How to make use of IAS 1 for a better presentation of financial statements
IAS 1 is an accounting standard. It is an standard
for the presentation of financial statements. It outlines the general
requirements for financial statements, including how they should be structured,
the bare minimum of what they must contain, and any overriding principles like
going concerns, the accrual basis of accounting, and the distinction between
current and non-current obligations. A complete set of financial statements
including comparative figures from the prior year must be presented by a
business at least once per year including comparative amounts in the notes. IAS
1 was updated in September 2007 and applies to fiscal years starting on or
after January 1, 2009.
The financial statements are designed to
give information about an entity’s financial situation, financial performance,
and cash flows so that they can be used by a variety of users to make choices
about the economy.
IAS 1 – Components of financial statements
A complete set of financial statements
comprises these elements:
- Statement of the financial position as of the
end of the period - Statement of profit or loss and other
comprehensive income for the period - Statement of changes in equity for the
period - Statement of cash flows for the period
- Notes containing a summary of significant
accounting policies and other explanatory information - Comparative information prescribed by the
standard
IAS 1 mandates that current assets and
current liabilities be separated in a classified statement of financial status.
The profit or loss and other comprehensive income statements for the period
include the revenue, finance expenses, equity method portion of gain or loss
due to partners and joint ventures, tax expense, each component of other
comprehensive income, and total comprehensive income.
A company must adhere to IAS 1 and present
a separate statement of equity changes. IAS 1 mandates that the notes contain a
declaration of IFRS compliance, a review of significant accounting principles
applied, supporting information for the figures in the financial statements,
and further disclosures.
An entity may use different titles for the
assertions in addition to those listed above. An organization’s financial
statements must clearly specify in the notes that they adhere to IFRS
Standards.
If financial statements don’t meet all of
the standards, an entity cannot claim that they are compliant with IFRS
Standards. It is assumed that the use of IFRS Standards will produce financial
statements with a fair presentation, as well as additional disclosure as
needed. Going concern problems, offsetting, and modifications to presentation
or categorization are also covered by IAS 1. The IFRSs do not apply to reports
that are provided separately from the financial statements, such as value-added
statements, environmental reports, and management’s financial evaluations.
Get
to know more about IAS 1 From Annual Reporting
Annual reporting is a website that has a
vast knowledge base for IFRS Reporting. It has the actual standards issued by
the International Accounting Standards Board (IASB). The website guides readers
about accounting fundamentals. There are different chapters on different IFRS
topics arranged alphabetically which makes it easy for users to access them.
The website contains disclosure information, example accounting policies,
disclosure equity guidance, and others. If you would like more information,
please read on their website: annualreporting.info.
