Financial Financial StatementsStatements

IAS 1IAS 1

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Related StandardsRelated Standards

Canadian GAAP Reference– HB 1400 General Standards of Financial

Statement Presentation– HB 1505 Disclosure of Accounting Policies– HB 1510 Current Assets and Current Liabilities– HB 1520 Income Statement– HB 1530 Comprehensive Income– HB 1535 Capital Disclosures– HB 3480 Extraordinary Items

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Related StandardsRelated StandardsFAS 130 Reporting Comprehensive FAS 130 Reporting Comprehensive

IncomeIncome

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Related StandardsRelated Standards IFRS 5 Non-current Assets Held for IFRS 5 Non-current Assets Held for

Sale and Discontinued OperationsSale and Discontinued Operations IFRS 7 Financial Instruments: IFRS 7 Financial Instruments:

DisclosuresDisclosures IAS 8 Accounting Policies, Changes IAS 8 Accounting Policies, Changes

in Accounting Estimates and Errorsin Accounting Estimates and Errors

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Purpose and Components of Purpose and Components of Financial StatementsFinancial Statements

Comparable statements more usefulComparable statements more useful IAS 1 looks to enhance comparabilityIAS 1 looks to enhance comparabilityApplies to general purpose financial Applies to general purpose financial

statementsstatementsMeets the needs of most usersMeets the needs of most users

““Financial statements are a structured Financial statements are a structured representation of the financial position representation of the financial position and financial performance of the entity.” and financial performance of the entity.”

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IAS 1 - OverviewIAS 1 - Overview Statement of financial positionStatement of financial position Statement of comprehensive income (this may be Statement of comprehensive income (this may be

augmented by a separate income statement)augmented by a separate income statement) Statement of changes in equityStatement of changes in equity Statement of cash flowsStatement of cash flows Notes including significant accounting policies Notes including significant accounting policies

and explanatory informationand explanatory information Statement of financial position at the beginning of Statement of financial position at the beginning of

the earliest comparative period when an entity the earliest comparative period when an entity applies an accounting policy retrospectively or applies an accounting policy retrospectively or makes a retrospective restatementmakes a retrospective restatement

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Fair Presentation and Fair Presentation and

Compliance with IFRSsCompliance with IFRSs Should present fairly - faithful representationShould present fairly - faithful representation Entity must:Entity must:

select and apply appropriate accounting policies select and apply appropriate accounting policies keeping in mind the GAAP hierarchy, keeping in mind the GAAP hierarchy,

present the information such that it provides, present the information such that it provides, relevant, comparable and understandable relevant, comparable and understandable information, andinformation, and

provide additional disclosures where necessary.provide additional disclosures where necessary. Note disclosures are not a substitute for Note disclosures are not a substitute for

proper accountingproper accounting May depart from GAAPMay depart from GAAP

Going Concern and Accrual Going Concern and Accrual Based AccountingBased Accounting

Accrual basisAccrual basisGoing concern assumedGoing concern assumed If not – new basis of accountingIf not – new basis of accounting

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MaterialityMaterialityOmissions or misstatements of items are Omissions or misstatements of items are

material if they could, individually or material if they could, individually or collectively, influence the economic collectively, influence the economic decisions of users taken on the basis of decisions of users taken on the basis of the financial statements. Materiality the financial statements. Materiality depends on the size and nature of the depends on the size and nature of the omission or misstatement judged in the omission or misstatement judged in the surrounding circumstances. The size or surrounding circumstances. The size or nature of the item, or a combination of nature of the item, or a combination of both, could be the determining factor.”both, could be the determining factor.”

PresentationPresentationIdentify what is includedIdentify what is includedMust display the followingMust display the following

1.1. the name of the entitythe name of the entity

2.2. whether the financial statements are whether the financial statements are consolidated or notconsolidated or not

3.3. the date of the balance sheet or period the date of the balance sheet or period coveredcovered

4.4. the reporting currency andthe reporting currency and

5.5. the level of rounding (e.g. $000s)the level of rounding (e.g. $000s)

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Frequency of reporting, Frequency of reporting, comparability and comparability and

consistencyconsistencyAt a minimum – annual statementsAt a minimum – annual statementsComparative required unless IFRS Comparative required unless IFRS

permits or requires otherwisepermits or requires otherwiseAt least two statements and a third if At least two statements and a third if

retrospective application or retrospective application or restatementrestatement

Presentation and classification should Presentation and classification should generally stay the same generally stay the same

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Statement of Financial Statement of Financial PositionPosition

  Information to be Presented in the Information to be Presented in the Statement of Financial PositionStatement of Financial PositionSufficiently differentSufficiently different

Based on size, function, nature and liquidity, Based on size, function, nature and liquidity, nature, timingnature, timing

Different measurement basesDifferent measurement basesSpecific items to be presented separatelySpecific items to be presented separatelyMay present relevant subcategoriesMay present relevant subcategoriesDetails re share capitalDetails re share capital

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Current assets and liabilitiesCurrent assets and liabilitiesSegregate current versus nonSegregate current versus nonOrder of liquidityOrder of liquidityCombinedCombinedAmounts beyond 12 months Amounts beyond 12 months

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Current AssetsCurrent AssetsAn entity classifies assets as current An entity classifies assets as current

assets when:assets when:

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Current LiabilitiesCurrent LiabilitiesAn entity classifies liabilities as An entity classifies liabilities as

current liabilities when:current liabilities when:

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Statement of Statement of Comprehensive IncomeComprehensive Income

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Total comprehensive incomeTotal comprehensive income……the change in equity during a the change in equity during a

period resulting from transactions period resulting from transactions and other events, other than those and other events, other than those changes resulting from transactions changes resulting from transactions with owners in their capacity as with owners in their capacity as owners.owners.

includes all components of profit or includes all components of profit or loss and of loss and of other comprehensive other comprehensive incomeincome as noted above as noted above

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Other Comprehensive Other Comprehensive IncomeIncome

1.1. changes in the revaluation surplus for property, changes in the revaluation surplus for property, plant and equipment and intangible assets, plant and equipment and intangible assets,

2.2. certain actuarial gains/losses on defined benefit certain actuarial gains/losses on defined benefit plans, plans,

3.3. gains/losses arising on translation of financial gains/losses arising on translation of financial statements of foreign operations,statements of foreign operations,

4.4. gains/losses arising from remeasuring available gains/losses arising from remeasuring available for sale securities and for sale securities and

5.5. gains/losses on cash flow hedges.gains/losses on cash flow hedges.

(IASCF, IAS 1.7)(IASCF, IAS 1.7)

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Presentation of Income Presentation of Income StatementsStatements

Nature of Expense presentationNature of Expense presentation

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Function of Expense presentation:Function of Expense presentation:

Presentation of Income Statements

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..Which one?Which one?

Either may be iusedEither may be iusedSurvey - 55% presented the statement Survey - 55% presented the statement

by function of expense and 45% by by function of expense and 45% by nature of expensenature of expense

Presentation of Income Statements

Statement of Changes in Statement of Changes in EquityEquity

This statement presents the following:This statement presents the following:

1.1. total comprehensive incometotal comprehensive income

2.2. for each component of equity, the for each component of equity, the effects of retrospective effects of retrospective application/restatementapplication/restatement

3.3. reconciliation between the carrying reconciliation between the carrying amount of each component of equity at amount of each component of equity at the beginning and end of the period.the beginning and end of the period.

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Statement of Changes in Statement of Changes in EquityEquity

Notes:Notes:augment the basic statementsaugment the basic statementsinclude information about the way they have include information about the way they have

been prepared been prepared provide additional descriptive and supportive provide additional descriptive and supportive

informationinformationshould be cross referenced should be cross referenced accounting policiesaccounting policieskey sources of estimation uncertaintykey sources of estimation uncertaintynature and structure of an entity’s capital and nature and structure of an entity’s capital and

how it is managed how it is managed

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Samples of and Excerpts Samples of and Excerpts from Selected Statements from Selected Statements

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Samples of and Excerpts from Selected Statements

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Statement of Comprehensive Statement of Comprehensive IncomeIncome

Statement of Changes in Statement of Changes in EquityEquity

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Looking AheadLooking AheadPart of MoUPart of MoUPhase A completePhase A completePhase B – in progressPhase B – in progressDiscussion paper planned 2008Discussion paper planned 2008

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Phase B Phase B consistent principles for aggregating information consistent principles for aggregating information

in each financial statementin each financial statement the totals and subtotals that should be reported in the totals and subtotals that should be reported in

each financial statementeach financial statement whether the direct or the indirect method of whether the direct or the indirect method of

presenting operating cash flows provides more presenting operating cash flows provides more useful informationuseful information

whether components of other comprehensive whether components of other comprehensive income should be reclassified to profit or loss and, income should be reclassified to profit or loss and, if so, the characteristics of the transactions and if so, the characteristics of the transactions and events that should be reclassified and when events that should be reclassified and when reclassification should be madereclassification should be made

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Phase BPhase B

(taken from Summary of tentative preliminary views (taken from Summary of tentative preliminary views (IASB and FASB))(IASB and FASB))

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ICMAP STAGE 1,2,3,4FUNDAMENTALS OF FINANCIAL ACCOUNTING

ECONOMICS

FUNDAMENTALS OF COST ACCOUNTING

FINANCIAL ACCOUNTING

COST ACCOUNTING PERFORMANCE APPRAISAL

ADVANCED FINANCIAL ACCOUNTING

PIPFAPIPFAFOUNDATION,INTERMEDIATE,FINALFOUNDATION,INTERMEDIATE,FINAL

BASIC ACCOUNTINGBASIC ACCOUNTINGBASIC COST ACCOUNTINGBASIC COST ACCOUNTINGFINANCIAL ACCOUNTINGFINANCIAL ACCOUNTINGPERFORMANCE MEASUREMENTPERFORMANCE MEASUREMENTFINANCIAL REPORTINGFINANCIAL REPORTINGMANAGEMENT ACCOUNTINGMANAGEMENT ACCOUNTING

COACHING CLASSES COACHING CLASSES

MA-ECONOMICSMA-ECONOMICSB.COMB.COMBBA & MBABBA & MBAO/A LEVEL (ACCOUNTING)O/A LEVEL (ACCOUNTING)

KHALID AZIZKHALID AZIZ

0322-33857520322-3385752

R-1173,ALNOOR SOCIETY, BLOCK 19, R-1173,ALNOOR SOCIETY, BLOCK 19, F.B.AREA, KARACHI, PAKISTANF.B.AREA, KARACHI, PAKISTAN