Framework for the preparation and presentation of financial statements
IAS 1 PRESENTATION OF FINANCIAL STATEMENTS
The objective of
IAS 1 (revised 1997) is to prescribe the basis for presentation of general
purpose financial statements based on International Financial Reporting
Standards. [IAS 1.2]
Objective of Financial Statements The
objective of general purpose 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. To
meet that objective, financial statements provide information about an
entity's: [IAS 1.7] - Assets.
- Liabilities.
- Equity.
- Income
and expenses, including gains and losses.
- Other
changes in equity.
- Cash
flows.
- a
statement of financial position at the end of the period,
- a
statement of comprehensive income for the period,
- a
statement of changes in equity for the period
- statement
of cash flows for the period, and
- notes,
comprising a summary of accounting policies and other explanatory notes.
·
The financial statements must "present fairly" the
financial position, financial performance and cash flows of an entity. Fair
presentation requires the faithful representation of the effects of
transactions, other events, and conditions in accordance with the definitions
and recognition criteria for assets, liabilities, income and expenses set out
in the Framework. The application of IFRSs, with additional disclosure when
necessary, is presumed to result in financial statements that achieve a fair
presentation. [IAS 1.13]
·
IAS 1 requires that an entity whose financial statements comply
with IFRSs make an explicit and unreserved statement of such compliance in the
notes. Financial statements shall not be described as complying with IFRSs
unless they comply with all the requirements of IFRSs (including
Interpretations). [IAS 1.14]
·
Inappropriate accounting policies are not rectified either by
disclosure of the accounting policies used or by notes or explanatory material.
[IAS 1.16]
·
IAS 1 acknowledges that, in extremely rare circumstances,
management may conclude that compliance with an IFRS requirement would be so
misleading that it would conflict with the objective of financial statements
set out in the Framework. In such a case, the entity is required to depart from
the IFRS requirement, with detailed disclosure of the nature, reasons, and
impact of the departure. [IAS 1.17-18]