NZ IAS 1 Presentation of Financial Statements

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NZ IAS 1Presentation of Financial Statements
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NZ IAS 1

• Objective prescribe the basis for presentation
  of general purpose financial statements (para 1)
• Scope applies to all general purpose financial
  statements prepared and presented in accordance
  with NZ IFRSs (para 2)
• Financial statements are a structured
  representation of the financial position and
  financial performance of an entity (para 9)

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Financial statements

• Statement of comprehensive income
• Statement of financial position
• Statement of changes in equity
• Statement of cash flows
• Notes, comprising a summary of significant
  accounting policies and other explanatory notes
  (para 10(e))
• Note that the use of these names is not mandatory

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Overall considerations

• Fair (faithful) presentation (para 15) and
  compliance with NZ IFRS explicit unreserved
  statement needs to be made (para 16)
• Going-concern basis (paras 25 26)
• Accrual basis of accounting (paras 27 28)
• Materiality aggregation (paras 7 and 29-31)
• Offsetting (paras 3235)
• Frequency of reporting (paras 3637)
• Comparative information (paras 38-44)
• Consistency of presentation (paras 45 46)

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Statement of Financial Position

• The Statement of financial position is the basis
  for evaluating capital structure, liquidity,
  solvency and financial flexibility as well as for
  computing rates of return
• Has limitations such as the optional measurement
  of assets (cost or revaluation models) and
  omission of internally generated intangible
  assets
• Should always be read in conjunction with the
  Notes

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Classification

• Minimum requirements for display on the face of
  the Statement of Financial Position (line items)
  are in para 54
• Further line items can be displayed if relevant
  to an understanding of an entitys financial
  position (para 55)
• Items are classified on the basis of being
  current or non-current (current implies being
  sold, consumed or realised within the normal
  operating cycle or within 12 months of balance
  date)
• Note that items are usually displayed in
  liquidity order

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Further information

• Paras 77 78 note the sub classifications line
  items that need to be displayed this is usually
  complied with in the Notes
• Property, plant and equipment (see NZ IAS 16 para
  73)
• Receivables
• Inventories (see NZ IAS 2 para 36)
• Provisions
• Contributed equity reserves
• Note the disclosure for share capital (para 79)

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Statement of Comprehensive Income

• Total comprehensive income represents the change
  in equity resulting from transactions and other
  events other than changes resulting from
  transactions with owners in their capacity as
  owners (para 7) such as share issues or dividend
  payments
• The statement presents the total of income less
  expense (profit or loss) followed by other
  comprehensive income
• Other comprehensive income includes
• Changes in revaluation surplus (PPE/Intangibles)
  
• Exchange differences on translating foreign
  operations
• Actuarial gains/losses on defined benefit pension
  plans
• Gains/losses on remeasuring available for sale
  financial assets
• Effective portion of gains/losses on hedging
  instruments in a cash flow hedge
• Share of other comprehensive income (after tax)
  of associates and equity accounted joint ventures

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Presentation

• Minimum line items required on face of statement
  (para 82) are
• Revenue
• Finance costs (separate from other expenses)
• Share of profits/(losses) of associates and joint
  ventures accounted for under the equity method
• Tax expenses
• Profit/(loss) (Non-controlling interest/Owners of
  parent)
• Each component of other comprehensive income
• Share of comprehensive income of associates and
  joint ventures
• Total comprehensive income (NCI/Owners of parent)

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Material items

• When items of income or expense are material, an
  entity needs to disclose their nature and amount
  separately (para 97).
• These include (para 98)
• Inventory and PPE write-downs/impairment
• Cost of restructuring
• Disposals of PPE and other investments
• Profit/(losses) re discontinuing operations
• Litigation settlements
• Reversals of provisions

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Additional information

• Expenses are classified either on nature or
  function basis (para 99) - See examples in paras
  102 103
• If classifying by function, must disclose
  additional information on the nature of expenses,
  including depreciation, amortisation and employee
  benefits (para 104)
• Must also disclose
• Fees to auditors, disclosing separately fees for
  audit, audit-related aspects such as assurance
  work, tax and any other services (para NZ105.1)
• Total donations made (para NZ105.2)

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Revenue

• Revenue must be presented separately on the face
  of the Statement of Comprehensive Income
• NZ IAS 18 Revenue requires that the amount of
  each significant category of revenue is presented
  separately and at minimum
• Revenue from the sale of goods
• Revenue from the rendering of services
• Interest
• Royalties
• Dividends
• If any of the above include revenue arising from
  exchanges of goods and services, rather than
  being settled in cash, those amounts of revenue
  must be disclosed separately.

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Statement of Changes in Equity

• This discloses total comprehensive income and
  changes in owner related equity
• Specifically, the following is disclosed on the
  face of the statement (para 106)
• Total comprehensive income for the period
• For each component of equity, the effects of
  retrospective application or restatement as per
  NZ IAS 8
• For each component of equity a reconciliation
  between the opening and closing carrying amount,
  separately disclosing changes from profit or
  loss each item of other comprehensive income
  and transactions with owners (e.g. contributions
  and distributions)

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Notes

• Notes enhance the information in the financial
  statements (para 7)
• Each item on the face of the statements is
  cross-referenced to any related information in
  the Notes
• Order of Notes (as per para 114)
• Statement of compliance with IFRSs
• Summary of significant accounting policies
• Supporting information for items on face of
  statements
• Other disclosures such as contingent liabilities,
  unrecognised contractual commitments and
  non-financial disclosures (e.g. entitys
  financial risk management objectives and policies)