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    IAS 1 Notes

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    adekolatunde.a

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    IAS 1 Notes

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    adekolatunde.a
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    3 views2 pages

    IAS 1 Notes

    Uploaded by

    adekolatunde.a

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 2

    IAS 1 “PRESENTATION OF FINANCIAL STATEMENTS”

    IAS 1 ‘Presentation of financial statements’ prescribes the basis for preparation and presentation of financial statements meant
    for general purpose.

    COMPONENT OF FINANCIAL STATEMENT

    The objective of general-purpose financial statements is to provide information about the financial position of the company, and its
    financial performance and cash flows, that is useful to a wide range of users in making economic decisions.

    According to IAS 1, a complete set of financial statement should include the following:

    1. A statement of financial position as at the end of the period.

    2. A statement of profit or loss and other comprehensive income for the period (made up of a statement of profit or loss and a
    statement of other comprehensive income).

    3. A statement of changes in equity for the period.

    4. A statement of cash flows.

    5. Notes to these statements, consisting of a summary of significant accounting policies used by the entity and other explanatory
    notes.

    Further requirements include:

    ‰ Financial statements should present fairly the financial position, financial performance and cash flows of the entity.

    ‰ Comparative information for the immediately preceding accounting period should be disclosed.

    ‰ Each component of the financial statements must be properly identified with the following information displayed
    prominently:

     The name of the reporting entity x the date of the end of the reporting period or the period covered by the statement,
    whichever is appropriate.
     The currency in which the figures are reported
     The level of rounding used in the figures (for example, whether the figures are thousands of naira or millions of naira).

    Note: IAS 1 does not specify what the statements must be called and allows the use of other terminology. For example, a
    statement of financial position is often called a balance sheet and a statement of profit or loss is often called an income

    GENERAL FEATURES AND PRINCIPLES RELATING TO PRESENTATION

    The following are the general features and principles relating to presentation:

    1. Fair presentation and compliance with IFRSs Disclosure of compliance

    An entity whose financial statements comply with IFRSs must make such disclosure in the notes to the accounts. Financial
    statements shall not be described as complying with IFRS unless they comply with all the requirements of each applicable
    Standard and Interpretation.

    Fair presentation: financial statements must present fairly the financial position, financial performance and cash flows of an
    entity. This means that they must be a faithful representation of the effects of transactions and other events in accordance with
    the definitions and recognition criteria for assets, liabilities, income and expenses set out in IFRS.

    2. Going concern

    The going concern assumption states that financial statements should be prepared based on the fact that the reporting entity
    will continue to exist for the foreseeable future.

    Financial statements must be prepared on a going concern basis unless management either;

    1. Intends to liquidate the entity

    2. To cease trading

    3. Has no realistic alternative but to do so.


    3. Accrual basis of accounting

    This states that the financial transactions and events should be recognized in the accounting period when they actually
    occurred and not necessarily the timing of occurrence of transactions.

    Financial statements (except for cash flow information) must be prepared under the accrual basis of accounting. Under the
    accrual basis of accounting, items are recognized as assets, liabilities, equity, income and expenses (the elements of financial
    statements) when they satisfy the definitions and recognition criteria.

    4. Materiality and aggregation

    Information is material if omitting, misstating or obscuring it could reasonably be expected to influence the economic
    decisions of users taken on the basis of the financial statements.
    Each material class of similar items must be presented separately in the financial statements.

    Items of a dissimilar nature or function must be presented separately unless they are immaterial.

    While immaterial items will be aggregated or combined together and included in the books if they are of similar nature and
    function.

    5. Offsetting
    Assets and liabilities (Or Income and expenses) must not be offset except when offsetting is required by another IFRS .
    However, offsetting can be permitted if the amounts are receivable and payables to the same source and the parties has agreed
    to settle on the net basis.
    Note: The reporting of assets net of valuation allowances - for example, obsolescence allowances on inventories and doubtful
    debts allowances on receivables - is not offsetting.
    6. Frequency of reporting
    Financial statements must be presented at least annually.
    When an entity’s reporting date changes its financial statements are presented for a period longer or shorter than one year.
    In such cases an entity must disclose, in addition to the period covered by the financial statements:
    ▪ the reason for using a period other than one year
    ▪ the fact that comparative amounts for the income statement, changes in equity, cash flows and related notes are not
    comparable.
    7. Comparative information
    Comparative information must be disclosed in respect of the previous period for all amounts reported in the financial
    statements unless IFRS permits or requires otherwise.
    This means that, there should be minimum of two accounting period (Current period and the preceding period) for each of the
    components recognized in the financial statements.
    NB: It is necessary to present an additional statement of financial position (i.e A third statement of financial position known as
    an opening financial statements) as at the beginning of the preceding period, if:
    a. There is a change in accounting policy applied retrospectively.
    b. There is a prior period error corrected retrospectively that relates to accounting periods before the preceding period.

    8. Consistency of presentation

    The presentation and classification of items in the financial statements must be retained from one period to the next.unless:

    ‰ A significant change in the nature of the operations of the entity or a review of its financial statement presentation
    demonstrates that a change in presentation results in a more appropriate presentation of transactions or other events; or a
    change in presentation is required by an IFRS.

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