IAS 1– Presentation of Financial Statement By : Mehul Shah mehul@raseshca.com 9723459572 By CA Mehul Shah ( 9723459572 )

high quality, enforceable and global IASB Structure IASC Foundation appoints appoints oversees funds appoints reports reports SAC advises IASB interprets IFRIC creates IFRS high quality, enforceable and global By CA Mehul Shah ( 9723459572 )

Principles vs. Rules Principles Only U.S. Rules Only GAAP IFRS By CA Mehul Shah ( 9723459572 )

IASB Standards and History 1973 International Accounting Standards (IAS) ↓ 2001 SIC Interpretations (SIC) 2001 International Financial Reporting Standards (IFRS) ↓ Present IFRIC Interpretations (IFRIC) By CA Mehul Shah ( 9723459572 )

Features of IFRS Notes to accounts shall run into pages… Globally accepted Simplified ( but significant subjectivity involved) Substance over form Time value of money Fair value Restatement More disclosure and reporting requirements Notes to accounts shall run into pages… By CA Mehul Shah ( 9723459572 )

Movement toward one set of standards - benefits Greater transparency Greater credibility Greater comparability between companies wherever they are Greater cross-border capital flows Greater Investor confidence and understanding Thriving economies By CA Mehul Shah ( 9723459572 )

IAS -1 – General Features Fair presentation and compliance with IFRS Going concern Accrual basis of accounting –except for statement of cash flows Materiality and aggregation Consistency Offsetting Frequency of reporting Comparative information Consistency of presentation More or less similar to AS 1 ►Fair presentation and compliance with IFRS General presumption that Compliance with IFRS = fair. But Departation is required in the extremely rare circumstances where the management Concludes that compliance with the specific requirement would not meet the objective of the standard. It should also consider how its own circumstances differ from the other entities that comply with the relevant IFRS requirement ►Going concern Management is required to assess , at the time of preparing the financial statements, the entities ability to continue as a going concern. MM may need to consider very carefully the company’s ability to meet its liabilities as they fall due. ►Accrual basis of accounting –except for statement of cash flows ►Materiality and aggregation ►Offsetting Offsetting or netting of assets and liabilities and of income and expenses is permitted when expressly required or permitted by an Accounting standard. E.g : Deferred tax asset. ►Frequency of reporting An entity shall present a complete set of financial statements ( including comparative statements) At least annaully ►Comparative information ►Consistency of presentation An entity shall retain the presentation and classification of items in FS unless IFRS requrires change in presentation. A deparatation of IFRS is allowable in rarest circumstances to comply law or if management feels it necessary to maintain confidentiality ►Going concern : Assessible at each reporting period. ►Consistency <<Speaker (host, expert, auditor)>> : <<Replace with narrative script for this character>> Note: Add "Click the flashing button when you are ready to continue" to the scrip in when you want to pause the program for class discussion or activites. By CA Mehul Shah ( 9723459572 )

IAS -1 – Complete set A complete set of financial statements comprises: A statement of financial position as at the end of the period A statement of comprehensive income for the period A statement of changes in equity for the period A statement of cash flows for the period Notes, comprising a summary of significant accounting policies and other explanatory information Start from : In previous slide, I told, An entity shud present complete set of financial statement atleast annually. Wat is complete set? By CA Mehul Shah ( 9723459572 )

Statement of Financial Position One year comparatives required for all amounts reported in the financial statements,( including notes ) A statement of financial position as at the beginning of the earliest comparative period is required when an entity makes any changes therein pursuant to Retrospective application of a new accounting policy; or Retrospective restatement of items in its financial statements, or Reclassification of items in its financial statements. More or less similar to AS 1 … Use E n Y for explaning ►Fair presentation and compliance with IFRS ►Going concern ►Accrual basis of accounting –except for statement of cash flows ►Materiality and aggregation ►Consistency ►Offsetting ►Frequency of reporting ►Comparative information ►Consistency of presentation <<Speaker (host, expert, auditor)>> : <<Replace with narrative script for this character>> Note: Add "Click the flashing button when you are ready to continue" to the scrip in when you want to pause the program for class discussion or activites. By CA Mehul Shah ( 9723459572 )

Statement of Financial Position An entity must present current and non-current assets, and current and non-current liabilities, as separate classifications, Current assets are one Expected to be realised in, or intended for sale or consumption in, the entity‟s normal operating cycle Held primarily for trading purposes Expected to be realised within 12 months after the reporting period, or Cash or a cash equivalent asset that is not restricted as to its use All other assets are classified as non-current assets More or less similar to AS 1 … Use E n Y for explaning ►Fair presentation and compliance with IFRS ►Going concern ►Accrual basis of accounting –except for statement of cash flows ►Materiality and aggregation ►Consistency ►Offsetting ►Frequency of reporting ►Comparative information ►Consistency of presentation <<Speaker (host, expert, auditor)>> : <<Replace with narrative script for this character>> Note: Add "Click the flashing button when you are ready to continue" to the scrip in when you want to pause the program for class discussion or activites. By CA Mehul Shah ( 9723459572 )

Statement of Financial Position Examples of current assets include Inventories Trade receivables Examples of non-current assets may include Property, plant and equipment and intangible assets Financial assets expected to be realised more than 12 months after the balance sheet date Deferred Tax More or less similar to AS 1 … Use E n Y for explaning ►Fair presentation and compliance with IFRS ►Going concern ►Accrual basis of accounting –except for statement of cash flows ►Materiality and aggregation ►Consistency ►Offsetting ►Frequency of reporting ►Comparative information ►Consistency of presentation <<Speaker (host, expert, auditor)>> : <<Replace with narrative script for this character>> Note: Add "Click the flashing button when you are ready to continue" to the scrip in when you want to pause the program for class discussion or activites. By CA Mehul Shah ( 9723459572 )

Statement of Financial Position – A Situation If an entity breaches an undertaking or covenant under a long-term loan agreement with the effect that the liability becomes payable on demand, the liability is classified at the reporting period as: Current, even if the lender has agreed, after the reporting period and before the financial statements are authorized for issue, not to demand payment, or Non-current, if the lender has agreed by the reporting period to provide a period of grace, ending at least 12 months after the reporting period. Period of grace is a period during which it cannot demand immediate repayment and within which the entity can rectify the breach. More or less similar to AS 1 … Use E n Y for explaning ►Fair presentation and compliance with IFRS ►Going concern ►Accrual basis of accounting –except for statement of cash flows ►Materiality and aggregation ►Consistency ►Offsetting ►Frequency of reporting ►Comparative information ►Consistency of presentation <<Speaker (host, expert, auditor)>> : <<Replace with narrative script for this character>> Note: Add "Click the flashing button when you are ready to continue" to the scrip in when you want to pause the program for class discussion or activites. By CA Mehul Shah ( 9723459572 )

Statement of Comprehensive Income Entity has an option to present all items of income or expense recognised during the period using either of two options Two statements approach One statement displaying components of profit or loss (income statement); and Second statement beginning with profit or loss and displaying components of other comprehensive income. Or Single statement comprising both components of profit or loss as well as other comprehensive income. More or less similar to AS 1 … Use E n Y for explaning ►Fair presentation and compliance with IFRS ►Going concern ►Accrual basis of accounting –except for statement of cash flows ►Materiality and aggregation ►Consistency ►Offsetting ►Frequency of reporting ►Comparative information ►Consistency of presentation <<Speaker (host, expert, auditor)>> : <<Replace with narrative script for this character>> Note: Add "Click the flashing button when you are ready to continue" to the scrip in when you want to pause the program for class discussion or activites. By CA Mehul Shah ( 9723459572 )

Statement of Comprehensive Income Analysis of expenses (on face or in notes): nature of expenses; or function of expenses “No extraordinary items” and therefore no profit or loss from ordinary activities By CA Mehul Shah ( 9723459572 )

Other Comprehensive Income Examples of items to be included under the statement Revaluation surplus/ reserve on items of PPE Actuarial gains and losses, if entity adopts policy of recognizing the same directly in equity Gains/ losses arising from translating financial statements of a foreign operation Gains/ losses on re-measurement of available for sale financial assets Effective portion of gains or losses on hedging instruments in a cash flow hedge Entity‟s share in comprehensive income of associates and joint ventures By CA Mehul Shah ( 9723459572 )

Statement of Other Comprehensive Income Reclassification adjustments relating to components of other comprehensive income to be disclosed either on face or in notes By CA Mehul Shah ( 9723459572 )

Statement of Changes in equity This should include: total comprehensive income for the period Show separately total amounts attributable to owners of the parent and to non-controlling interest for each component of equity –the effect of retrospective application or retrospective restatement recognised in accordance with IAS 8; the amount of transactions with owners in their capacity as owners, showing separately contributions by and distributions to owners; and for each component of equity, a reconciliation between the carrying amount at the beginning and the end of the period, separately disclosing each change An entity should present, either in the statement of changes in equity or in the notes, the amount of dividends recognised as distributions to owners during the period, and the related amount per share. See “ yeh sirf presentation ki baat hai” So I want you to pay attention here By CA Mehul Shah ( 9723459572 )

Other disclosures The domicile and legal form of the entity, its country of incorporation, and the address of the registered office (or principal place of business) A description of the nature of the entity's operations and its principal activities The name of the parent and the ultimate parent of the group The amount of dividends proposed or declared before the financial statements were authorised for issue but not recognised as a distribution during the period, and the related amount per share The amount of any cumulative preference dividends not recognised If entity has limited life, information regarding the length of its life See “ yeh sirf presentation ki baat hai” So I want you to pay attention here By CA Mehul Shah ( 9723459572 )

Financial Statements Area Indian GAAP IFRS Primary literature AS 1 Disclosure of Accounting Policies IAS 1 Presentation of Financial Statements Presentation True and fair presentation Fair Presentation Statement of financial position (Balance Sheet) Formats are prescribed by the Companies Act and other industry regulations Separate classification for Current/Non Current in the statement of financial position. Specific items to be included in the statement of financial position. <<Speaker (host, expert, auditor)>>: <<Replace with narrative script for this character>> <<Speaker (host, expert, auditor)>> : <<Replace with narrative script for this character>> Note: Add "Click the flashing button when you are ready to continue" to the scrip in when you want to pause the program for class discussion or activites. By CA Mehul Shah ( 9723459572 )

Financial Statements Area Indian GAAP IFRS Statement of Comprehensive Income Formats for specific industry specified by the respective regulations. Specific items to be included. Expenses to be presented either by function or nature. Statement of Changes in Equity A statement of changes in equity is not required. Movements in share capital, retained earnings and other reserves are presented in schedules to financial statements. A statement of changes in equity is presented showing the total comprehensive income for the period effects of retrospective application or restatement on each component of equity transactions with owners and for each component of equity, a reconciliation between opening and closing balances, separately disclosing each change. <<Speaker (host, expert, auditor)>>: <<Replace with narrative script for this character>> <<Speaker (host, expert, auditor)>> : <<Replace with narrative script for this character>> Note: Add "Click the flashing button when you are ready to continue" to the scrip in when you want to pause the program for class discussion or activites. By CA Mehul Shah ( 9723459572 )

Financial Statements Area Indian GAAP IFRS Extraordinary items Events or transactions clearly distinct from ordinary activities of the entity and or expected to recur frequently or regularly Prohibited Disclosures of significant associates Detailed information is not required. Detailed information on significant associates’ assets, liabilities and results is required. <<Speaker (host, expert, auditor)>>: <<Replace with narrative script for this character>> <<Speaker (host, expert, auditor)>> : <<Replace with narrative script for this character>> Note: Add "Click the flashing button when you are ready to continue" to the scrip in when you want to pause the program for class discussion or activites. By CA Mehul Shah ( 9723459572 )

Financial Statements Area Indian GAAP IFRS Offsetting of Assets and Liabilities No specific guidance. Assets and Liabilities cannot be set off unless permitted under the standards. Financial assets and liabilities can be set off if the entity has legally enforceable right to set off and intends to settle on a net basis. <<Speaker (host, expert, auditor)>>: <<Replace with narrative script for this character>> <<Speaker (host, expert, auditor)>> : <<Replace with narrative script for this character>> Note: Add "Click the flashing button when you are ready to continue" to the scrip in when you want to pause the program for class discussion or activites. By CA Mehul Shah ( 9723459572 )

By CA Mehul Shah ( 9723459572 )