PAS 1 FS Presentation PDF

GENERAL FEATURES FOR THE PRESENTATION OF THE FINANCIAL STATEMENTS Reference: THE PHILIPPINE FINANCIAL REPORTING by Empleo & Robles General Features for the Presentation of the Financial Statements Reference: Empleo & Robles Fair Presentatio...

GENERAL FEATURES FOR THE PRESENTATION OF THE FINANCIAL STATEMENTS Reference: THE PHILIPPINE FINANCIAL REPORTING by Empleo & Robles General Features for the Presentation of the Financial Statements Reference: Empleo & Robles Fair Presentation & Compliance with IFRS Consistency of Going Concern Presentation GENERAL Comparative Accrual Basis of Information FEATURES Accounting per IAS 1 Frequency of Materiality and Reporting Aggregation Offsetting General Features for the Presentation of the Financial Statements Reference: Empleo & Robles Fair Presentation & Compliance with FAIR PRESENTATION AND IFRS COMPLIANCE WITH IFRS Consistency of Going Concern Presentation Financial statements shall present fairly the financial position, financial performance, and cash flows of the enterprise. GENERAL FEATURES Comparative Accrual Basis of Fair presentation requires faithful Information per IAS 1 Accounting presentation of the effects of transactions, other events and conditions in accordance with the definitions and recognition criteria for Frequency of Materiality and Reporting Aggregation assets, liabilities, income, and expenses set out in the Conceptual Offsetting Framework. General Features for the Presentation of the Financial Statements Reference: Empleo & Robles Fair Presentation & Compliance with FAIR PRESENTATION AND IFRS COMPLIANCE WITH IFRS Consistency of Going Concern Presentation Application of IFRS with additional disclosures, when necessary, is presumed to result in financial statements that achieve a fair GENERAL FEATURES Comparative Accrual Basis of presentation (paragraph 15, IAS 1) Information per IAS 1 Accounting Frequency of Materiality and Reporting Aggregation Offsetting General Features for the Presentation of the Financial Statements Reference: Empleo & Robles Fair presentation requires an entity to (paragraph 17, IAS 8): a) Select accounting policies based on PAS/IAS 8, observing the hierarchy in formulating accounting policies. b) Present information, including accounting policies, in a manner that provides relevant, reliable, comparable, and understandable information, and c) Provide additional disclosures when compliance with the specific requirements of the IFRS is insufficient to enable the users to understand the impact of a particular transaction, other event or condition on the entity’s financial position and performance. General Features for the Presentation of the Financial Statements Reference: Empleo & Robles Philippine Financial Reporting Standards (PFRS), as used in PAS 1, are Standards and Interpretations adopted by the Financial Reporting Standards Council. They comprise: a) Philippine Financial Reporting Standards (based on IFRS and originally promulgated by International Accounting Standards Board); b) Philippine Accounting Standards (based on International Accounting Standards and originally promulgated by International Accounting Standards Committee, subsequently reviewed, improved, amended or redrafted by the IAS Board); and c) Interpretations originated by the: o International Financial Reporting Interpretations Committee (IFRIC – interprets the work of IASB) o Standing Interpretations Committee (SIC – interpreted the work of then IASC); and o Philippine Interpretations Committee (PIC) General Features for the Presentation of the Financial Statements Reference: Empleo & Robles DEPARTURE FROM STANDARDS In extremely rare circumstances, the management shall depart from the specific requirements of the IFRS when it concludes that compliance would make the financial information misleading, provided further that the regulatory framework requires, or does not prohibit such a departure. In such circumstances, the entity shall make the following disclosures (paragraph 20, IAS 1): (a) FS present fairly the entity’s financial position, financial performance, and cash flows; (b) It has complied with applicable IFRS, except that it has departed from a particular requirement to achieve a fair presentation; (c) Title of IFRS from which the entity has departed, the nature of departure (including treatment that IFRS would require), the reason why treatment would be misleading in the circumstances that it would conflict with the objective in the Conceptual Framework, and the treatment adopted; and (d) Financial impact of departure on each item that have been reported in complying with the requirement (for each period presented). General Features for the Presentation of the Financial Statements Reference: Empleo & Robles In rare circumstances when management believes that departure from IFRS is necessary to achieve the objective of financial statements, but relevant regulatory framework prohibits departure, the enterprise shall reduce the perceived misleading aspects of compliance by disclosing (paragraph 23, IAS 1): (a) Title of Standard or Interpretation in question, the nature of requirement, and the reason why management concluded that complying with that requirement is so misleading that it conflicts with the objective of financial statements; and (b) The adjustments in each item that management has concluded would be necessary to achieve fair presentation. General Features for the Presentation of the Financial Statements Reference: Empleo & Robles Fair Presentation & Compliance with GOING CONCERN IFRS Consistency of Going Concern Financial statements should be Presentation prepared on a going concern basis unless management either intends to liquidate the enterprise or cease in trading, or has no realistic alternative Comparative GENERAL FEATURES Accrual Basis of but to do so. Information per IAS 1 Accounting Frequency of Materiality and Reporting Aggregation Offsetting General Features for the Presentation of the Financial Statements Reference: Empleo & Robles Fair Presentation & Compliance with GOING CONCERN IFRS Consistency of Going Concern When financial statements are not Presentation prepared on a going concern basis, the following shall be disclosed in the notes to the financial statements: Comparative GENERAL FEATURES Accrual Basis of (a) The fact that financial statements are Information per IAS 1 Accounting not prepared on a going concern basis; (b) The basis on which the financial statements are prepared; and Frequency of Materiality and Reporting Aggregation (c) The reason why the enterprise is not considered to be a going concern. Offsetting General Features for the Presentation of the Financial Statements Reference: Empleo & Robles Note on Going Concern: The management should assess the ability of the enterprise to continue operations for a period of at least, but not limited to, twelve (12) months. When the enterprise has a history of profitable operations and ready access to financial resources, no detailed analysis is necessary to evaluate the capacity of the enterprise to continue operations in the future. When enterprise is aware of significant uncertainties that may cast doubt upon the entity’s ability to continue as a going concern, management may consider reviewing the basis for measurement of assets and liabilities. Under such circumstance, financial statements shall disclose these uncertainties, basis for presentation, and reasons why entity is not viewed as going concern. General Features for the Presentation of the Financial Statements Reference: Empleo & Robles Fair Presentation ACCRUAL BASIS & Compliance with IFRS Consistency of An enterprise should prepare its financial Presentation Going Concern statements, except for cash flow information, under the accrual basis of accounting. Comparative GENERAL FEATURES Accrual Basis of Information per IAS 1 Accounting Frequency of Materiality and Reporting Aggregation Offsetting General Features for the Presentation of the Financial Statements Reference: Empleo & Robles Under the accrual basis of accounting: Transactions and events are recognized when they occur (not when cash is received or paid). Transactions are recorded and reported in the financial statements of the periods to which they relate. Expenses are recognized on the basis of: o Direct matching – a direct association between costs incurred and earning of specific items of income; o Systematic and rational allocation – systematically allocating cost of asset acquired to periods of benefit. General Features for the Presentation of the Financial Statements Reference: Empleo & Robles Note on Accrual Basis of Accounting: Accrual basis of accounting and expense recognition principles do not allow the recognition of assets for costs which are not expected to provide probable future economic benefits to the enterprise. Accrual basis applies revenue recognition principles. o Revenue is recognized at the point of delivery of goods and services, provided that it would result to an inflow of economic benefits that could be reliably measured. General Features for the Presentation of the Financial Statements Reference: Empleo & Robles Fair Presentation MATERIALITY AND AGGREGATION & Compliance with IFRS Each material item should be Consistency of Presentation Going Concern presented separately in the financial statements. Immaterial amounts of similar nature or functions should be aggregated Comparative GENERAL FEATURES Accrual Basis of as one-line item on the face of Information per IAS 1 Accounting financial statements. The details comprising the amounts, if relevant to the decision needs of Frequency of Materiality and Reporting Aggregation the users, will be presented in the notes to the financial statement. Offsetting General Features for the Presentation of the Financial Statements Reference: Empleo & Robles Fair Presentation MATERIALITY AND AGGREGATION & Compliance with IFRS Consistency of Information is material if its non- Presentation Going Concern disclosure would influence decision or evaluation of the user. Materiality depends on the size and Comparative GENERAL FEATURES Accrual Basis of nature of the item judged in the Information per IAS 1 Accounting particular circumstances of its omission. Frequency of Materiality and Reporting Aggregation Offsetting General Features for the Presentation of the Financial Statements Reference: Empleo & Robles Note on Materiality and Aggregation: The process of aggregation and classification involves the presentation of condensed and classified information. If item taken individually will call the attention of the user – item is presented as a single line item on the face of the financial statements. If item is not considered significant – aggregated with other items, either on the face or in the notes. Materiality is considered a threshold for recognition. A specific disclosure requirement in an accounting standard need not apply if the item is not material. General Features for the Presentation of the Financial Statements Reference: Empleo & Robles Fair Presentation & Compliance with IFRS Consistency of Going Concern Presentation GENERAL Comparative Accrual Basis of Information FEATURES Accounting per IAS 1 Frequency of Materiality and Reporting Aggregation Offsetting General Features for the Presentation of the Financial Statements Reference: Empleo & Robles Fair Presentation & Compliance with OFFSETTING IFRS Consistency of Offsetting means deducting one Presentation Going Concern item from another item of different nature and presenting only the net on the face of financial statements. Comparative GENERAL FEATURES Accrual Basis of NOT considered offsetting: Information per IAS 1 Accounting Presenting receivables net of the related allowance for bad debts Frequency of Materiality and Reporting Aggregation Property, plant, and equipment net of accumulated depreciation Offsetting General Features for the Presentation of the Financial Statements Reference: Empleo & Robles Note on Offsetting: GENERAL RULE Offsetting is not allowed, unless required or permitted by a Standard or an Interpretation. EXCEPTION Offsetting is also allowed and applied when presenting on the net basis reflects the substance of the transaction or other event, say, netting any income with related expenses arising on the same transaction. General Features for the Presentation of the Financial Statements Reference: Empleo & Robles Offsetting Illustrations: ✓ Deferred tax assets are set off against the differed tax liabilities, if they arise from deferred taxes imposed by only one taxing authority and are expected to reverse simultaneously (applies requirements of IAS 12 Income Taxes). ✓ The excess of proceeds from sale of property, plant, and equipment over its carrying amount is presented as a gain on the Statement of Comprehensive Income. ✓ Presenting only the net unrealized gain or loss on financial assets at FVPL and the net forex transaction gain or loss. General Features for the Presentation of the Financial Statements Reference: Empleo & Robles Fair Presentation & Compliance with FREQUENCY OF REPORTING IFRS Consistency of Going Concern Presentation Financial statements should be presented at least annually. (In exceptional cases) If statement Comparative GENERAL FEATURES Accrual Basis of of financial position date changes Information per IAS 1 Accounting and financial statements are prepared for a period longer or shorter than one year, that fact should be disclosed. Frequency of Materiality and Reporting Aggregation Offsetting General Features for the Presentation of the Financial Statements Reference: Empleo & Robles Fair Presentation & Compliance with FREQUENCY OF REPORTING IFRS Consistency of Going Concern Presentation The reason for using a period shorter or longer than one year and the fact that comparative amounts are not entirely comparable should likewise be Comparative GENERAL FEATURES Accrual Basis of disclosed. Information per IAS 1 Accounting Reporting annually does not prevent the enterprise from presenting interim financial Frequency of Reporting Materiality and Aggregation statements (shorter than one year). Offsetting General Features for the Presentation of the Financial Statements Reference: Empleo & Robles Fair Presentation & Compliance with COMPARATIVE INFORMATION IFRS Consistency of Going Concern Paragraph 38, IAS 1: Presentation Comparative information should be disclosed in respect of the preceding period for all financial information in the financial Comparative GENERAL FEATURES Accrual Basis of statements, except when IFRSs Information per IAS 1 Accounting permit or require otherwise. Comparative narrative and descriptive information shall likewise be included Frequency of Materiality and when it is relevant to an understanding Reporting Aggregation of the current period’s financial statements. Offsetting General Features for the Presentation of the Financial Statements Reference: Empleo & Robles In presenting information for the current year; Two sets of all components of financial statements are presented (end of current year and end of immediate prior year): o two statements of financial position General Features for the Presentation of the Financial Statements Reference: Empleo & Robles In presenting information for the current year; Two sets of all components of financial statements are presented (end of current year and end of immediate prior year): o two statements of comprehensive income General Features for the Presentation of the Financial Statements Reference: Empleo & Robles In presenting information for the current year; Two sets of all components of financial statements are presented (end of current year and end of immediate prior year): o two statements of changes in equity General Features for the Presentation of the Financial Statements Reference: Empleo & Robles In presenting information for the current year; Two sets of all components of financial statements are presented (end of current year and end of immediate prior year): o two statements of cash flows (one set for current year and another set for immediate prior year) General Features for the Presentation of the Financial Statements Reference: Empleo & Robles In presenting information for the current year; Two sets of all components of financial statements are presented (end of current year and end of immediate prior year): o two sets of notes General Features for the Presentation of the Financial Statements Reference: Empleo & Robles When an enterprise makes retrospective adjustment for any one or combination of the following, (a) change in accounting policy (b) correction of prior period error/s; and (c) reclassification or amendment of items in the financial statements Three (3) statements of financial position shall be presented, namely as at: (a) the end of current period (b) the end of the immediate prior period; and (c) the beginning of the preceding period This is done to ensure comparability of prior year information with the current period. General Features for the Presentation of the Financial Statements Reference: Empleo & Robles RECLASSIFICATION: When an entity reclassifies comparative amounts, it shall disclose: (a) the nature of reclassification (b) the amount of each item or class of items that is reclassified; and (c) the reason for the reclassification (paragraph 41, IAS 1) When it is impracticable to reclassify comparative amounts, an entity shall disclose the reason for not reclassifying the amount and nature of the adjustments that would have been made if the amount had been reclassified (paragraph 42, IAS 1). General Features for the Presentation of the Financial Statements Reference: Empleo & Robles Fair Presentation & Compliance with CONSISTENCY OF PRESENTATION IFRS Consistency of The presentation and classification of Presentation Going Concern items in the financial statements should be the same from period to period, unless (paragraph 45, IAS 1): a) it is apparent, following a significant Comparative GENERAL FEATURES Accrual Basis of change in the nature of the entity’s Information per IAS 1 Accounting operations or a review of its financial statements, that another presentation or classification would be more appropriate; or Frequency of Materiality and Reporting Aggregation b) an IFRS requires a change in presentation. Offsetting General Features for the Presentation of the Financial Statements Reference: Empleo & Robles Fair Presentation & Compliance with CONSISTENCY OF PRESENTATION IFRS Consistency of Going Concern Presentation The manner of presentation of financial statements shall be retained from period to period, unless the changed presentation is more useful to the users and Comparative GENERAL FEATURES Accrual Basis of enhances the relevance of Information per IAS 1 Accounting information. If presentation is changed, comparative financial statements Frequency of Reporting Materiality and Aggregation for prior period shall be re- presented, unless impracticable. Offsetting IDENTIFICATION OF THE FINANCIAL STATEMENTS Reference: THE PHILIPPINE FINANCIAL REPORTING by Empleo & Robles Identification of the Financial Statements Reference: Empleo & Robles IDENTIFICATION OF THE FINANCIAL STATEMENTS The financial statements shall be identified clearly and distinguished from other information in the same published document (paragraph 49, IAS 1): Each component shall be identified clearly. In addition, the following information should be displayed prominently and repeated, when necessary, for a proper understanding of the information presented (paragraph 51, IAS 1): a) The name of the reporting entity and other means of identification, and any change from the preceding financial statement date. b) Whether the financial statements cover the individual entity or group of entities. c) The statement of financial position date or period covered by the financial statements. d) The presentation currency. e) The level of rounding used in presenting amounts. PAS 1 Presentation of the Financial Statements Reference: Empleo & Robles End of Video Lectures. Thank you!