1. Problems addressed

The objective of the standard is to prescribe the basis for presentation of general purpose financial statements to ensure comparability. It outlines:

• Overall considerations for presentation.

• Guidelines for their structure.

• Minimum content requirements.

• Guidance on compliance with the IAS.

• Guidance on departures from the IAS.

2. Scope of the standard

This standard deals with the presentation of all general purpose financial statements prepared and presented in accordance with the IAS and which are not tailored to meet specific information needs of users. SIC-2 provides guidance on the first time application of lASs.

3. Accounting concepts

3.1.Financial statements should provide information about an enterprise's financial position, performance, and cash flows that is useful for economic decision making.

3.2.The board of directors and/or other governing body is responsible for the preparation and presentation of financial statements.

3.3.A complete set of financial statements includes:

• Balance Sheet.

• Income Statement.

• Changes in Equity Statement.

• Cash Flow Statement.

• Accounting Policies & Notes.

Entities are encouraged to furnish other related financial and nonfinancial information in addition to the financial statements.

3.4. Management should consider all of the following overall considerations regarding the presentation of financial statements:

• Fair presentation

This is normally achieved by applying the IAS. Departure is allowed only if the application of an accounting standard would result in misleading financial statements.

Compliance with the IAS The following aspects should be addressed:

• Compliance with the IAS should be disclosed.

• Compliance with all requirements of each standard is compulsory.

• Disclosure is no excuse for inappropriate accounting treatments.

Premature compliance with an IAS is to be mentioned.

Any departure from an IAS that is necessary to achieve fair presentation should be disclosed in detail.

• Accounting policies

Accounting policies that are applied should be those required by the IAS. An enterprise would develop its own relevant and reliable policies if no IAS exist (SIC-18). The following two considerations are the underlying assumptions of financial statements;

• Going concern

Financial statements should be presented on a going concern basis unless it is probable that an entity will be liquidated or cease trading. If not presented on going concern basis, disclose the fact and rationale for not using it. Uncertainties regarding going concern should be disclosed.

• Accrual basis

Use the accrual basis for presentation except for the cash flow statement.

• Consistency of presentation

The presentation and classification of items should be retained from .one period to anofl er unless a change would result in a more appropriate presentation, or a change was required by the IAS.

• Materiality and Aggregation

Aggregation of immaterial items of a similar nature and function is allowed. Material items should not be aggregated.

• Offsetting

Assets and liabilities should not be offset unless allowed by the IAS. However, immaterial gains, losses, and related expenses arising from similar transactions and events may be offset.

• Comparative information

The following aspects are relevant:

• Disclosure required for numerical information in respect of the previous period.

• Relevant narrative and descriptive information to be included.

• Reclassify comparatives when classification of items is amended; that is, disclose nature, amounts, and reason(s).

4. Disclosure

4.1. Identification and period

• Financial statements should be distinguished from other information.

• Each component should be clearly identified.

• Prominently display:

o Name of reporting enterprise.

o Own or group statements.

o Reporting date or period.

o Reporting currency.

o Level of precision.

• Report annually, at the very least.

• Statements to be issued timely (within 6 months of reporting date).

4.2. Balance sheet

Provide information about the financial position.

Current/Non-current distinction

• Enterprise may choose this classification for assets and liabilities.

• If not chosen, assets and liabilities should be presented in broad order of liquidity.

• Split amounts to be recovered or settled within and after 12 months.

Current assets

• Current assets include:

Assets expected to be realized — or held for sale or consumption - in the iv operating cycle.

• Assets held primarily for trading or over the short-term and expected to he realized within 12 months.

• Cash or cash equivalents not restricted in use.

Current liabilities

• Current liabilities include:

o Liabilities expected to be settled in the normal operating cycle.

o Liabilities due to be settled within 12 months.

• Long-term interest-bearing liabilities to be settled within 12 months may be class!' fied as non-current if:

o Original term greater than 12 months.

o Intention to refinance obligation.

o Intention supported by agreement.

Other information on the face or in notes

• Appropriate additional subclassifications.

• Amounts payable to and from:

o Parent enterprise.

o Fellow subsidiaries.

o Associates.

o Related parties.

• For each class of share capital:

o Number of shares authorized.

o Number of shares issued and fully paid.

o Number of shares issued and not fully paid.

o Par value per share, or that it has no par value.

o Reconciliation of shares at beginning and end of year.

o Rights, preferences, and restrictions.

o Held by enterprise, subsidiaries, or associates.

o Reserved for issue under options and sales contracts.

• Nature and purpose of each reserve.

• Shareholders for dividend not formally approved for payment.

• Amount of cumulative preference dividend not recognized.

4.3. Income statement

Provide information about performance.

Other information on the face or in notes

• Analysis of expenses based on nature or their function.

• If classified by function, disclose:

o Depreciation charges for tangible assets

o Amortization charges for intangible assets.

o Staff costs.

• Dividends per share declared or proposed.

4.4. Changes in equity statement

Reflect information about the increase/decrease in net assets or wealth.

Minimum information on the face of the changes in equity statement

• Net profit/loss for the period.

• Income, expense, gain, or loss taken directly to equity.

• Effects of changes m accounting policy.

• Effects of correction of fundamental errors.

Other information on the face or in notes

• Capital transactions with owners and distributions to owners.

• Reconciliation of the balance of accumulated profit or loss at beginning and end of the year.

• Reconciliation of the carrying amount of each class of equity capital, share prerai um, and each reserve at beginning and end of the period.

4.5. Cash flow statement Refer to IAS 7 (Chapter 5).

4.6. Accounting Policies and Notes

Information about the following is provided;

• Basis of preparation and selected accounting policies.

• Information required by the IAS that is not on the face of financial statements.

• Additional information required for fair presentation.

Structure

• Presented in a systematic manner.

• Cross-reference items from the face of financial statements to the notes.

Presentation of accounting policies

• Measurement bases used in preparing financial statements,

• Each accounting policy used even if it is not covered by the existing IAS.

Other disclosures

• Domicile of the enterprise.

• Legal form of the enterprise.

• Country of incorporation.

• Registered office/business address.

• Nature of operations/principal activities.

• Name of the parent and ultimate parent.

• Average number of employees.