An Executive Guide to IFRS: Content, Costs and Benefits to Business

IAS 1 presentation of financial statements

This standard has been revised many times, and continues to be revised, although it will likely be replaced in 2012 or 2013 but not for application until some time after that. It is the standard of reference for the presentation of financial statements and some key disclosures. While IAS 1 does not explicitly declare this, the ultimate objective of IFRS, as laid out in its Conceptual Framework1, is to provide useful information to investors for making investment decisions. This is particularly relevant to the financial statements in that they try to distinguish the ongoing business from value changes and other changes in the business to help investors make their projections of future performance.

The standard does refer to users in the definition of materiality. It says that omissions or misstatements are material if they could influence the economic decisions of users. It adds that users are assumed to have a reasonable knowledge of business activities and accounting and a willingness to study the information provided in the financial statements with due diligence.

The standard provides that a complete set of financial statements consists of:

• Statement of Comprehensive Income
• Statement of Financial Position
• Statement of Changes in Equity
• Statement of Cash Flows
• Notes to the accounts.

The financial statements must always include previous year comparative figures. The names of the statements have been harmonized with those in use by the ...