Other disclosures

Disclosures about Dividends

In addition to the distributions information in the statement of changes in equity (see above), the following must be disclosed in the notes: the amount of dividends proposed or declared before the financial statements were authorised for issue but not recognized as a distribution to owners during the period, and the related amount per share and the amount of any cumulative preference dividends not recognized.

Capital Disclosures

An entity should disclose information about its objectives, policies and processes for managing capital. To comply with this, the disclosures include:

• Qualitative information about the entity's objectives, policies and processes for managing capital, including
• Description of capital it manages
• Nature of external capital requirements, if any
• How it is meeting its objectives
• Quantitative data about what the entity regards as capital
• Changes from one period to another
• Whether the entity has complied with any external capital requirements and
• If it has not complied, the consequences of such non-compliance

Disclosures about Puttable Financial Instruments

IAS 1 requires the following additional disclosures if an entity has a puttable instrument that is classified as an equity instrument:

• Summary quantitative data about the amount classified as equity
• The entity's objectives, policies and processes for managing its obligation to repurchase or redeem the instruments when required to do so by the instrument holders, including any changes from the previous period
• The expected cash outflow on redemption or repurchase of that class of financial instruments and
• Information about how the expected cash outflow on redemption or repurchase was determined

Notes to the financial statements

The notes must:

• Present information about the basis of preparation of the financial statements and the specific accounting policies used
• Disclose any information required by IFRSs that is not presented elsewhere in the financial statements and
• Provide additional information that is not presented elsewhere in the financial statements but is relevant to an understanding of any of them

Notes should be cross-referenced from the face of the financial statements to the relevant note.

IAS 1 suggest that the notes should normally be presented in the following order:

• A statement of compliance with IFRSs
• A summary of significant accounting policies applied, including:
• The measurement basis (or bases) used in preparing the financial statements
• The other accounting policies used that are relevant to an understanding of the financial statements
• Supporting information for items presented on the face of the statement of financial position (balance sheet), statement of comprehensive income (and income statement, if presented), statement of changes in equity and statement of cash flows, in the order in which each statement and each line item is presented
• Other disclosures, including:
• Contingent liabilities and undersigned contractual commitments
• Non-financial disclosures, such as the entity's financial risk management objectives and policies

Disclosure of judgments

An entity must disclose, in the summary of significant accounting policies or other notes, the judgments, apart from these involving estimations, that management has made in the process of applying the entity's accounting policies that have the most significant effect on the amounts recognized in the financial statements.

Examples cited in IAS 1 include management's judgments in determining:

• Whether financial assets are held-to-maturity investments
• When substantially all the significant risks and rewards of ownership of financial assets and lease assets are transferred to other entities
• Whether, in substance, particular sales of goods are financing arrangements and therefore do not give rise to revenue; and
• Whether the substance of the relationship between the entity and a special purpose entity indicates control

Disclosure of key resources of estimation uncertainty

An entity must disclose, in the notes, information about the key assumptions concerning the future, and other key sources of estimation uncertainty at the end of the reporting period, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year. These disclosures do not involve disclosing budgets or forecasts.

The following other note disclosures are required by IAS 1 if not disclosed elsewhere in information published with the financial statements:

• Domicile and legal form of the entity
• Country of incorporation
• Address of registered office or principal place of business
• Description of the entity's operations and principal activities
• If it is part of a group, the name of its parent and the ultimate parent of the group
• If it is a limited life entity, information regarding the length of the life

Statement of changes in equity

IAS 1 requires an entity to present a statement of changes in equity as a separate component of the financial statements. The statement must show:

• Total comprehensive income for the period, showing separately amounts attributable to owners of the parent and to non-controlling interests
• The effect of retrospective application, when applicable, for each component
• Reconciliations between the carrying amounts at the beginning and the end of the period for each component of equity, separately disclosing:
• Profit or loss
• Each item of owners, showing separately contributions by and distributions to owners and changes in ownership interests in subsidiaries that do not result in a loss of control

The following amounts may also be presented on the face of the statement of changes in equity, or they may be presented in the notes:

• Amounts or dividends are recognized as distributions, and
• The related amount per share

Statement of cash flows

Rather than setting out separate standards for presenting the cash flow statement, IAS 1 refers to IAS 7 - cash flow statement

Statement of comprehensive income

Comprehensive income for a period includes profit or loss for that period plus other comprehensive income recognized in that period. As a result of the revision to IAS 3, the standard is now using profit or loss rather than net profit or loss as the descriptive term for the bottom line of the income statement.

All items of income and expense recognized in a period must be included in profit or loss unless a standard or an interpretation requires otherwise. Some IFRSs require or permit that some components to be excluded from profit or loss and instead to be included in other comprehensive income.

The components of other comprehensive income include:

• Changes in revaluation surplus (IAS 16 & IAS 38)
• Actuarial gains and losses on defined benefit plans recognized in accordance with IAS 19
• Gains and losses arising from translating the financial statements of a foreign operation (IAS 21)
• Gains and losses on remeasuring available-for-sale financial assets (IAS 39)
• The effective portion of gains and losses on hedging instruments in a cash flow hedge (IAS 39)

An entity has a choice of presenting:

• A single statement of comprehensive income or
• Two statements:
• An income statements displaying components of profit or loss and
• A statement of comprehensive income that begins with profit or loss (bottom line of the income statement) and displays components of other comprehensive income

Minimum items of the face of the statement of comprehensive income should include:

• Revenue
• Finance costs
• Share of the profit or loss of associates and joint ventures accounted for using the equity method
• Tax expense
• A single amount comprising the total of
1. The post-tax profit or loss of discontinued operations
2. The post-tax gain or loss recognized on the disposal of the assets or disposal group(s) constituting the discontinued operation
• Profit or loss
• Each component of other comprehensive income classified by nature
• Share of the other comprehensive income of associates and joint ventures accounted for using the equity method
• Total comprehensive income

The following items must also be disclosed in the statement of comprehensive income all allocations for the period:

• Profit or loss for the period attributable to non-controlling interests and owners of the parent
• Total comprehensive income attributable to non-controlling interests and owners of the parent

Additional line items may be needed to fairly present the entity's results of operations.

No items may be presented in the statement of comprehensive income (or in the income statement, if separately presented) or in the notes as extraordinary items.

Certain items must be disclosed separately either in the statement of comprehensive income or in the notes, if material, including:

• Write-downs of inventories to net realizable value or of property, plant and equipment to recoverable amount, as well as reversals of such write-downs
• Restructurings of the activities of an entity and reversals of any provisions for the costs of restructuRing
• Disposals of items of property, plant and equipment
• Disposals of investments
• Discontinuing operations
• Litigation settlements
• Other reversals of provisions

Expenses recognized in profit or loss should be analyzed either by nature (raw materials, staffing costs, depreciation, etc) or by function (cost of sales, selling, administrative, etc). If an entity categorises by function, then additional information on the nature of expenses - at a minimum depreciation, amortisation and employee benefits expense - must be disclosed.

Statement of Financial Position

An entity must normally present a classified statement of financial position, separating current and non-current assets and liabilities. Only if a presentation based on liquidity provides information that is reliable and more relevant may the current / non-current split be omitted. In either case, if an assets (liability) category combines amounts that will be received (settled) after 12 months with assets (liabilities) that will be received (settled) within 12 months, note disclosure is required that separates the longer-term amounts from the 12-month amounts.

Current assets are cash; cash equivalents; assets held for collection, sale or consumption within the entity's normal operating cycle; or assets held for trading within the next 12 months. All other assets are non-current.

Current liabilities are those to be settled within the entity's normal operating cycle or due within 12 months, or those held for trading, or those for which the entity does not have an unconditional right to defer payment beyond 12 months. Other liabilities are non-current.

When a long-term debts is expected to be refinanced under an existing long facility and the entity has the discretion the debt is classified as non-current, even if due within 12 months.

If a liability has become payable on demand because an entity has breached an undertaking under a long-term loan agreement on or before the reporting date, the liability is current, even if the lender has agreed, after the reporting date and before the authorization of the financial statements for issue, not to demand payment as a consequence of the breach. However, the liability is classified as non-current if the lender agreed by the reporting date to provide a period of grace ending at least 12 months after the end of the reporting period, within the entity can rectify the breach and during which the lender cannot demand immediate repayment.

Minimum items on the face of the statement of financial position

• Property, plant and equipment
• Investment property
• IntangIble assets
• Financial assets
• Investments accounted for using the equity method
• Biological assets
• Assets held for sale
• Inventories
• Trade and other receivables
• Cash and cash equivalents
• Trade and other payables
• Provisions
• Financial liabilities
• Liabilities and assets for current tax, as defined in IAS 12
• Deferred tax liabilities and deferred tax assets, as defined in IAS 12
• Liabilities included in disposal groups
• Minority interest, presented within equity
• Issued capital and reserves attributable to equity holders of the parent

Additional line items may be needed to fairly present the entity's financial position.

IAS 1 does not prescribe the format of the balance sheet. Assets can be presented current the non-current, or vice versa and liabilities and equity can be presented current then non-current then equity, or vice versa. A net asset presentation (assets minus liabilities) is allowed.

Regarding issued share capital and reserves, the following disclosures are required:

• Numbers of shares authorized, issued and fully paid, and issued but not fully paid
• Par value
• Reconciliation of shares outstanding at the beginning and the end of the period
• Description of rights, preferences, and restrictions
• Treasury shares, including shares held by subsidiaries and associates
• Shares reserved for issuance under options and contracts
• A description of the nature and purpose of each reserve within owners' equity

IAS 1 - Presentation of Financial Statements

Background

This standard prescribes the basis for presentation of general purpose financial statements, to ensure comparability both with the entity's financial statements of previous periods and with the financial statements of other entities. To achieve this objective, this standard sets out overall requirements for the presentation of financial statements, guidelines for their structure and minimum requirements for their content.

IAS 1 sets out the overall framework and responsibilities for the presentation of financial statements, guidelines for their structure and minimum requirements for the content of the financial statements. Please note that standards for recognizing, measuring and disclosing specific transactions are addressed in other standards and interpretations.

Scope

IAS 1 applies to all general-purpose financial statements based on International Financial Reporting Standards. General purpose financial statements are those intended to serve users who do not have the authority to demand financial reports tailored for their own needs.

Objective of Financial Statements

The objective of general-purpose financial statements is to provide information about the financial position, financial performance and cash flows of an entity that is useful to a wide range of users in making economic decisions. To meet that objective, financial statements provide information about an entity's:

• Assets
• Liabilities
• Equity
• Income and expenses, including gains and losses
• Other changes in equity
• Cash Flows 

Components of Financial Statements

A complete set of financial statements should include:

• A statement of financial position at the end of the period
• A statement of comprehensive income for the period
• A statement of changes in equity for the period
• Statement of cash flows for the period
• Notes, comprising a summary of accounting policies and other explanatory notes

When an entry applies an accounting policy retrospectively or makes a retrospective restatement of items in its financial statements, or when it reclassifies items in its financial statements, it must also present a statement of financial position as at the beginning of the comparative period.

Retrospective application means adjusting the opening balance of each affected component of equity for the earliest prior period presented and the other comparative amounts disclosed for each prior period presented as if the new accounting policy had always been applied.

An entity may use titles for the statements other than those stated above.

Reports that are presented out side of the financial statements including financial reviews by management, environmental reports, and value-added statements are outside the scope of IFRSs.

Fair presentation and compliance with IFRSs

The financial statements must "present fairly" the financial position, financial performance and cash flows of an entity. Fair presentation requires the faithful representation of the effects of transactions, other events and conditions in accordance with the definitions and recognition criteria for assets, liabilities, income and expenses set out in the framework. The application of IFRSs, with additional disclosure when necessary, is presumed to result in financial statements that achieve a fair presentation.

IAS 1 requires that an entity whose financial statements comply with IFRSs make an explicit and unreserved statement of such compliance in the notes. Financial statements shall not be described as complying with IFRSs unless they comply with all the requirements of IFRSs (including interpretations)

Inappropriate accounting policies are not rectified either by disclosure of the accounting policies used or by notes or explanatory material.

IAS 1 acknowledges that, in extremely rare circumstances, management may conclude that compliance with an IFRSs requirement would be so misleading that it would conflict with the objective of financial statements set out in the framework. In such a case, the entity is required to depart from the standard requirement, with detailed disclosure of the nature, reasons and impact of the departure.

Going concern

When preparing financial statements, management shall make an assessment of an entity's ability to continue as a going concern. Financial statements shall be prepared on a going concern basis unless management either intends to liquidate the entity or to cease trading, or has no realistic alternative but to do so. When management is aware, in making its assessment, of material uncertainties related to events or conditions that may cast significant doubt upon the entity's ability to continue as a going concern, the financial statements should not be prepared on a going concern basis, in which case IAS 1 requires a series of disclosures.

Accrual Basis

IAS 1 requires that an entity prepare its financial statements, except for cash flow information, using the accrual basis of accounting.

Consistency of presentation

The presentation and classification of items in the financial statements shall be retained from one period to the next unless a change is justified either by a change in circumstances or a requirement of a new standard.

Materiality and aggregation

Each material class of similar items shall be presented separately in the financial statements. Items of a dissimilar nature or function shall be presented separately unless they are immaterial.

Omissions or misstatements of items are material if they could, individually or collectively; influence the economic decisions of users taken on the basis of the financial statements. Materiality depends on the size and nature of the omission or misstatement judged in the surrounding circumstances. The size or nature of the item, or a combination of both, could be the determining factor. If a line item is not individually material, it is aggregated with other items either on the face of those statements or in the notes. An item that is not sufficiently material to warrant separate presentation on the face of those statements may nevertheless be sufficiently material for it to be presented separately in the notes.

Offsetting

Assets and liabilities, and income and expenses, may not be offset unless required or permitted by a standard or an interpretation.

Comparative information

IAS 1 requires that comparative information shall be disclosed in respect of the previous period for all amounts reported in the financial statements, both face of financial statements and notes, unless another standard requires otherwise. If comparative amounts are changed or reclassified, various disclosures are required.

Structure and content of financial statements in general

Clearly identify:

• The financial statements
• The reporting enterprise
• Whether the statements are for the enterprise or for a group
• The date or period covered
• The presentation currency
• The level of precision (thousands, millions, etc.)

Reporting period

There is a presumption that financial statements will be prepared at least annually. If the annual reporting period changes and financial statements are prepared for a different period, the enterprise must disclose the reason for the change and a warning about problems of comparability.

Disclosures

• Statement of financial position
• Statement of comprehensive income
• Statement of cash flows
• Statement of changes in equity
• Notes to the financial statements
• Other disclosures