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IFRS Conceptual Foundations Of Financial Statements

IFRS Conceptual Foundations Of Financial Statements

IFRS Conceptual Foundations Of Financial Statements : Model Financial Statements a guide to applying International Financial Reporting Standards, changes and updated are also up-to dated.

IFRS Conceptual Foundations Of Financial Statements

IFRS Conceptual Foundations Of Financial Statements : Our Guides to financial statements help you to prepare financial statements in accordance with IFRS. They are compliance-focused and have two components:

  • Illustrative disclosures, including supplements, that illustrate one possible format for financial statements prepared under IFRS, based on a fictitious multinational corporation; and
  • a companion Disclosure checklist, which identifies the disclosures that may be required based on currently effective standards.

IFRS Model financial statements : Impact of the new standards

IFRS Conceptual Foundations Of Financial Statements : Users and regulators have shown a growing interest in the possible impact of the new major standards that have been issued but are not yet effective – i.e. IFRS 9 Financial Instruments, IFRS 15 Revenue from Contracts with Customers and IFRS 16 Leases. Regulators expect preparers to progressively enhance the related disclosures, including quantitative information, as new accounting policies are defined, estimation uncertainty reduces and the effective date of a new standard approaches.

The 2016 annual Illustrative disclosures therefore include disclosures on the possible impact of standards issued but not yet effective.

In addition, the 2017 interim Illustrative disclosures show how an entity might describe in its interim financial statements updates to information relevant to assessing the possible impact that the application of the new standards will have on its financial statements in the period of initial application.

IFRS Conceptual Foundations Of Financial Statements
Early adoption of the new standards

For entities that decide to early adopt, the following Illustrative disclosures are available:

IFRS Conceptual Foundations Of Financial Statements : But compliance is just the beginning…

IFRS Conceptual Foundations Of Financial Statements : Investors continue to ask for a step-up in the quality of business reporting, so companies should be careful not to become buried in compliance to the exclusion of relevance. In preparing their financial statements, companies need to focus on improving their communication by reporting financial information in a meaningful way and innovating their financial statement presentation and disclosure in the broader context of better business reporting. For more information, see our Better Business Reporting website.

Our Guides to Different information

Annual Illustrative disclosures2016 edition | 2015 edition | 2014 edition
Supplements to annual Illustrative disclosuresIFRS 15 supplement
IFRS 12 supplement
Annual Disclosure checklists2016 edition | 2015 edition | 2014 edition
Interim Illustrative disclosures2017 edition | 2016 edition | 2015 edition
Interim Disclosure checklists2017 edition | 2016 edition | 2015 edition
Annual Illustrative disclosures for sectors   Investment funds (2016)
Banks (IFRS 9; 2015)
Banks (IAS 39; 2016)

IFRS Conceptual Foundations Of Financial Statements : Objective of financial statements

IFRS Conceptual Foundations Of Financial Statements : Financial statements are a structured representation of the financial positions 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 and
  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.

The following are the general features in IFRS:

  • Fair presentation and compliance with IFRS: Fair presentation requires the faithful representation of the effects of the transactions, other events and conditions in accordance with the definitions and recognition criteria for assets, liabilities, income and expenses set out in the Framework of IFRS.
  • Going concern: Financial statements are present 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.
  • Accrual basis of accounting: An entity shall recognise items as assets, liabilities, equity, income and expenses when they satisfy the definition and recognition criteria for those elements in the Framework of IFRS.
  • Materiality and aggregation: Every material class of similar items has to be presented separately. Items that are of a dissimilar nature or function shall be presented separately unless they are immaterial.
  • Offsetting: Offsetting is generally forbidden in IFRS. However certain standards require offsetting when specific conditions are satisfied (such as in case of the accounting for defined benefit liabilities in IAS 19  and the net presentation of deferred tax liabilities and deferred tax assets in IAS 12 ).
  • Frequency of reporting: IFRS requires that at least annually a complete set of financial statements is presented. However listed companies generally also publish interim financial statements (for which the accounting is fully IFRS compliant)for which the presentation is in accordance with IAS 34 Interim Financing Reporting.
  • Comparative information: IFRS requires entities to present comparative information in respect of the preceding period for all amounts reported in the current period’s financial statements. In addition comparative information shall also be provided for narrative and descriptive information if it is relevant to understanding the current period’s financial statements. The standard IAS 1 also requires an additional statement of financial position (also called a third balance sheet) when an entity 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. This for example occurred with the adoption of the revised standard IAS 19 (as of 1 January 2013) or when the new consolidation standards IFRS 10-11-12 were adopted (as of 1 January 2013 or 2014 for companies in the European Union).
  • Consistency of presentation: IFRS requires that the presentation and classification of items in the financial statements is retained from one period to the next unless:
    1. it is apparent, following a significant change in the nature of the entity’s operations or a review of its financial statements, that another presentation or classification would be more appropriate having regard to the criteria for the selection and application of accounting policies in IAS 8; or
    2. an IFRS standard requires a change in presentation.

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