IAS1

International Accounting Standard 1: Presentation of Financial Statements or IAS 1 is

an international financial reporting standard adopted by the International Accounting Standards
Board (IASB). It lays out the guidelines for the presentation of financial statements and sets out
minimum requirements of their content; it is applicable to all general purpose financial
statements that are based on International Financial Reporting Standards (IFRS).

Purpose and Features

IAS 1 sets out the purpose of financial statements as the provision of useful information on the
financial position, financial performance and cash flowsof an entity, and categorizes the
information provided into assets, liabilities, income and expenses, contributions by and
distribution to owners, and cash flows. It lists the set of statements, for example the statement of
financial position and statement of profit and loss, that together comprise the financial statements.
IAS 1 also elaborates on the following features of the financial statements:

 fairly presented and compliant with IFRSs;

 prepared on a going concern basis;
 prepared using the accrual basis of accounting;
 has material classes presented separately;
 does not offset assets and liabilities;
 prepared at least annually;
 includes comparison with previous periods; and
 presented consistently across periods

Structure and Content

IAS 1 lists the line items that, as a minimum, are to be included The statements lists
requirements regarding the classification of information, such as requiring that current
liabilities be listed separately, and details on when to classify as liability as current as opposed to
non-current. It also sets out requirements regarding the notes to the financial statements,
including disclosures on accounting policy and information on assumptions used.[1]
IAS 1 was amended in 2007 to reflect a change in terminology that also affected other
accounting standards. The changes include the following.[4]
Term before amendment Term after amendment
Balance sheet Statement of financial position
Cash flow statement Statement of cash flows
Income statement Statement of comprehensive income

Notes to financial statements (notes) are additional information added to the end of financial
statements that help explain specific items in the statements as well as provide a more
comprehensive assessment of a company's financial condition. Notes to financial statements can
include information on debt, going concern criteria, accounts, contingent liabilities or contextual
information explaining the financial numbers (e.g. to indicate a lawsuit).
The notes clarify individual statement line-items. For example, if a company lists a loss on a fixed
asset impairment line in their income statement, notes could state the reason for the impairment
by describing how the asset became impaired. Notes are also used to explain the accounting
methods used to prepare the statements and they support valuations for how particular accounts
have been computed.
In consolidated financial statements, all subsidiaries are listed as well as the amount of
ownership (controlling interest) that the parent company has in the subsidiaries. Any items within
the financial statements that are valuated by estimation are part of the notes if a substantial
difference exists between the amount of the estimate previously reported and the actual result.
Full disclosure of the effects of the differences between the estimate and actual results should be
included.
IAS 1 sets out overall requirements for the presentation of financial statements, guidelines for
their structure and minimum requirements for their content. It requires an entity to present a
complete set of financial statements at least annually, with comparative amounts for the
preceding year (including comparative amounts in the notes).

A complete set of financial statements comprises:

 a statement of financial position as at the end of the period;

 a statement of profit and loss and other comprehensive income for the period. Other
comprehensive income is those items of income and expense that are not recognised in
profit or loss in accordance with IFRS Standards. IAS 1 allows an entity to present a
single combined statement of profit and loss and other comprehensive income or two
separate statements;
 a statement of changes in equity for the period;
 a statement of cash flows for the period;
 notes to the financial statement, comprising a summary of significant accounting
policies and other explanatory information; and
 a statement of financial position as at the beginning of the preceding comparative period
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.

An entity whose financial statements comply with IFRS Standards must make an explicit and
unreserved statement of such compliance in the notes. An entity must not describe financial
statements as complying with IFRS Standards unless they comply with all the requirements of
the Standards. The application of IFRS Standards, with additional disclosure when necessary, is
presumed to result in financial statements that achieve a fair presentation. IAS 1 also deals with
going concern issues, offsetting and changes in presentation or classification.