retrospective restatement of items in its financial statements, or Reclassification of items in its financial statements. 9

10 Statement of Financial Position 10 An entity must present current and non-current assets, and current and non-current liabilities, as separate classifications, Current assets are one Expected to be realised in, or intended for sale or consumption in, the entity s normal operating cycle Held primarily for trading purposes Expected to be realised within 12 months after the reporting period, or Cash or a cash equivalent asset that is not restricted as to its use All other assets are classified as non-current assets 10

11 Statement of Financial Position 11 Examples of current assets include Inventories Trade receivables Examples of non-current assets may include Property, plant and equipment and intangible assets Financial assets expected to be realised more than 12 months after the balance sheet date Deferred Tax 11

12 Statement of Financial Position A Situation 12 If an entity breaches an undertaking or covenant under a long-term loan agreement with the effect that the liability becomes payable on demand, the liability is classified at the reporting period as: Current, even if the lender has agreed, after the reporting period and before the financial statements are authorized for issue, not to demandd payment, or Non-current, if the lender has agreed by the reporting period to provide a period of grace, ending at least 12 months after the reporting period. Period of grace is a period during which it cannot demand immediate repayment and within which the entity can rectify the breach. 12

13 Statement of Comprehensive Income 13 Entity has an option to present all items of income or expense recognised during the period using either of two options Two statements approach One statement displaying components of profit or loss (income statement); and Second statement beginning with profit or loss and displaying components of other comprehensive income. Or Single statement comprising both components of profit or loss as well as other comprehensive income. 13

14 Statement of Comprehensive Income 14 Analysis of expenses (on face or in notes): nature of expenses; or function of expenses No extraordinary items and therefore no profit or loss from ordinary activities 14

15 Other Comprehensive Income 15 Examples of items to be included under the statement Revaluation surplus/ reserve on items of PPE Actuarial gains and losses, if entity adopts policy of recognizing the same directly in equity Gains/ losses arising from translating financial statements of a foreign operation Gains/ losses on re-measurement of available for sale financial assets Effective portion of gains or losses on hedging instruments in a cash flow hedge Entity s share in comprehensive income of associates and joint ventures 15

16 Statement of Other Comprehensive Income 16 16

17 This should include: Statement of Changes in equity total comprehensive income for the period 17 Show separately total amounts attributable to owners of the parent and to non-controlling interest for each component of equity the effect of retrospective application or retrospective restatement recognised in accordance with IAS 8; the amount of transactions with owners in their capacity as owners, showing separately contributions by and distributions to owners; and for each component of equity, a reconciliation between the carrying amount at the beginning and the end of the period, separately disclosing each change An entity should present, either in the statement of changes in equity or in the notes, the amount of dividends recognised as distributions to owners during the period, and the related amount per share. 17

18 Other disclosures 18 The domicile and legal form of the entity, its country of incorporation, and the address of the registered office (or principal place of business) A description of the nature of the entity's operations and its principal activities The name of the parent and the ultimate parent of the group The amount of dividends proposed or declared before the financial statements were authorised for issue but not recognised as a distribution during the period, and the related amount per share The amount of any cumulative preference dividends not recognised If entity has limited life, information regarding the length of its life 18

19 Financial Statements Area Indian GAAP IFRS 19 Primary literature AS 1 Disclosure of Accounting Policies IAS 1 Presentation of Financial Statements Presentation Statement of financial position (Balance Sheet) True and fair presentation Formats are prescribed by the Companies Act and other industry regulations Fair Presentation Separate classification for Current/Non Current in the statement of financial position. Specific items to be included in the statement of financial position. 19

20 Financial Statements Area Indian GAAP IFRS 20 Statement of Formats for specific Specific items to be included. Comprehensive industry specified by the Expenses to be presented either by Income respective regulations. function or nature. Statement of Changes in Equity A statement of changes in equity is not required. Movements in share capital, retained earnings and other reserves are presented in schedules to financial statements. A statement of changes in equity is presented showing (a) the total comprehensive income for the period (b) effects of retrospective application or restatement t t on each component of equity (c) transactions with owners and (d) for each component of equity, a reconciliation between opening and closing balances, separately disclosing each change. 20

21 Financial Statements 21 Area Indian GAAP IFRS Extraordinary items Disclosures of significant associates Events or transactions clearly distinct from ordinary activities i i of the entity and or expected to recur frequently or regularly Detailed information is not required. Prohibited Detailed information on significant associates assets, liabilities and results is required. 21

22 Financial Statements Area Indian GAAP IFRS 22 Offsetting of Assets and Liabilities No specific guidance. Assets and Liabilities cannot be set off unless permitted under the standards. Financial assets and liabilities can be set off if the entity has legally enforceable right to set off and intends to settle on a net basis. 22

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