IAS 1 Presentation of financial statements

Presented by : FATIMA ZAFAR

Financial Statements And Their Objectives

Financial statements are:
Structured representation of the financial position and financial performance of an entity.

Objective:
To provide fair information and compliance with IFRS 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.

The Framework
The International Accounting Standards (IAS), in particular guidance on presentation and disclosure Local statutory requirements:
The Companies Ordinance, 1984, in particular the Fourth/ Fifth Schedule for presentation purposes Directives of the regulatory bodies Industry specific legislation Generally accepted accounting principles (GAAP).

Components of Financial Statements

General purpose financial statements comprise of:
Balance Sheet Income Statement Statement of changes in equity Cash flow statement Notes to the financial statements

Components of Financial Statements (contd.)

Listed Cos .
Balance sheet Profit and loss Statement of changes in equity Cash flow Notes

Non Listed Cos.

Balance sheet Profit and loss Notes

4th schedule applies This includes private companies and public non-listed companies that are subsidiaries of listed companies

5th schedule applies

The Annual Report other information

Other information includes the following:

TYPE OF REPORT
Directors report Statement of Compliance with Code of corporate governance Company information including financial progress reports, management structure etc

REQUIREMENT OF:
Companies Ordinance 1984 Listing regulations

Review of the Financial Statements

Variation in presentation may arise from difference in:
Nature of business of the entity Type of Company (listed, non-listed public, private) Consolidated or unconsolidated accounts Management judgement on matters not specified by statute / standards

Review of the Financial Statements (Contd.)

Name of reporting entity. Balance sheet date/period of account. Presentation currency. Level of rounding used in presenting amounts. Comparatives. F/s amounts supported by adequate notes. Each F/s component signed by director and chief executive.

Review of Balance Sheet Presentation

ASSETS:

Fixed Assets Long term investments Long term loans and advances Long term deposits and prepayments Current assets
Stores and spares Stock in trade Trade debts Loans and advances Trade deposits, prepayments Interest accrued Other receivables Financial assets Tax refunds Cash and bank balances

Balance Sheet (Contd.)

SHARE CAPITAL & RESERVES:

Share capital Capital reserves Revenue reserves Surplus on revaluation of fixed assets
Long term financing Debentures Liabilities against assets subject to finance lease Long term Murabaha Long term Deposits Deferred Liabilities

NON CURRENT LIABILITIES:

Balance Sheet (Contd.)

CURRENT LIABILITIES: Trade and other payables Interest, profit, markup accrued Short term borrowings Current portion of long term borrowings Current portion of long term murabaha Provisions for taxation

CONTINGENCIES AND COMMITMENTS:

(Shown as a Foot Notes )

Review of Income Statement

TURNOVER: EXPENSES: Cost of sales Distribution cost Administrative expenses Other operating expenses Finance cost OTHER OPERATING INCOME: Income from financial assets Income from investments/debts of related parties Income from assets other than financial assets

Review of Statement of Cash Flow

Cash flows may be prepared under the indirect or direct method. Discussion will follow the line items of the sample cash flow:
from operating activities from investing activities from financing activities cash& equivalents

Cash flows are prepared in accordance with the requirements of IAS 7

Review of Statement of Changes in Equity

Please review sample statements of changes in equity Statement may either show:
All changes in equity Changes other than transactions with equity holders

Amended Terms
Terms before 2007 revision of IAS 1
Balance Sheet Cash Flow Statement

Terms as amended by IAS 1(2007)

Statement of Financial Position Statement of Cash Flows

Income Statement (only one statement is prepared )

Statement of Comprehensive Income (income statement is retained in two statements)

Although this is optional for entities to adopt these amended terms .

Summary of IAS 1
IAS 1 deals with fair structured presentation of Financial Statements in regard to its components and other reports based on Accrual Accounting system of a Going Concern entity in a Logical Order, which provides the disclosures about Material Information to its stakeholders .