IFRS No. 1 Presentation financial statements»
This standard is fundamental in defining the principles for the preparation and presentation of financial statements.
The purpose of this Standard is to provide a framework for the presentation of financial statements general purpose in order to achieve comparability both with the financial statements of the company for previous periods and with the financial statements of other companies. To achieve this objective, this Standard sets out a number of considerations for the presentation of financial statements, guidelines for their structure and minimum content requirements.
Financial statements are a structured presentation of information about the financial position, operations and performance of a company.
The purpose of financial statements is to disclose information about a company's assets, liabilities, equity, income, expenses and financial performance.
This information should be useful to a wide range of users when making economic decisions. Financial reporting also characterizes the quality of company management, i.e. results of resource management (assets).
Responsibility for the preparation and presentation of financial statements lies with the governing body of the enterprise (board of directors, administration).
In accordance with paragraph 9 of IAS 1 “Presentation of Financial Statements”, the purpose of general purpose financial statements is true representation information about the financial position, financial results of operations and cash flows of the company, useful for a wide range of users when making economic decisions. General purpose financial statements are financial statements intended for those users who do not have the ability to require reporting that meets their specific information needs. Financial statements also show the results of managing the resources entrusted to the company's management.
To achieve this goal, financial statements provide information about the following company indicators:
Assets;
Liabilities;
Capital;
Income and expenses, including profits and losses;
Contributions and distributions to owners;
Cash flow.
This information, together with other information in the notes to the financial statements, helps users predict the company's future cash flows, particularly the timing and certainty of the generation of cash and cash equivalents.
It must be remembered that the same transaction can be reflected in several main forms of financial reporting, therefore these forms are interrelated. For example, the purchase of goods may be shown as: national international financial standard
Assets in the statement of financial position;
The outflow of cash from the buyer in the statement of financial position and statement of cash flows.
According to IFRS 1, financial statements must contain the following components:
Balance sheet;
Gains and losses report;
A statement showing either all changes in equity or changes in equity other than capital transactions with owners;
Cash flow statement;
Accounting policies and explanatory notes.
In accordance with the general requirements of IFRS 1, “the statements must present fairly financial position, financial results activities and cash flow of the company."
Each material item must be presented separately in the financial statements.
Non-material amounts should not be presented separately. They must be combined with amounts of a similar nature or purpose.
At a minimum, the balance sheet should include line items that represent:
Fixed assets;
Financial assets;
Investments accounted for using the participation method;
Cash and cash equivalents;
Debt of buyers and customers and other receivables;
Tax obligations and requirements;
Reserves;
Long-term liabilities, including interest payments;
Minority share;
Issued capital and reserves.
Additional line items, headings and subtotals should be presented on the balance sheet when required by International Financial Reporting Standards or when such presentation is necessary to provide a fair presentation of the financial position of the entity.
The company must disclose on the balance sheet or in the notes thereto further subclassifications of each of the presented line items, classified according to the company's operations. Each item should be divided into subclasses according to its nature and amounts of creditor and accounts receivable parent company, related subsidiaries, associated companies and other related parties.
A company must disclose the following information on its balance sheet or notes:
1) for each class of share capital:
Number of shares authorized for issue;
The number of issued and fully paid shares, as well as issued but not fully paid;
The par value of the share, or an indication that the shares have no par value;
Reconciliation of the number of shares outstanding at the beginning and end of the year;
The rights, privileges and restrictions associated with the relevant class, including restrictions on the distribution of dividends and reimbursement of capital;
Shares of a company owned by the company itself or its subsidiaries or associated companies;
Shares reserved for issue under option or sale agreements, including terms and amounts;
2) a description of the nature and purpose of each reserve within the owners' capital;
3) when dividends were proposed, but were not officially approved for payment, the amount included (or not included) in the liability is shown;
4) the amount of any unrecognized dividends on cumulative preferred shares.
At a minimum, the income statement should include the following line items:
Revenue;
Operating results;
Financing costs;
Share of profits and losses of associated companies and joint activities accounted for using the participation method;
Tax expenses;
Profit or loss from ordinary activities;
Results of emergency circumstances;
Minority share;
Net profit or loss for the period.
Additional line items, headings and subtotals must be presented in the income statement when required by International Financial Reporting Standard or when such presentation is necessary for a fair presentation of the company's financial performance.
A company must present in its income statement or notes an analysis of income and expenses using a classification based on the nature of income and expenses or their function within the company.
The first analysis option is called the cost nature method. Expenses are combined in the income statement according to their nature (for example, depreciation, purchase of materials, transportation costs, wage and salaries, advertising costs), and are not redistributed between various functional areas within the company. This method is easily applicable in small companies where operating expenses are not required to be allocated according to functional classification.
The second analysis is called the cost function or "cost of sales" method, and classifies expenses according to their function, as part of the cost of sales, distribution, or administrative activities. This view often provides users with more relevant information than classifying costs by nature, but the allocation of costs by function can be controversial and largely subjective.
A company must present, as a separate form of its financial statements, a statement of changes in equity that shows:
Net profit or loss for the period;
Each item of income and expense, profit and loss, which, in accordance with the requirements of other Standards, is recognized directly in equity, as well as the amount of such items;
The cumulative effect of changes in accounting policy and correcting fundamental errors.
In addition, the company must present either in this report or in the notes thereto:
Capital transactions with owners and distributions to them;
The balance of accumulated profit or loss at the beginning of the period and at the reporting date, as well as the change during the period;
A reconciliation between the carrying amounts of each class of share capital, share premium and each reserve at the beginning and end of the period, with separate disclosure of each change.
In a note to the financial statements, companies should:
Provide information about the basis of financial reporting and the specific accounting policies selected and applied for significant transactions and events;
Disclose information required by International Financial Reporting Standards that is not presented elsewhere in the financial statements;
Provide Additional information information that is not presented in the financial statements themselves but is necessary for a fair presentation.
The accounting policies section of the notes to the financial statements should describe the following:
The measurement basis(s) used to prepare the financial statements ( actual cost acquisitions, replacement cost, selling price, possible selling price, discounted value). When more than one measurement basis is used in the financial statements, for example when only certain non-current assets are revalued, it is sufficient to indicate the categories of assets and liabilities to which each basis applies.
Each specific accounting policy matter that is significant to a correct understanding of the financial statements.
Table 1
Basic provisions for regulating financial (accounting) reporting
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Name |
IFRS 1 Presentation of Financial Statements
We talked about what is meant by International Financial Reporting Standards (IFRS) and who is obliged to apply them in our country.
IFRS 1, except for its clauses 15-35, does not apply to the structure and content of condensed interim financial statements, which are prepared in accordance with IFRS 34 “Interim Financial Reporting” (clause 4 of IFRS 1).
Purpose and composition of financial statements
The purpose of financial statements is to present information about the financial position, financial performance and cash flows an organization that will be useful to a wide range of users when making economic decisions (clause 9 of IFRS 1).
IN general case a complete set of financial statements includes (clause 10 of IFRS 1):
- statement of financial position;
- statement of profit or loss and other comprehensive income;
- statement of changes in equity;
- cash flow statement for the period;
- notes ( short review significant accounting policies and other explanatory information).
For each form of reporting, IFRS 1 describes their structure and content.
General aspects of financial reporting
IFRS 1 provides the following features and requirements for the preparation of financial statements:
- fair presentation and compliance with IFRS;
- going concern;
- accrual accounting;
- materiality and aggregation;
- offset;
- reporting frequency;
- comparative information;
- presentation sequence.
Each of these aspects is disclosed in detail in IFRS 1.
IFRS 1 First-time Adoption of International Financial Reporting Standards
In 2003, the IASB issued IFRS (IFRS) 1 "First use international standards financial statements”, which replaced the IFRIC Interpretation (SIC) 8 “Applying IFRS for the first time as main basis accounting". This standard is the first to new edition international standards. It is effective for financial statements for periods beginning on or after 1 January 2004.
The standard was adopted to ensure that companies switching to IFRS in the near future could prepare in advance all the necessary data for the formation of opening balance sheets and comparative information so that the reporting fully complies with the requirements of IFRS.
The need for a separate standard on the issue of the first application of IFRS is caused by a number of reasons, which include:
- 1) high costs of preparing financial statements under IFRS for the first time, including employee training, payments to audit companies, obtaining various expert assessments, recalculations;
- 2) an increase in the number of companies switching to IFRS, and the associated requirement for a more detailed explanation of some important issues;
- 3) a requirement that causes additional difficulties retrospective application IFRS. Often change accounting estimates difficult in retrospect due to the lack of information available at the date of the financial statements. For particularly complex IFRS cases (IFRS) 1 provides exceptions to the retrospective application of IFRS requirements to avoid costs that outweigh the benefits to users of financial statements. The standard allows six voluntary and three mandatory exceptions from the retrospective application of IFRS requirements;
- 4) coverage of additional requirements for the disclosure of information explaining how the transition to IFRS affected the financial position and results financial activities, in the form of reconciliation of capital indicators and net profit of the company;
- 5) the need to formulate a new accounting policy that meets the requirements of all standards as of the reporting date;
- 6) the need to form an opening balance sheet in accordance with IFRS on the transition date;
- 7) presentation of comparative data for at least the year preceding the year of the first reporting under IFRS.
Financial statements compiled for the first time under IFRS should provide users with useful information:
- 1) understandable;
- 2) comparable to information for all periods presented;
- 3) which can serve as a starting point for further preparation of financial statements under IFRS;
- 4) the costs of its preparation would not exceed the benefits of its value for users of financial statements.
IFRS (IFRS) 1 applies to the first IFRS financial statements and to each interim IFRS financial statement for any period that is part of the year covered by the first IFRS financial statements.
Financial statements in accordance with IFRS (compliance with IFRS) are financial statements that satisfy all the accounting and disclosure requirements of each applicable standard and interpretation under IFRS. Compliance with IFRS must be disclosed in such financial statements.
First IFRS financial statements - These are the first annual financial statements to clearly and unequivocally state their compliance with IFRS.
The starting point for preparing financial statements under IFRS is the opening balance sheet under IFRS drawn up on the date of transition to IFRS. Publication of the opening balance is not required.
Date of transition to IFRS (date of transition to IFRS ) is the beginning of the earliest period for which an entity has presented full comparative information in accordance with IFRS in its first IFRS financial statements.
On the date of transition, an opening balance sheet is prepared in accordance with IFRS. As a rule, the opening balance is drawn up two years before reporting date first financial statements under IFRS.
Opening IFRS balance sheet - This is the company's balance sheet prepared in accordance with IFRS on the date of transition to IFRS.
Balance sheet date, reporting date - it is the end of the last period for which the financial statements are prepared.
Hindsight - it is a judgment about a past event taking into account the experience gained since that time.
Estimates - these are estimates associated with the uncertainty inherent in the activities of any company. The value of some objects cannot be measured, but can only be calculated based on professional judgment. The use of reasonable estimates is an important part of the preparation of financial statements that fairly reflect the financial condition, results of operations and cash flows in accordance with IFRS.
According to IFRS (IFRS) 1 in the first financial statements under IFRS:
- 1) comparative data for at least one year must be presented;
- 2) the accounting policies must comply with the requirements of each applicable IFRS effective at the reporting date of the first financial statements, and be applied to generate the opening balance sheet and reporting indicators for all comparative periods included in the first financial statements under IFRS;
- 3) the date of transition to IFRS, which is also the date of the opening balance sheet, depends on the number of periods for which comparative information is presented.
By general requirement the date of transition to IFRS is two years away from the date of the first financial statements prepared under IFRS. Thus, when switching to IFRS, starting with financial statements for 2012, the opening balance sheet must be drawn up as of January 1, 2011. For 2011, a complete set of financial statements in IFRS is presented, but so far without comparative information, and for 2012 d. a complete set of financial statements according to IFRS is generated, already with comparative information.
The company should prepare the opening balance sheet as if it were based on the assumption that financial statements under IFRS have always been prepared, i.e. retrospectively apply the requirements of all international standards. To this end, the company must:
- 1) recognize assets and liabilities in accordance with IFRS;
- 2) exclude items recognized as assets or liabilities if IFRS does not allow such recognition;
- 3) reclassify items that were recognized in accordance with national accounting rules as one type of assets, liabilities or elements equity, and according to IFRS represent another type of assets, liabilities or elements of equity;
- 4) include in the opening balance sheet all items in the assessment that comply with IFRS;
- 5) calculate how the result of changes in financial statements prepared according to national standards, after their reduction to IFRS, will affect the value retained earnings or another item of equity.
If the opening balance sheet is formed on January 1, 2012, and the company has existed for 10 years, when reflecting assets and liabilities in the balance sheet, information should be examined starting from the moment of initial recognition of accounting items. Taking into account the fact that such information is not always available at the transition date and the costs of its generation may exceed the corresponding economic effect for users of financial statements, IFRS (IFRS) 1 provided exceptions to retrospective application individual standards when first applying IFRS. As noted, there are two types of exceptions: voluntary (which the company's management can choose at its discretion) and mandatory (which should be applied regardless of the company's decision).
Cases of application of exceptions and summary adjustments are presented in table. 2.3 and 2.4.
Disclosure of information in the first financial statements under IFRS.
Information must be fully disclosed as required by the relevant IFRS standards, taking into account additional requirements of IFRS (IFRS) 1.
Table 23
End of table. 23
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Voluntary exception |
exception |
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2.Usage fair value as a supposed |
The company is not required to recreate the original information about the value of property, plant and equipment, intangible assets and investment property, which is a significant simplification. The estimated cost for subsequent depreciation and impairment testing of such items is either the fair value at the date of transition to IFRS or the revalued value at the last revaluation. In this case, the conditions must be met that the carrying amount of the item is comparable to its fair value and that the revaluation was carried out by recalculating actual costs to a price index. This exception applies to any single object |
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3. Employee benefits |
The Company may not retrospectively restate actuarial gains and losses from the inception of the benefit plan. They can be calculated prospectively: from the date of transition to IFRS onwards. Recognition of actuarial gains and losses using the IAS described (IAS) 19 of the “corridor method” may be deferred until the next reporting period. If a company uses this exception, it applies to all pension plans |
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4. Cumulative adjustment for currency translation |
The Company may not retrospectively restate exchange differences from the date of formation or acquisition of the subsidiary. They can be calculated prospectively. All cumulative gains and losses from currency translation are assumed to be zero. If a company uses this exception, it applies to all subsidiaries |
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5. Combined financial instruments |
An analysis of combined financial instruments should be carried out from the point of view of identifying their debt and equity components at the time of the appearance of such instruments. Entities are not required to identify the equity elements of a combined financial instrument if the debt component has already been repaid at the date of transition to IFRS |
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6. Assets and liabilities of subsidiaries, associates and joint ventures |
The dates of transition to IFRS may be different for parent, subsidiary, and associated companies. The exception allows a subsidiary to measure its assets and liabilities either by book value included in the consolidated financial statements of the parent company, or based on IFRS (IFRS) 1 at the date of transition to IFRS. The carrying amount of the assets and liabilities of the subsidiary must be adjusted to eliminate any adjustments made to it upon consolidation under the purchase method. |
application of IFRS
Table 2.4
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Mandatory exception |
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1. Derecognition of financial assets and liabilities |
As required by IAS (IAS) 39, the requirement to derecognise financial assets and liabilities applies from January 1, 2001. In this regard, financial assets and liabilities that were derecognized before 1 January 2001 are not recognized in the first IFRS financial statements |
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2. Hedge accounting |
Hedge accounting should not be applied retrospectively and should be reflected in the opening IFRS balance sheet and for any transaction in the first IFRS financial statements. Hedge accounting can be introduced from the date of transition to IFRS, prospectively in relation to those transactions that meet the conditions for its application provided for in IAS (IAS) 39. Supporting documentation also cannot be created retrospectively. |
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3. Estimates |
The use of hindsight to revise estimates is prohibited. Estimates made by an entity in accordance with previously used national regulations may be revised only to correct errors that have been proven to have occurred or because of a change in accounting policies. |
IFRS (IFRS) 1 requires disclosure of information about the impact of the transition to IFRS.
The first IFRS financial statements must include a reconciliation of the following:
- - capital under the previously used national rules and capital at the date of transition to IFRS and at the end of the last period presented in the most recent financial statements of the company under the national rules;
- - net profit under previously used national rules and net profit according to IFRS for the most recent period reflected in the company's most recent financial statements under national rules.
The reconciliation must contain sufficient information to enable users of the financial statements to understand:
- 1) significant adjustments to items of the balance sheet and profit and loss statement;
- 2) adjustments due to changes in accounting policies;
- 3) corrections of errors identified during the transition to IFRS.
Disclosure of information according to IAS (IAS) 36 is given in the case when
impairment losses are reflected in the opening balance sheet under IFRS.
Reveals line by line total amount fair value and the total amount of the adjustment to the previously used carrying amount. The first IFRS financial statements must also include comparative information prepared under IFRS for at least one year. In Russia there is no standard regulating the first application of national accounting standards - PBU.
IAS 1 Presentation of financial statements
Summary of IAS 1
Objectives of the standard:
IFRS 1 was developed to provide comparability financial statements.
Comparability means comparability with the reporting of other companies and comparability of the reporting of the company itself for previous periods.
Application area:
IFRS 1 applies to:
- -all commercial companies
- -government organizations working for profit
- - banks, insurance companies and other financial institutions.
The standard applies both to each individual company and to consolidated statements groups.
IFRS 1 not applicable for the preparation of interim reporting(IFRS 34 was developed for interim reporting) and others financial reports special purpose(to prospects)
General provisions of IFRS 1:
1. Reporting must be presented reliably and comply with IFRS standards
The company's reporting must reliably reflect the real financial position of the company. Information in financial statements should be understandable to users and consistent.
Deviation from IFRS standards is allowed in extremely rare cases, if compliance with any standard may mislead users. In this case, the reporting must indicate:
- - fact of violation of the standard;
- -reasons for violating the standard;
- -consequences of deviation from the standard on financial indicators company (it is also necessary to indicate the financial indicators that would be obtained if the standard were met.
If any standard is violated in cases of extreme necessity, then the reporting complies with IFRS standards.
2. Going concern
If there are uncertainties regarding the company's future activities, they should be disclosed in the financial statements.
3. Accrual accounting
Assets, liabilities, income and expenses are recognized when they arise (rather than when cash is received) and are reported in the period to which they relate. This rule does not apply to the statement of cash flows.
4. Materiality and aggregation
Information must be disclosed if it is material (if it could have an impact on economic decision users, accepted on the basis of financial statements).
Aggregation of information is allowed (for example, reflecting all amounts in millions of dollars)
5. Settlement
Offsetting of assets and liabilities is not permitted except as permitted by certain standards (for example, IAS 20 allows offsetting of government grants).
6. Periodic preparation of financial statements
A complete set of financial statements must be submitted annually.
If, in exceptional cases, reporting is provided for a period longer or shorter than a year, the company must indicate that the data are not sufficiently comparable.
7.Comparative information
Each reporting form must be submitted for at least two periods.
If the data previously provided has changed (for example, a retrospective change in accounting policy has been applied - IAS 8), it is necessary to provide at least three statements of financial position and two forms of other statements.
If descriptive information from the prior period is needed to understand the current accounts, it must be included in the current accounts.
8. Sequence of provision
The wording and classification of items in the financial statements must remain unchanged in all periods.
Changes are permitted only if they are necessary to better understand events or operations, or if changes are required to comply with any standard.
Structure and content of financial statements
The financial statements must include the following information:
- -the title of each report (for example, cash flow statement)
- -name of the enterprise;
- -reporting date or period (depending on the reporting period);
- - reporting currency;
- -unit of measurement;
- - reporting of an individual company or group is provided.
Financial statements include five forms:
Cash flow statement
With this article we are opening a series of publications that will provide the names of the standards, their table of contents and a description of basic terms and procedures.
Prologue
The full text of IFRS is a book of about 1000 pages of text and tables 1
International financial reporting standards. M., Askeri. 1999. (Edition in Russian.)
With alarming regularity, changes and additions are made to the standards (by no means small in scope), and new standards are adopted. At the same time, the foundations and principles laid down in the standards are constant.
Many standards and changes have not been officially published in Russian, although the need for this certainly exists. The purpose of this and subsequent articles in the series is to provide basic information on IFRS.
International standards in this context relate to reporting and do not regulate accounting as such. However, they define and interpret basic concepts, and if concepts other than those given in the standards are used in accounting, even through numerous adjustments, creating a report will be almost impossible.
Thus, accounting based on the principles and concepts laid down in IFRS is not only desirable, but in many cases mandatory. IFRS have their own dictionary of terms and definitions that are used only in the form they contain, i.e., other interpretations, for example, depending on the country, are excluded.
A little history
Standards are developed by the International Financial Reporting Standards Committee (IASC). The Committee's headquarters are in London. Website - http://www.iasc.org.uk The IASC is governed by a Board appointed International Association accountants. Until 2001, the Committee was registered as a private organization; now it operates as an independent organization. He owns the copyright to the texts of the standards.
Standards have been published since 1973. During the existence of the Committee, 41 standards were adopted. One of the bodies of the IASB is the Standing Interpretation Committee (Interpretation of International Financial Reporting Standards). It was created in 1997 and publishes explanations of the application of standards (ICP). PKI are required for use.
Why are standards needed?
With the introduction of IFRS, the transparency of companies' activities should increase (transparency, in Newspeak), and the possibility of comparison will appear (both of one company by period, and of different companies among themselves). As a result, stakeholders (investors, participants, shareholders, counterparties) will be less afraid to invest their money in the company.
Regardless of the wishes of company owners, the transition to IFRS is coming soon. mandatory. Most likely, banks will be the first to switch to IFRS. They have the most prepared accounting staff; they have been preparing reports for a long time that transform accounting data into an approximate IFRS reporting, in accordance with Instructions No. 17 of the Bank of Russia. Other companies will also make the transition in the near future. This is stated in the Decree of the Government of the Russian Federation dated March 6, 1998 No. 283 “On approval of the reform program accounting in accordance with International Financial Reporting Standards."
The transition to IFRS is also related to the issue of mandatory certification of accountants and managers in the light of the application of IFRS in practice.
We present the entire list of current standards (Table 1).
| IFRS No. | Name | Note |
| 1 | Presentation of financial statements | |
| 2 | Reserves | |
| 4 | Depreciation accounting | |
| 7 | ||
| 8 | Net profit or loss for the period, fundamental errors and changes in accounting policies | |
| 10 | Events after the reporting date | |
| 11 | Contracts | |
| 12 | Income taxes | |
| 14 | Segment reporting | |
| 15 | Information reflecting the impact of price changes | |
| 16 | Fixed assets | |
| 17 | Rent | |
| 18 | Revenue | |
| 19 | Employee benefits | |
| 20 | Accounting for government grants and disclosure of information about state aid | |
| 21 | Impact of changes exchange rates | |
| 22 | Merger of companies | |
| 23 | Borrowing costs | |
| 24 | Related Party Disclosure | |
| 25 | Investment accounting | |
| 26 | Accounting and reporting for pension plans | |
| 27 | Consolidated financial statements and accounting for investments in subsidiaries | |
| 28 | Accounting for investments in associated companies | |
| 29 | Financial reporting in hyperinflationary conditions | |
| 30 | Disclosure of information in the financial statements of banks and similar financial institutions | |
| 31 | Financial reporting on participation in joint activities | |
| 32 | Financial instruments: disclosure and presentation of information | |
| 33 | Earnings per share | |
| 34 | Interim financial statements | |
| 35 | Discontinued operations | |
| 36 | Recognition of impairment of assets | |
| 37 | Reserves, contingent liabilities And contingent assets | |
| 38 | Intangible assets | |
| 39 | Financial instruments: recognition and valuation | |
| 40 | Investments | |
| 41 | Agriculture |
What are the differences between IFRS and Russian accounting standards?
How do International Standards differ from the PBUs currently in force in Russia?
First of all, the use accrual basis. It should also be taken into account that some concepts and terms currently used in PBU differ from the interpretations found in IFRS, which will be seen further from the texts. In addition, assessments are made using different prices. For example, fixed assets can be reflected at fair value, i.e., it is estimated how much they cost now and how much they can be purchased or exchanged for. Accordingly, depreciation is calculated based on their planned and actual service life, and not on the terms established in accordance with Government regulations.
But there is more significant differences related to the separation of accounting and control functions, the need to implement internal control, another control system.
We are not yet very accustomed to the fact that the entire balance sheet is divided into assets, liabilities and capital. Liabilities and capital constitute what we now call liabilities.
Asset in accordance with standards and international practice only that which is a source of future economic benefits is considered. When defining an asset, ownership of it is not primary. So, for example, leased property is an asset if the company will benefit from its use.
Liabilities are debts that, when repaid, will reduce the company's assets. Let's look at individual standards.
IFRS 1 Presentation of Financial Statements
Contents of the standard
Target
Scope of application
- Purpose of financial statements
- Responsibility for financial reporting
- Components of Financial Statements
General Considerations
- Objective presentation and compliance with the requirements of International Financial Reporting Standards
- Accounting policy
- Going concern assumption
- Accrual method
- Presentation sequence
- Materiality and aggregation
- Offsetting
- Comparative information
Structure and content
- Introduction
- Definition of financial statements
- Reporting period
- Timeliness
- Balance sheet
- Division into short-term/long-term items
- Current assets
- Short-term liabilities
- The information provided in the balance sheet
- Information presented either in the balance sheet itself or in the notes
- Gains and losses report
- Information presented in the income statement itself
- Information presented either in the income statement itself or in the notes
- Changes in capital
- Cash flow statement
- Explanatory note to financial statements
- Structure
- Presentation of accounting policies
- Other disclosure requirements
Effective date
Appendix - Illustrative Structure of Financial Statement Forms
The purpose of reporting is to present it to shareholders, investors, counterparties and government agencies and, importantly, to management for making management decisions.
The statements are signed by the Board of Directors or other governing body of the company.
This standard lays out the basic principles, methods, assumptions and requirements.
Basic principles
The main principles of IFRS are:
For accounting and reporting purposes, it appears that the company will continue to operate further, i.e., it is assumed that the company is not being liquidated (the method is unimportant) and the company’s management does not see the possibility of terminating its activities.
Income and expenses are accepted in the period to which they belong, and not when payments were made. This makes it possible to obtain information about the actual financial condition company at the moment. Possible shortfalls in funds are compensated by the timely creation of reserves.
Accrued income may arise due to the fact that income is spread over time and there is a gap between the accrual period and the time of payment (for example, interest or rent), or in the case of services provided for which invoices have not been issued or received. cash.
The same attitude towards expenses is also fair.
By tax accounting, it should be noted that we are already familiar with an analogue of this principle applied for profit tax purposes.
Basic Concepts
Here are the basic concepts used in IFRS:
- relevance and understandability of information;
- materiality of information and its reliability;
- predominance economic essence over the legal form;
- uncertainty and caution;
- benefit-cost ratio;
- data comparability.
Understandability means that any qualified person can understand and clearly understand the reporting. This requires that all relevant information be reflected in the reporting.
Reliability of information is achieved subject to the following points:
- information should be accepted based on its economic essence, and not legal registration;
- information must be neutral, i.e. not directed at any group of people;
- completeness of information is required;
- When presenting information, caution must be observed, i.e., assets should not be overvalued and liabilities should not be underestimated (in practice, one must proceed from the minimum value of assets and the maximum value of liabilities, as well as from the fact that you will repay debts, and you will most likely , No);
- the provision that expenses incurred must be correlated with the results achieved (income) should be taken into account.
Materiality implies that if any indicators affect the economic result, they are shown in detail. There is no quantitative definition of materiality. Reporting should not be littered, but it should not be misunderstood either. According to the periodicity assumption economic activity enterprises can be divided into certain periods. Periods are usually month, quarter or year. IN in full annual reports are submitted.
IFRS defines accounting policies as a set of specific principles, assumptions, rules and approaches adopted by a company for the preparation and presentation of financial statements. The document should describe all decisions and assumptions made, as well as options if alternatives exist. Reports that claim compliance with IFRS must apply each IFRS standard to which the reporting entity is subject, including any disclosure requirements.
All deviations from the requirements of IFRS, if any, must be limited to exceptions when the application of the standard distorts the real situation, and must be reflected in the reporting.
As for the offset of items, it should be noted that the standards prohibit offsets of assets and liabilities, except in specially specified cases.
Technical aspect
A turnover sheet is used to prepare reports. If accounting diverges from IFRS, then adjusting entries (adjustments) are prepared and made. After posting and transferring data to the General Ledger, an adjusted turnover sheet is compiled. Such a turnover sheet reflects the balances of all accounts at the end of the reporting period, taking into account adjustments. Reporting consists of required forms and recommended reviews.
Mandatory forms included in reporting include:
- balance;
- Profits and Losses Report;
- statement of changes in capital;
- cash flow statement;
- accounting policy;
- notes and transcripts to the reporting.
All reporting forms must contain the name of the reporting company, an indication of the type of reporting (consolidated or not), reporting period, in what currency the reporting is presented and the bit depth of the numbers.
The balance sheet items should include at least those listed in Table. 2.
The company in the balance sheet or in the notes to the balance sheet deciphers these items based on its activities. Thus, fixed assets are deciphered based on IFRS 16, and financial assets - from IFRS 32; capital - based on the number of issued shares, broken down into paid, unpaid, partially paid, etc.
The division of items into short-term and long-term is based on the fact that assets expected to be received or participating in the normal production cycle, as well as liabilities for a period of up to 12 months, are considered short-term. Current assets also include cash and cash equivalents.
Reports
Gains and losses report
The profit and loss statement (OPL) consists of the following items:
- Revenue;
- The result of operating activities;
- Financing costs;
- Profit/loss from joint activities and participation;
- Profit Loss;
- Extraordinary Expenses;
- Share of small shareholders (participants);
- Taxes;
- Net income (loss.
The control center is constructed using one of the following methods:
1) classification of costs by economic content or
2) cost of sales.
The result of using any of the methods is the same, but the data is grouped differently.
Cash flow statement
Compiled on a cash basis and presented in accordance with the requirements of IFRS 7.
Statement of changes in equity
The report shows net profit/loss and deciphers profit/loss items in terms of items related to capital. This is important due to the fact that some expenses and income are not charged to income and expense accounts, but directly to capital. In addition, capital transactions, movements of retained earnings and others that change net assets(capital).
Desirable reports are reviews and forms revealing:
- factors influencing financial results, both external and internal, including the management structure and quality of company management;
- financial position;
- compensatory measures to overcome negative factors;
- clarification on dividend policy;
- sources of financing, government subsidies;
- involved funds;
- resources;
- other necessary.
IFRS 34 Interim Financial Reporting
International Financial Reporting Standard IFRS 34 (1998 edition)
Contents of the standard
Target
Scope of application
Definitions
Contents of interim financial statements
- Minimum components of interim financial statements
- Form and content of interim financial reports
- Selected Explanations
- Disclosure of compliance with IFRS
- Periods for which interim financial statements are required
- Materiality
Disclosure in annual terms financial statements
Recognition and evaluation
- Elements of accounting policies as part of the annual policy
- Revenue generated seasonally, cyclically or incidentally
- Costs incurred unevenly over a period of time financial year
- Application of principles of recognition and evaluation
- Using ratings
Recalculation of previously reported interim periods
Effective date
Applications
The standard considers interim reporting in the same package of abbreviated forms of financial statements. Interim reporting is prepared for a shorter period than a year, for example a quarter. The reports reflect significant events that have occurred since the date of the last annual reporting.
If there are changes in accounting policies after the reporting date, this should be reflected in the interim reports. In companies exposed to seasonal activities, it is recommended to provide data similar period last year and show the phenomenon of seasonality in interim reports.