LACPA- IFRS Seminars

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LACPA- IFRS Seminars

• IAS 1 Presentation of Financial Statements
• Presented by Roger Nasr, Deloitte

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Structure of the standard

• Objective and scope
• Purpose of Financial statements
• Components of Financial Statements
• Definitions
• Overall considerations
• Structure and content

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Objective and scope

• Objective
• to prescribe basis for presentation of General
  Purpose financial statements
• in order to ensure comparability
• Scope
• all general purpose financial statements prepared
  under IFRS
• not condensed interim financial information

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Purpose of Financial statements

• Structured Presentation of
• Financial Position
• Financial Performance
• Results of Management Stewardship of the
  resources entrusted to it

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Components, complete set of financial statements

• Balance sheet
• Income statement
• Statement of changes in equity
• Cash flow statement
• Notes
• Accounting policies
• Explanatory notes

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Definitions

• Impracticable requirement
• Entity can not apply it after making every
  reasonable effort
• IFRS
• IFRS, IAS, IFRIC or SIC
• Material
• Omission or misstatement is material if it can
  influence the economic decision of users

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Overall considerations

• Fair presentation
• achieved through application of IFRS
• disclose compliance with IFRS
• full compliance with IFRS required
• application before effective date
• disclose that fact
• true and fair override
• only in extremely rare circumstances

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Overall considerations

• Fair presentation
• In extremely rare circumstances, where compliance
  with a Standard would be misleading so it would
  conflict with objective set out in the framework
• departure is permissible, if regulatory framework
  requires or does not prohibit
• Specified disclosure required

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Overall considerations

• Going concern
• no intention to liquidate or to cease trading
• Disclose in case of Material uncertainty
• Accrual basis - transactions and events
• are recognised when they occur, and
• in the periods to which they relate
• Consistency
• presentation classification be retained
• Unless change in nature of operations
  necessitates another presentation
• A standard or an interpretation requires a change

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Overall considerations

• Materiality aggregation
• material ? present separately
• immaterial ? aggregate with other items
• Offsetting
• Assets/Liabilities, and Income and expenses shall
  not be offset unless required or permitted
• Comparative information
• incl. narrative descriptive information

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Structure and content

• General
• identification of financial statements
• clearly distinguished from other information
• reporting period
• at least annually,
• to explain if longer or shorter
• Information required
• Name and change, if any
• Individual or group financials
• Period covered
• Currency
• Level of rounding

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Structure and content

• Balance sheet
• current vs. non-current distinction
• or, classify based on liquidity if more relevant
• obligatory line items on face of B/S
• disclosure required on face or in notes
• relevant sub-classifications of items above
• information on share capital and reserves

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Structure and content

• Minimum Items on face of Balance Sheet
• Property, Plant and Equipment
• Investment Property
• Intangible Assets
• Financial Assets
• Investments Accounted for using the equity method
• Biological Assets
• Inventories
• Trade and Other receivables
• Cash and Cash Equivalents
• Trade and Other Payables
• Provisions
• Financial liabilities
• Liabilities and Assets for current tax
• Deferred tax assets and liabilities
• Minority interest within equity
• Issued Capital and reserves attributable to
  equity holders of the parent

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Structure and content

• Current vs. non-current Assets
• Realised/settled in the normal course of
  operating cycle or within 12 month of the balance
  sheet date
• Held primarily for the purpose of being traded
• Unrestricted cash or a cash equivalent
• All other assets are non-Current

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Structure and content

• Current Vs. non Current Liabilities
• Settled in the normal course of operating cycle
  or due to be settled within 12 month of the
  balance sheet date
• Held primarily for the purpose of being traded
• No unconditional right to defer settlement for at
  least 12 months
• post-balance sheet events (refinancing,
  correction of defaults) do not affect current vs.
  non-current classification
• All other Liabilities are non-Current

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Structure and content

• Income statement
• obligatory line items on face of I/S
• To show as allocation
• Profit or loss attributable to Minority Interest
• Profit or loss attributable to equity holders of
  the parent
• expenses analysed on basis of
• nature
• Function
• Dividends should be disclosed plus per share (or
  in statement of changes in equity

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Structure and content

• Minimum Items on the face of the income statement
• Revenue
• Finance Costs
• Share of profit/loss of associates accounted for
  at the equity method
• Tax expense
• Sum of profit or loss on discontinued operations
  plus gain or loss on the disposal of discontinued
  operations assets
• Profit or loss
• No operating income/loss
• No extraordinary items

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Structure and content

• Income Statement presentation
• classification based on nature
• salaries, depreciation, transport, etc
• classification based on function
• cost of sales, distribution, administration

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Structure and content

• Statement of changes in equity
• separate component of financial statements
• On the face
• (a) Profit or loss for the period
• (b) gains and losses not reflected in income
  statement
• (a)(b) attributable to each of Minority Interest
  and equity holders of the parent
• also in statement or in the notes
• capital transactions with owners
• movements in accumulated profit
• movements in capital and reserves

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Structure and content

• Role of statement of changes in equity
• broader performance indicator
• total recognised gains and losses or
• comprehensive income
• Cash flow statement in accordance with IAS 7

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Structure and content

• Notes to the financial statements
• basis of preparation of financial statements
• accounting policies selected
• additional disclosure to present fairly
• other sundry disclosures
• e.g. domicile, legal form, country of
  incorporation

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• Case study 01
• Income statement presentation

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Classification by function
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