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IFRS amendments to IAS 1

IFRS amendments to IAS 1

IFRS amendments to IAS 1: The International Accounting Standards Board (IASB) completed the first step in its Disclosure Initiative with the publication of Disclosure Initiative (Amendments to IAS 1). The narrow-focus amendments to IAS 1 Presentation of Financial Statements clarify, rather than significantly change, existing IAS 1 requirements. In most cases the proposed amendments respond to overly prescriptive interpretations of the wording in IAS 1.

The amendments to IAS 1 address concerns raised during the Agenda Consultation 2011, in research carried out for the IASB and during the Financial Reporting Disclosure Discussion Forum and the related survey.

International Financial Reporting Standards (IFRSs) are Standards and Interpretations adopted by the International Accounting Standards Board (IASB). They comprise:

  1. International Financial Reporting Standards.
  2. International Accounting Standards.
  3. Interpretations developed by the International Financial Reporting Interpretations Committee (IFRIC) or the former Standing Interpretations Committee (SIC).
IFRS amendments to IAS 1

IFRS amendments to IAS 1

IFRS amendments to IAS 1: OBJECTIVE

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. It sets out overall requirements for the presentation of financial statements, guidelines for their structure and minimum requirements for their content. 

The amendments relate to the following:

  • materiality.
  • order of the notes.
  • subtotals.
  • accounting policies.
  • disaggregation.

There is an emphasis on materiality. Specific single disclosures that are not material do not have to be presented – even if they are a minimum requirement of a standard.

The order of notes to the financial statements is not prescribed. Instead, companies can choose their own order, and can also combine, for example, accounting policies with notes on related subjects.

IFRS amendments to IAS 1 : It has been made explicit that companies:

  • should disaggregate line items on the balance sheet and in the statement of profit or loss and other comprehensive income (OCI) if this provides helpful information to users; and
  • can aggregate line items on the balance sheet if the line items specified by IAS 1 are immaterial.

Specific criteria are provided for presenting subtotals on the balance sheet and in the statement of profit or loss and OCI, with additional reconciliation requirements for the statement of profit or loss and OCI.

The presentation in the statement of OCI of items of OCI arising from joint ventures and associates accounted for using the equity method follows IAS 1’s approach of splitting items that may, or that will never, be reclassified to profit or loss.

 IFRS amendments to IAS 1

Now we will discuss about the amendment IAS1: 

Materiality and aggregation – Information is not to be aggregated or disaggregated in a manner that obscures material information and reduces the understand ability of financial statements

Materiality applies to all four primary financial statements and the notes to the financial statements – Even when a standard contains a list of specific minimum disclosure requirements, prepares need to assess whether each required disclosure is material, and consequently whether presentation or disclosure of that information is warranted. This combines with the existing definition of materiality in IAS 1.7, which requires consideration of items both individually and collectively, because a group of immaterial items may, when combined, be material. Prepares also need to consider whether particularly significant items mean that disclosures, in addition to minimum requirements specified in IFRSs, are required to provide an appropriate amount of information.

Statement of financial position, and statement of profit or loss and other comprehensive income – It is clarified that the requirements to present specific line items in the ‘statement of profit or loss and other comprehensive income’ and ‘statement of financial position’ can be met by dis aggregating these line items if this is relevant to an understanding of the entity’s financial position and performance. – New requirements are introduced when an entity presents subtotals in primary statements in accordance with IAS 1.55 and 85. The amendments clarify that additional subtotals must be made up of items recognised in accordance with IFRSs, need to be presented and labelled in a manner that makes the subtotals understandable and consistent from period to period, and are not permitted to be displayed with more prominence than the subtotals and totals required by IFRSs.

Notes : It is emphasised that understand ability and comparability of financial statements should be considered by an entity when deciding the order in which the notes are presented. – It is clarified that entities have flexibility for the order of the notes, which do not necessarily need to be presented in the order listed in IAS 1.114 (e.g. it may be decided to give more prominence to areas that the entity considers to be most relevant to its financial performance and position, such as grouping together information about items that are measured at fair value).

Disclosure of accounting policies:  The examples in IAS 1.120 of accounting policies for income taxes and foreign exchange gains and losses have been removed, because the examples were unclear about why a user of financial statements would always expect these specific policies to be disclosed. e) Equity accounted investments This amendment clarifies the presentation of an entity’s share of other comprehensive income (OCI) from equity accounted associates and joint ventures. The amendment would require entities to include two separate line items in OCI for those items, being amounts that will and will not be reclassified to profit or loss.

A little bit about The FINANCIAL STATEMENTS :

Financial statements are a structured representation of the financial position and financial performance of an entity. The objective of 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. Financial statements also show the results of the management’s stewardship of the resources entrusted to it. To meet this objective, financial statements provide information about an entity’s:

  1. Assets.
  2. Liabilities.
  3. Equity.
  4. Income and expenses, including gains and losses.
  5. Contributions by and distributions to owners in their capacity as owners.
  6. Cash flows. This information, along with other information in the notes, assists users of financial statements in predicting the entity’s future cash flows and, in particular, their timing and certainty.


IFRS – IAS 1 Presentation of Financial Statements ——-> Presentation of Financial Statements

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