2.  Prescribes basis for preparation of general purpose financial statements  Ensure comparability of entity’s financial statements

3.  Statement of financial position (Balance sheet)  Statement of profit or loss and other comprehensive income (Income statement)  Statement of changes in equity  Statement of cash flows (cash flow statement)  Notes to the financial statements  Comparative information IAS 1 :10 Components of financial statements

4.  a statement of financial position as at the beginning of the preceding period when an entity applies an accounting policy retrospectively or makes a retrospective restatement of items in its financial statements, or when it reclassifies items in its financial statements in accordance with a change in accounting policy, retrospective restatement or reclassification IAS 1 :10 Components of financial statements (Cont’d)

5.  IAS 1:15 - Financial statements should fairly present the financial position, financial performance and cash flows of an entity.  Where IFRS is applied together with additional disclosures where necessary – fair presentation is presumed achieved

6.  Entities complying IFRS should disclose the fact  Compliance is achieved if the following are complied with: All requirements of each applicable standard Each applicable interpretation (SIC)  Departure from compliance is allowed where: Compliance would be so misleading it would conflict with the objective of financial statements as set out in the framework.

7.  On departure an entity shall disclose: that management has concluded that the financial statements are fairly present that it has complied with applicable Standards (S) and Interpretations (I), except that it has departed from a requirement of a (S) or (I) in order to achieve fair presentation; the (S) or (I) from which the entity has departed; the nature of the departure; the treatment that the (S) or (I) would require; the reason why the treatment would be so misleading the treatment adopted; and for each period presented, the financial impact of the departure, on each item in the financial statements that would have been reported, had the requirement been complied with.

8.  Similar to other companies (as above)  In addition to above – they need to comply to: ◦ Companies Act ◦ Other acts governing particular industry ◦ JSE exchange listing requirements

9.  Each material class of similar items shall be presented separately in the financial statements;  Items of a dissimilar nature or function shall be presented separately unless they are immaterial;  Assets and liabilities, Income and expenses shall not be offset unless required or permitted by a (S) or (I);  A complete set of financial statements (including comparative information) shall be presented at least annually;  Numerical comparative information shall be included for the previous period;

10.  Narrative & descriptive comparative information shall be included when it is relevant to an understanding of the current period’s financial statements;  An entity shall present, as a minimum, two of each of the following; statements of financial position, statements of profit or loss and other comprehensive income, separate statements of profit or loss (if presented), statements of cash flows and statements of changes in equity, and related notes.  An entity shall present a third statement of financial position as at the beginning of the preceding year in addition to the statements above if it applies an accounting policy retrospectively, makes a retrospective restatement of items in its financial statements or reclassifies items in its financial statements; and the retrospective application restatement or the reclassification has a material effect on the information in the statement of financial position at the beginning of the preceding period.

11.  IAS 1:45 – Presentation & classification of items remains consistent unless: ◦ Significant change in entity operations/review of financial statements more appropriate presentation/classification. ◦ Change is required by IFRS  Where presentation/classification amended, comparatives are reclassified unless impracticable. IAS 1:41 prescribes following disclosures where comparatives reclassified: ◦ Nature of reclassification ◦ Reason for reclassification & ◦ The amount of each item/class of items reclassified

12.  Where reclassification of comparatives impracticable, present: ◦ Reason for not reclassifying ◦ Nature of adjustments that would have been made hade amounts been reclassified  Financial statements shall be clearly identified and distinguished from other information in the annual report.

13.  Statement of Financial Position (SFP) ◦ Current & non-current assets/ liabilities require separate classification in (SFP), except where liquidity presentation is more relevant & reliable. ◦ Regardless of presentation method, separate disclosures to be made of assets/liabilities to be recovered/settled within and after a twelve month period from reporting date.

14. Classification of Assets/Liabilities An asset is classified as current whe n : is expected to be realised in, or is intended for sale or consumption in, the normal course of the entity’s operating cycle, or is held primarily for trading purposes, or is expected to be realised within twelve months after the reporting period, or is cash or a cash equivalent asset that is not restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period A liability is classified as current when: is expected to be settled in the normal course of the entity’s operating cycle is held primarily for trading purposes, is due to be settled within 12 months after the reporting period, or

15. does not have an unconditional right to defer settlement of the liability for at least 12 months after the reporting period. Terms of a liability that could, at the option of the counterparty, result in its settlement by the issue of equity instruments do not affect its classification. All other assets and liabilities are classified as non- current

16. Example of Statement of Financial Position Refer to Stainbank, Chapter 2 pg 8

17. Information to be provided in notes or on face of SFP is dependant on : IFRS requirements e.g PPE, Inventories Nature and liquidity of assets The function of the assets within the entity Amounts, nature and timing of liabilities

18. Statement of profit and loss & other comprehensive income (SFP) Two presentation options, are provided by IAS 1 Present all income & expense items in one statement - Statement of Profit or Loss and Other Comprehensive Income. Present all income & expense items in two statements; -Income statement or statement of profit & loss plus -A 2 nd statement starting with profit & loss and displaying components of OCI. - Statement of Profit or Loss and Other Comprehensive Income -Refer to pictorial presentation: Page 13

19. Information to be presented in the statement of comprehensive income or in the notes: Material items should be disclosed separately, disclosing their: Nature & amount e.g. disposal of a PPE item

20. Analysis of expenses by nature or function: Expenses can be classified by nature or function – option chosen should be one which provides most relevant & reliable information. Classification by nature: Easy to apply ∴ used by small entities Less likely to be useful to users Classification by function: Expenses allocated between cost of sales, distribution costs, administrative costs More relevant to users However quality may be degraded as it is a subjective judgement Additional disclosures required e.g. depreciation, employee benefit expense, amortisation

21. Statement of changes in Equity Presentation and disclosure requirements: total comprehensive income for the period, showing separately the total amounts attributable to the owners of the parent and to the non-controlling interest; the amounts 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.

22. Notes to the financial statements disclosure requirements: Accounting policy notes – (significant policies) Info required by IFRS, not presented elsewhere in financial statements Additional info necessary to understand financial statements Structure of presentation: a statement of compliance with IFRSs; a summary of significant accounting policies; supporting information for items presented on the face of each financial statement in the order in which they are presented; and other disclosures, including contingent liabilities and unrecognised contractual commitments, and non-financial disclosures. Read: Sources of measurement uncertainty pg. 20 & 21 Capital & Other disclosures pg 22 & 23

23. Going concern Financial statements prepared assuming that a business entity will continue to operate in the foreseeable future unless there is strong evidence to the contrary. (Entity will realise assets and settle its obligations in normal course of business) General purpose financial statements are prepared on a going concern basis, unless management either: intends to liquidate the entity or, to cease operations, or has no realistic alternative but to do so Refer to e-learning: Events casting doubt about GC