Financial Statements Presentation Lecture 2

Study Notes

Recap from Last Lecture

Introduction to International Financial Reporting Standards (IFRS)
Importance of IFRS in financial reporting
Implications arising from the adoption of IFRS

Topics Covered

Definition and significance of financial statements and their presentation
Different types of financial statements relevant for stakeholders
Importance of effective financial statement presentation as outlined by International Accounting Standard 1 (IAS 1)

Financial Statements Presentation Guidelines

IAS 1 outlines standards for general purpose financial statements, fostering comparability across periods and entities.
General purpose financial statements cater to users who cannot request tailored reports.

Definitions

IFRS: International Financial Reporting Standards
IASB: International Accounting Standards Board
IASC: International Accounting Standards Committee
SIC: Standing Interpretations Committee
IFRIC: International Financial Reporting Interpretations Committee
Key terms: Owners, Profit, Loss

Purpose of Financial Statements

Provide stakeholders insight into the entity's financial position, performance, and cash flows.
Information included:
- Assets
- Liabilities
- Equity
- Income and Expenses
- Changes in equity and cash flows

Components of Financial Statements

Income Statement: Overview of income and expenses
Statement of Changes in Equity: Changes in equity not related to owners
Cash Flow Statement: Operating and investing inflows and outflows
Notes to Financial Statements: Accounting policies and explanatory notes

General Features of Financial Statements

Fair presentation and adherence to IFRS requirements
Management must affirm fair presentation of financial performance and position
Disclosures required if any IFRS requirement is not followed
Principles include: Going concern, Accrual basis, Materiality, Aggregation, Offsetting, Reporting frequency, Consistency

Structure and Content of Financial Statements

Statement of Financial Position at reporting date
Statement of Profit or Loss and Other Comprehensive Income for the period
Statement of Changes in Equity for the reporting period
Statement of Cash Flows for the period
Summary of significant accounting policies and other explanatory notes
Comparative data for prior periods when accounting policies are retrospectively applied

Objectives of Financial Statement Presentation

Ensuring cohesiveness within the financial statements
Facilitating disaggregation of data for clarity
Highlighting liquidity and financial flexibility of the entity

Types of Financial Statements Covered

Balance Sheet (Statement of Financial Position)
Profit and Loss Account (Statement of Profit or Loss)
Comprehensive Statement incorporating all elements of financial performance

Description

This lecture focuses on the meaning and importance of financial statements and their effective presentation in accordance with IAS 1. We'll also explore the types of financial statements and their implications under IFRS. Understanding these concepts is crucial for anyone involved in financial reporting.