presentation of financial statements ias 1

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Presentation of Financial Statements (IAS 1)

Last updated: 14 November 2023

IAS 1 serves as the main standard that outlines the general requirements for presenting financial statements. It is applicable to ‘general purpose financial statements’, which are designed to meet the informational needs of users who cannot demand customised reports from an entity. Documents like management commentary or sustainability reports, which are often included in annual reports, fall outside the scope of IFRS, as indicated in IAS 1.13-14. Similarly, financial statements submitted to a court registry are not considered general purpose financial statements (see IAS 1.BC11-13).

The standard primarily focuses on annual financial statements, but its guidelines in IAS 1.15-35 also extend to interim financial reports (IAS 1.4). These guidelines address key elements such as fair presentation, compliance with IFRS, the going concern principle, the accrual basis of accounting, offsetting, materiality, and aggregation. For comprehensive guidance on interim reporting, please refer to IAS 34 .

Note that IAS 1 will be superseded by the upcoming IFRS 18 Presentation and Disclosure in Financial Statements .

Now, let’s explore the general requirements for presenting financial statements in greater detail.

Financial statements

Components of a complete set of financial statements.

Paragraph IAS 1.10 outlines the elements that make up a complete set of financial statements. Companies have the flexibility to use different titles for these documents, but each statement must be presented with equal prominence (IAS 1.11). The terminology used in IAS 1 is tailored for profit-oriented entities. However, not-for-profit organisations or entities without equity (as defined in IAS 32), may use alternative terminology for specific items in their financial statements (IAS 1.5-6).

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Compliance with IFRS

Financial statements must include an explicit and unreserved statement of compliance with IFRS in the accompanying notes. This statement is only valid if the entity adheres to all the requirements of every IFRS standard (IAS 1.16). In many jurisdictions, such as the European Union, laws mandate compliance with a locally adopted version of IFRS.

IAS 1 does consider extremely rare situations where an entity might diverge from a specific IFRS requirement. Such a departure is permissible only if it prevents the presentation of misleading information that would conflict with the objectives of general-purpose financial reporting (IAS 1.20-22). Alternatively, entities can disclose the impact of such a departure in the notes, explaining how the statements would appear if the exception were made (IAS 1.23).

Identification of financial statements

The guidelines for identifying financial statements outlined in IAS 1.49-53 are straightforward and rarely cause issues in practice.

Going concern

The ‘going concern’ principle is a cornerstone of IFRS and other major GAAP. It assumes that an entity will continue to operate for the foreseeable future (at least 12 months). IAS 1 mandates management to assess whether the entity is a ‘going concern’. Should there be any material uncertainties regarding the entity’s future, these must be disclosed (IAS 1.25-26). IFRSs do not provide specific accounting principles for entities that are not going concerns, other than requiring disclosure of the accounting policies used. One of the possible approaches is to measure all assets and liabilities using their liquidation value.

See also this educational material at IFRS.org.

Materiality and aggregation

IAS 1.29-31 emphasise the importance of materiality in preparing user-friendly financial statements. While IFRS mandates numerous disclosures, entities should only include information that is material. This concept should be at the forefront when preparing financial statements, as reminders about materiality are seldom provided in other IFRS standards or publications.

Generally, entities should not offset assets against liabilities or income against expenses unless a specific IFRS standard allows or requires it. IAS 1.32-35 offer guidance on what can and cannot be offset. Offsetting of financial instruments is discussed further in IAS 32 .

Frequency of reporting

Entities are required to present a complete set of financial statements at least annually (IAS 1.36). However, some Public Interest Entities (PIEs) may be obliged to release financial statements more frequently, depending on local regulations. However, these are typically interim financial statements compiled under IAS 34 .

IAS 1 also allows for a 52-week reporting period instead of a calendar year (IAS 1.37). This excerpt from Tesco’s annual report serves to demonstrate this point, showing that the group uses 52-week periods for their financial year, even when some subsidiaries operate on a calendar-year basis:

If an entity changes its reporting period, it must clearly disclose this modification and provide the rationale for the change (IAS 1.36). It is advisable to include an explanatory note with comparative data that aligns with the new reporting period for clarity.

Comparative information

As a general guideline, entities should present comparative data for the prior period alongside all amounts reported for the current period, even when specific guidelines in a given IFRS do not require it. However, there’s no obligation to include narrative or descriptive information about the preceding period if it isn’t pertinent for understanding the current period (IAS 1.38).

If an entity opts to provide comparative data for more than the immediately preceding period, this additional information can be included in selected primary financial statements only. However, these additional comparative periods should also be detailed in the relevant accompanying notes (IAS 1.38C-38D).

IAS 1.40A-46 outlines how to present the statement of financial position when there are changes in accounting policies, retrospective restatements, or reclassifications. This entails producing a ‘third balance sheet’ at the start of the preceding period (which may differ from the earliest comparative period, if more than one is presented). Key points to note are:

• The third balance sheet is required only if there’s a material impact on the opening balance of the preceding period (IAS 1.40A(b)).
• If a third balance sheet is included, there’s no requirement to add a corresponding third column in the notes, although this could be useful where numbers have been altered by the change (IAS 1.40C).
• Interim financial statements do not require a third balance sheet (IAS 1.BC33).

IAS 8 also requires comprehensive disclosures concerning changes in accounting policies and corrections of errors .

Statement of financial position

IAS 1.54 enumerates the line items that must, at a minimum, appear in the statement of financial position. Entities should note that separate lines are not required for immaterial items (IAS 1.31). Additional line items can be added for entity-specific or industry-specific matters. IAS 1 permits the inclusion of subtotals, provided the criteria set out in IAS 1.55A are met.

Additional disclosure requirements are set out in IAS 1.77-80A. Of particular interest are the requirements pertaining to equity (IAS 1.79), which begin with the number of shares and extend to include details such as ‘rights, preferences, and restrictions relating to share capital, including restrictions on the distribution of dividends and the repayment of capital.’ While these kinds of limitations are common across various legal jurisdictions (for example, not all retained earnings can be distributed as dividends), many companies neglect to disclose such limitations in their financial statements.

For guidance on classifying assets and liabilities as either current or non-current, please refer to the separate page dedicated to this topic.

Statement of profit or loss and other comprehensive income

IAS 1 provides two methods for presenting profit or loss (P/L) and other comprehensive income (OCI). Entities can either combine both P/L and OCI into a single statement or present them in separate statements (IAS 1.81A-B). Additionally, the P/L and total comprehensive income for a given period should be allocated between the owners of the parent company and non-controlling interests (IAS 1.81B).

Minimum contents in P/L and OCI

IAS 1.82-82A specifies the minimum items that must appear in the P/L and OCI statements. These items are required only if they materially impact the financial statements (IAS 1.31).

Entities are permitted to add subtotals to the P/L statement if they meet the criteria specified in IAS 1.85A. Operating income is often the most commonly used subtotal in P/L. This practice may be attributed to the 1997 version of IAS 1, which mandated the inclusion of this subtotal—although this is no longer the case. IAS 1.BC56 clarifies that an operating profit subtotal should not exclude items commonly considered operational, such as inventory write-downs, restructuring costs, or depreciation/amortisation expenses.

Profit or loss (P/L)

All items of income and expense must be recognised in P/L (or OCI). This means that no income or expenses should be recognised directly in the statement of changes in equity, unless another IFRS specifically mandates it (IAS 1.88). Direct recognition in equity may also result from intra-group transactions . IAS 1.97-98 require separate disclosure of material items of income and expense, either directly in the income statement or in the notes.

Expenses in P/L can be presented in one of two ways (IAS 1.99-105):

• By their nature (e.g., depreciation, employee benefits); or
• By their function within the entity (e.g., cost of sales, distribution costs, administrative expenses).

When opting for the latter, entities must provide additional details on the nature of the expenses in the accompanying notes (IAS 1.104).

Other comprehensive income (OCI)

OCI encompasses income and expenses that other IFRS specifically exclude from P/L. There is no conceptual basis for deciding which items should appear in OCI rather than in P/L. Most companies present P/L and OCI as separate statements, partly because OCI is generally overlooked by investors and those outside of accounting and financial reporting circles. The concern is that combining the two could reduce net profit to merely a subtotal within total comprehensive income.

All elements that constitute OCI are specifically outlined in IAS 1.7, as part of its definitions.

Reclassification adjustments

A reclassification adjustment refers to the amount reclassified to P/L in the current period that was recognised in OCI in the current or previous periods (IAS 1.7). All items in OCI must be grouped into one of two categories: those that will or will not be subsequently reclassified to P/L (IAS 1.82A). Reclassification adjustments must be disclosed either within the OCI statement or in the accompanying notes (IAS 1.92-96).

To illustrate, foreign exchange differences arising on translation of foreign operations and gains or losses from certain cash flow hedges are examples of items that will be reclassified to P/L. In contrast, remeasurement gains and losses on defined benefit employee plans or revaluation gains on properties will not be reclassified to P/L.

The practice of transferring items from OCI to P/L, commonly known as ‘recycling’, lacks a concrete conceptual basis and the criteria for allowing such transfers in IFRS are often considered arbitrary.

Tax effects

OCI items can be presented either net of tax effects or before tax, with the overall tax impact disclosed separately. In either case, entities must specify the tax amount related to each item in OCI, including any reclassification adjustments (IAS 1.90-91). Interestingly, there is no such requirement to disclose tax effects for individual items in the income statement.

Statement of changes in equity

IAS 1.106 outlines the minimum line items that must be included in the statement of changes in equity. Subsequent paragraphs specify the disclosure requirements, which can be addressed either within the statement itself or in the accompanying notes. It’s crucial to note that changes in equity during a reporting period can arise either from income and expense items or from transactions involving owners acting in their capacity as owners (IAS 1.109). This means that entities cannot adjust equity directly based on changes in assets or liabilities unless these adjustments result from transactions with owners, such as capital contributions or dividend payments, or are otherwise mandated by other IFRSs.

Statement of cash flows

The statement of cash flows is governed by IAS 7 .

• Explanatory notes

Structure of explanatory notes

The structure for explanatory notes is detailed in IAS 1.112-116. In practice, there are several commonly adopted approaches to organising these notes:

Approach #1:

• Primary financial statements (P/L, OCI, etc.)
• Statement of compliance and basis of preparation
• Accounting policies

Approach #1 is logically coherent, as understanding accounting policies is crucial before delving into the financial data. However, in reality, few people read the accounting policies in their entirety. Consequently, users often have to navigate past several pages of accounting policies to reach the explanatory notes.

Approach #2:

• Primary financial statements (P/L, OCI, etc)

In Approach #2, accounting policies are treated as an appendix and positioned at the end of the financial statements. The advantage here is that all numerical data is clustered together, uninterrupted by extensive descriptions of accounting policies.

Approach #3:

• Explanatory notes integrated with relevant accounting policies

Approach #3 pairs accounting policies directly with the associated explanatory notes. For example, accounting policies relating to inventory would appear alongside the explanatory note that breaks down inventory components.

Management of capital

IAS 1.134-136 outline the disclosures related to capital management. These provisions apply to all entities, whether or not they are subject to external capital requirements. An important note here is that entities are not obligated to disclose specific values or ratios concerning capital objectives or requirements.

IAS 1.137 mandates disclosure of dividends proposed or declared before the financial statements were authorised for issue but not recognised as a distribution to owners during the period. Furthermore, entities are required to disclose the amount of any cumulative preference dividends not recognised.

Disclosure of accounting policies

IAS 1 specifies the requirements for disclosing accounting policy information which are discussed here .

Disclosing judgements and sources of estimation uncertainty

IAS 1 mandates disclosing judgements and sources of estimation uncertainty .

Other disclosures

Additional miscellaneous disclosure requirements are detailed in paragraphs IAS 1.138.

IFRS 18 Presentation and Disclosure in Financial Statements

The upcoming IFRS 18 Presentation and Disclosure in Financial Statements , which will supersede IAS 1, aims to enhance the comparability and transparency of financial reporting, focusing on the statement of profit or loss. Key changes include:

• The introduction of two new subtotals in the P/L statement: ‘operating profit’ and ‘profit before financing and income taxes’.
• A requirement for the reconciliation of management-defined performance measures (also known as ‘non-GAAP’ measures) with those specified by IFRS.
• Refined guidelines for the aggregation and disaggregation of information within the primary financial statements.
• Limited changes to the statement of cash flows, establishing operating profit as a starting point for the indirect method and eliminating options for the classification of interest and dividend cash flows.

Learn more in this BDO’s publication .

The release of IFRS 18 is expected in Q2 2024. This new IFRS will be effective from 1 January 2027 with early application permitted.

© 2018-2024 Marek Muc

The information provided on this website is for general information and educational purposes only and should not be used as a substitute for professional advice. Use at your own risk. Excerpts from IFRS Standards come from the Official Journal of the European Union (© European Union, https://eur-lex.europa.eu). You can access full versions of IFRS Standards at shop.ifrs.org. IFRScommunity.com is an independent website and it is not affiliated with, endorsed by, or in any other way associated with the IFRS Foundation. For official information concerning IFRS Standards, visit IFRS.org.

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IAS 1 Presentation of Financial Statements

Presentation of financial statements sets out the overall requirements for the presentation of financial statements, guidelines for their structure, and minimum requirements for their content., access the standard, current proposals, recent amendments, related ifric interpretations, uk reduced disclosures – frs 101, icaew factsheets and guides, icaew articles, other resources.

• 2023 Issued Standard – IAS 1 The 2023 Issued Standards include all amendments issued up to and including 1 January 2023.

Registration is required to access the free version of the Issued Standards, which do not include additional documents that accompany the full standard (such as illustrative examples, implementation guidance and basis for conclusions).

A complete set of financial statements includes:

• A statement of financial position (balance sheet) at the end of the period
• A statement of profit or loss and other comprehensive income (income statement) for the period
• A statement of changes in equity for the period
• A statement of cash flows (cash flow statement) for the period
• Notes to the accounts.

The names of the main statements are not mandatory.

IAS 1 Revised also requires a statement of financial position at the start of the earliest comparative period where there has been a retrospective adjustment to the accounts or reclassification of items.

The statement of profit or loss and other comprehensive income, as the name suggests, presents profit and loss for the period as well as other comprehensive income. Other comprehensive income includes income and expenses not recognised in profit or loss such as revaluation surpluses. The statement of profit or loss and other comprehensive income may be presented either as one statement or a separate statement of profit or loss and statement showing other comprehensive income.

The standard provides guidance on the form and content of the financial statements and the underlying accounting concepts. It also requires financial statements to present fairly the position, performance and cash flows of an entity. This is normally achieved by the application of IFRS.

ED/2019/7 General Presentation and Disclosures was issued in December 2019. This is the exposure draft of a proposed new standard that would replace IAS 1. The standard would carry forward most of the current requirements of IAS 1 and add supplementary requirements, including:

• Categorising items in profit or loss as operating, investing or financing
• Requiring additional profit subtotals
• Distinguishing between integral and non-integral associates and joint ventures
• Removing the choice of how to present cash flows from dividends and interest
• Requiring additional disclosure about unusual items
• Providing disclosure of management performance measures.

All amendments issued up to and including the publication date of 1 January 2022 are included within the IFRS Foundation’s latest version of the issued standard: 2022 Issued Standard – IAS 1 . Issued amendments may, therefore, have a mandatory effective date that is later than 1 January 2022 – see below for details.

Any amendments issued after 1 January 2022 will not be included in the IFRS Foundation’s 2022 Issued Standards but will be listed below and identified as such.

See the Corporate Reporting Faculty’s annual IFRS factsheets  for a more detailed discussion of recent IFRS amendments.

Mandatory date: Annual periods beginning on or after 1 January 2024. Earlier application is permitted.

Issue date: October 2022 (not included within the IFRS Foundation’s 2022 Issued Standards).

The amendments specify that the classification of a liability as current or non-current is only affected by covenants that an entity must comply with on or before the end of the reporting period. They also require disclosure of information that allows users of financial statements to understand the risk that non-current liabilities with covenants could become repayable within 12 months.

This amendment has been endorsed for use in the UK. It is not yet endorsed for use in the EU as at 25 July 2023. Read more on UK endorsement  and EU endorsement  of IFRS standards.

For a more detailed discussion of the amendment, read the faculty’s factsheet:

• 2022 IFRS Accounts

Mandatory date: Annual periods beginning on or after 1 January 2024 (deferred from 2023). Earlier application is permitted.

IAS 1 is amended to clarify that the classification of liabilities as current or non-current should be based on rights that exist at the end of the reporting period. Expectations about whether an entity will exercise a right to defer settlement of a liability do not affect its classification. The amendments also clarify that settlement is the transfer of cash, equity instruments, other assets or services.

The deferral of the effective date to 2024 is included in the Non-current Liabilities with Covenants amendment to IAS 1.

Mandatory date: Annual periods beginning on or after 1 January 2023. Earlier application is permitted.

The amendments to IAS 1:

• Require an entity to disclose material accounting policy information rather than significant accounting policies.
• Explain that accounting policy information is material if, together with other information in the financial statements, it can reasonably be expected to influence decisions that primary users make.
• Provide examples of material accounting policies.
• Clarify that accounting policy information relating to immaterial transactions need not be disclosed.

IAS 1 is amended to:

• Add finance income and expenses to the list of components of other comprehensive income;
• Require line items to be presented in the statement of financial position in respect of contracts that are within the scope of IFRS 17;
• Require line items to be presented in the statement of profit or loss in respect of amounts related to contracts within the scope of IFRS 17.

IAS 1 is amended to refer to portfolios of contracts rather than groups of contracts within the scope of IFRS 17.

Mandatory date: Annual periods beginning on or after 1 January 2020. Earlier application is permitted.

The definition of material is amended to be as follows:

Information is material if omitting, misstating or obscuring it could reasonably be expected to influence decisions that the primary users of general purpose financial statements make on the basis of those financial statements, which provide financial information about a specific reporting entity.

Examples of circumstances that may result in material information being obscured are added to the standard as a result of the amendment, as is guidance on users of financial statements.

• 2020 IFRS Accounts

Mandatory date: Annual periods beginning on or after 1 January 2020. Earlier application is permitted if an entity also applies the amendments to other IFRS Accounting Standards at the same time.

IAS 1 is updated to refer to the 2018 Conceptual Framework rather than the Framework for the Preparation and Presentation of Financial Statements when referring to materiality, definitions of elements and their recognition criteria and the objective of financial statements.

• IFRIC 1 Existing Decommissioning, Restoration and Similar Liabilities Addresses accounting for a change in a provision that is included in the carrying amount of an item of PPE.
• IFRIC 14 IAS 19 – The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction Provides general guidance on how to assess the limit in IAS 19 on the amount of the surplus that can be recognised as an asset. Explains how the pensions asset or liability may be affected when there is a statutory or contractual minimum funding requirement.
• IFRIC 17 Distribution of Non-cash Assets to Owners Addresses the accounting for dividends of non-cash assets, including those where there is a cash alternative.
• IFRIC 19 Extinguishing Financial Liabilities with Equity Instruments Addresses the accounting by an entity which issues equity instruments in order to settle, in full or part, a financial liability.
• IFRIC 20 Stripping Costs in the Production Phase of a Surface Mine Addresses the accounting treatment of mine waste materials, which are the materials removed by mining entities in order to gain access to mineral ore deposits.
• IFRIC 21 Levies Provides guidance on when to recognise liability for a levy imposed by a government.
• IFRIC 23 Uncertainty over Income Tax Treatments Clarifies how to apply the recognition and measurement requirements of IAS 12 when there is uncertainty over income tax treatments.
• SIC 7 Introduction of the Euro The effective start of the EMU after the reporting date does not alter the requirements of IAS 21 at the reporting date.
• SIC 25 Income Taxes – Changes in the Tax Status of an Enterprise or its Shareholders Addresses the deferred tax consequences of changes in tax status of an enterprise or its shareholders.
• SIC 29 Disclosure – Service Concession Arrangements Prescribes disclosures required by a concession operator and concession provider joined by a service concession arrangement.
• SIC 32 Intangible Assets – Website Costs Addresses accounting for costs associated with the development of a website.

UK qualifying parents and subsidiaries can take advantage of FRS 101 Reduced Disclosure Framework. Our FRS 101 page  gives more information on which entities qualify and the criteria to be met.

The following amendments must be made to IAS 1 in order to achieve compliance with the Companies Act and related Regulations:

• The statement of financial position must comply with the balance sheet format requirements of the Companies Act.
• The statement of profit or loss and other comprehensive income must comply with the profit and loss account format requirements of the Companies Act.
• Ordinary activities of an entity are defined and extraordinary items are described as highly abnormal material items arising from events falling outside an entity’s ordinary activities.
• It is clarified that items of income or expense are not recognised in profit or loss where such recognition is prohibited by the Companies Act.

FRS 101 paragraph 8(f) states that a qualifying entity is exempt from the IAS 1 requirement to present the following within a set of financial statements:

• A statement of cash flows for the period;
• A third statement of financial position when a retrospective adjustment or reclassification is made;
• A statement of compliance with IFRS;
• A reconciliation of property, plant and equipment, intangible assets, investment properties, biological assets and the number of shares outstanding at the beginning and end of the comparative period;
• Capital management disclosures (this exemption is not available to a financial institution);
• All remaining IAS 1 disclosures must be applied.

IAS 1 paragraphs for which exemption is available: 10(d), 10(f), 16, 38A-D, 40A-D, 111, 134-6.

The Corporate Reporting Faculty's annual IFRS factsheets  provide a more detailed discussion of recent IFRS amendments.

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IFRS Standard: IAS 1 Presentation of Financial Statements

Ias 1 objective scope definitions, ias 1 presentation of financial statements, ias 1 objective ias 1 objective scope definitions.

1 This Standard prescribes the basis for presentation of general purpose financial statements to ensure comparability both with the entity’s financial statements of previous periods and with the financial statements of other entities. It sets out overall requirements for the presentation of financial statements, guidelines for their structure and minimum requirements for their content.

IAS 1 Scope

2 An entity shall apply this Standard in preparing and presenting general purpose financial statements in accordance with International Financial Reporting Standards (IFRSs).

3 Other IFRSs set out the recognition, measurement and disclosure requirements for specific transactions and other events.

4 This Standard does … Read more

IAS 1 Financial statements

Purpose of financial statements ia s 1 financial statements.

9. Financial statements are a structured representation of the financial position and financial performance of an entity. The objective of 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. Financial statements also show the results of the management’s stewardship of the resources entrusted to it. To meet this objective, financial statements provide information about an entity’s:

• liabilities;
• income and expenses, including gains and losses;
• contributions by and distributions to owners in their capacity as owners; and

IAS 1 Structure and content

Introduction ias 1 structure and content.

47 This Standard requires particular disclosures in the statement of financial position or the statement(s) of profit or loss and other comprehensive income, or in the statement of changes in equity and requires disclosure of other line items either in those statements or in the notes. IAS 7 Statement of Cash Flows sets out requirements for the presentation of cash flow information.

48 This Standard sometimes uses the term ‘disclosure’ in a broad sense, encompassing items presented in the financial statements. Disclosures are also required by other IFRSs. Unless specified to the contrary elsewhere in this Standard or in another IFRS, such disclosures … Read more

IAS 1 Statement of financial position

Information to be presented in the statement of financial position.

54 The statement of financial position shall include line items that present the following amounts:

• property, plant and equipment;
• investment property;
• intangible assets;
• financial assets (excluding amounts shown under (e), (h) and (i)); (da) portfolio of contracts within the scope of IFRS 17 that are assets, disaggregated as required by paragraph 78 of IFRS 17 ;
• investments accounted for using the equity method;
• biological assets within the scope of IAS 41 Agriculture ;
• inventories;
• trade and other receivables;
• cash and cash equivalents;
• the total of assets classified as held for sale and assets included in disposal groups classified

IAS 1 Statement of profit or loss and other comprehensive income

81 [ Deleted]

81A The statement of profit or loss and other comprehensive income (statement of comprehensive income) shall present, in addition to the profit or loss and other comprehensive income sections:

• profit or loss;
• total other comprehensive income;
• comprehensive income for the period, being the total of profit or loss and other comprehensive income.

If an entity presents a separate statement of profit or loss it does not present the profit or loss section in the statement presenting comprehensive income.

81B An entity shall present the following items, in addition to the profit or loss and other comprehensive income sections, as … Read more

IAS 1 Statement of changes in equity

Information to be presented in the statement of changes in equity ias 1 statement of changes in equity.

106 An entity shall present a statement of changes in equity as required by paragraph 10. The statement of changes in equity includes the following information:

• total comprehensive income for the period, showing separately the total amounts attributable to owners of the parent and to non-controlling interests;
• for each component of equity, the effects of retrospective application or retrospective restatement recognised in accordance with IAS 8; and
• for each component of equity, a reconciliation between the carrying amount at the beginning and the end of the period, separately

IAS 1 Statement of cash flows

111 Cash flow information provides users of financial statements with a basis to assess the ability of the entity to generate cash and cash equivalents and the needs of the entity to utilise those cash flows. IAS 7 sets out requirements for the presentation and disclosure of cash flow information.

Previous: IAS 1 Statement of changes in equity

Next: IAS 1 Notes

Source EU rules on financial information disclosed by companies

IAS 1 Statement of cash flows IAS 1 Statement of cash flows IAS 1 Statement of cash flows IAS 1 Statement of cash flows IAS 1 Statement of cash flows IAS 1 Statement of … Read more

IAS 1 Notes

112 The notes shall:

• present information about the basis of preparation of the financial statements and the specific accounting policies used in accordance with paragraphs 117–124;
• disclose the information required by IFRSs that is not presented elsewhere in the financial statements; and
• provide information that is not presented elsewhere in the financial statements, but is relevant to an understanding of any of them.

113 An entity shall, as far as practicable, present notes in a systematic manner. In determining a systematic manner, the entity shall consider the effect on the understandability and comparability of its financial statements. An entity shall cross-reference each item in the statements of financial position and … Read more

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IAS 1 Presentation of Financial Statements

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IAS 1 Presentation of Financial Statements

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IAS 1 sets out overall requirements for the presentation of financial statements, guidelines for their structure and minimum requirements for their content. It requires an entity to present a complete set of financial statements at least annually, with comparative amounts for the preceding year (including comparative amounts in the notes). A complete set of financial statements comprises:

• a statement of financial position as at the end of the period;
• a statement of profit and loss and other comprehensive income for the period.  Other comprehensive income is those items of income and expense that are not recognised in profit or loss in accordance with IFRS Standards.  IAS 1 allows an entity to present a single combined statement of profit and loss and other comprehensive income or two separate statements;
• 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; and
• a statement of financial position as at the beginning of the preceding comparative 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.

An entity whose financial statements comply with IFRS Standards must make an explicit and unreserved statement of such compliance in the notes. An entity must not describe financial statements as complying with IFRS Standards unless they comply with all the requirements of the Standards. The application of IFRS Standards, with additional disclosure when necessary, is presumed to result in financial statements that achieve a fair presentation. IAS 1 also deals with going concern issues, offsetting and changes in presentation or classification.

Standard history

In April 2001 the International Accounting Standards Board (IASB) adopted IAS 1 Presentation of Financial Statements , which had originally been issued by the International Accounting Standards Committee in September 1997. IAS 1 Presentation of Financial Statements replaced IAS 1 Disclosure of Accounting Policies (issued in 1975), IAS 5 Information to be Disclosed in Financial Statements (originally approved in 1977) and IAS 13 Presentation of Current Assets and Current Liabilities (approved in 1979).

In December 2003 the IASB issued a revised IAS 1 as part of its initial agenda of technical projects. The IASB issued an amended IAS 1 in September 2007, which included an amendment to the presentation of owner changes in equity and comprehensive income and a change in terminology in the titles of financial statements. In June 2011 the IASB amended IAS 1 to improve how items of other income comprehensive income should be presented.

In December 2014 IAS 1 was amended by Disclosure Initiative (Amendments to IAS 1), which addressed concerns expressed about some of the existing presentation and disclosure requirements in IAS 1 and ensured that entities are able to use judgement when applying those requirements. In addition, the amendments clarified the requirements in paragraph 82A of IAS 1.

In October 2018 the IASB issued Definition of Material (Amendments to IAS 1 and IAS 8). This amendment clarified the definition of material and how it should be applied by (a) including in the definition guidance that until now has featured elsewhere in IFRS Standards; (b) improving the explanations accompanying the definition; and (c) ensuring that the definition of material is consistent across all IFRS Standards.

In February 2021 the IASB issued Disclosure of Accounting Policies which amended IAS 1 and IFRS Practice Statement 2 Making Materiality Judgements . The amendment amended IAS 1 to replace the requirement for entities to disclose their significant accounting policies with the requirement to disclose their material accounting policy information.

In October 2022, the IASB issued  Non-current Liabilities with Covenants . The amendments improved the information an entity provides when its right to defer settlement of a liability for at least twelve months is subject to compliance with covenants. The amendments also responded to stakeholders’ concerns about the classification of such a liability as current or non-current.

Other Standards have made minor consequential amendments to IAS 1. They include Improvement to IFRSs (issued April 2009), Improvement to IFRSs (issued May 2010), IFRS 10 Consolidated Financial Statements (issued May 2011), IFRS 12 Disclosures of Interests in Other Entities (issued May 2011), IFRS 13 Fair Value Measurement (issued May 2011), IAS 19 Employee Benefits (issued June 2011), Annual Improvements to IFRSs 2009–2011 Cycle (issued May 2012), IFRS 9 Financial Instruments (Hedge Accounting and amendments to IFRS 9, IFRS 7 and IAS 39) (issued November 2013), IFRS 15 Revenue from Contracts with Customers (issued May 2014), Agriculture: Bearer Plants (Amendments to IAS 16 and IAS 41) (issued June 2014), IFRS 9 Financial Instruments (issued July 2014), IFRS 16 Leases (issued January 2016), Disclosure Initiative (Amendments to IAS 7) (issued January 2016), IFRS 17 Insurance Contracts (issued May 2017), Amendments to References to the Conceptual Framework in IFRS Standards (issued March 2018) and Amendments to IFRS 17 (issued June 2020).

Related active projects

IFRS Accounting Taxonomy Update—Primary Financial Statements

Related completed projects

Clarification of the Requirements for Comparative Information (Amendments to IAS 1)

Classification of Liabilities as Current or Non-current (Amendments to IAS 1)

Definition of Accounting Estimates (Amendments to IAS 8)

Disclosure Initiative (Amendments to IAS 1)

Disclosure Initiative (Amendments to IAS 7)

Disclosure Initiative—Accounting Policies

Disclosure Initiative—Definition of Material (Amendments to IAS 1 and IAS 8)

Disclosure Initiative—Principles of Disclosure

Disclosure Initiative—Targeted Standards-level Review of Disclosures

IFRS Accounting Taxonomy Update—Amendments to IAS 1, IAS 8 and IFRS Practice Statement 2

IFRS Accounting Taxonomy Update—Amendments to IFRS 16 and IAS 1

Joint Financial Statement Presentation (Replacement of IAS 1)

Non-current Liabilities with Covenants (Amendments to IAS 1)

Presentation of Items of Other Comprehensive Income (Amendments to IAS 1)

Presentation of Liabilities or Assets Related to Uncertain Tax Treatments (IAS 1)

Presentation of interest revenue for particular financial instruments (IFRS 9 and IAS 1)

Puttable Financial Instruments and Obligations Arising on Liquidation (Amendments to IAS 32 and IAS 1)

Revised IAS 1 Presentation of Financial Statements: Phase A

Supply Chain Financing Arrangements—Reverse Factoring

Related IFRS Standards

Related ifric interpretations.

IFRIC 1 Changes in Existing Decommissioning, Restoration and Similar Liabilities

Unconsolidated amendments

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IAS 1 Presentation of Financial Statements

International accounting standard 1.

Overview of IAS 1

• Issued: in 1975; re-issued in 2007, followed by amendments
• Effective date: 1 January 2009
• Statement of financial position;
• Statement of profit or loss and other comprehensive income;
• Statement of changes in equity;
• Statement of cash flows;
• Notes with summary of significant accounting policies and other explanatory information
• fair presentation and compliance with IFRS;
• going concern;
• accrual basis of accounting;
• materiality and aggregation;
• offsetting;
• frequency of reporting;
• comparative information; and
• consistency of presentation.
• It sets the minimum requirements for the content of financial statements; their identification and structure.

Articles about IAS 1

• Summary of IAS 1 Presentation of Financial Statements
• How to write notes - this article gives a step-by-step guidance on writing the notes and also, some stories are included
• Current or Non-current? - this article will help you decide whether you should present the item as current or non-current
• IFRS for Banks and Financial Institutions - I recommend reading it if you work for a bank, because the structure of financial statements is different
• Profit or loss vs. Other Comprehensive Income - what's the difference?

Questions and Answers

• How to present the financial statements when going concern does NOT apply?
• How to classify expenses in profit or loss?
• How to present a loan with breached covenants? - this Q&A relates to current/non-current distinction
• How to deal with CAPEX threshold for your PPE? - this Q&A relates to materiality and its change during the reporting period
• Failed to comply with IFRS?
• How to present comparatives when the reporting period changes

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IAS 1 - Presentation of Financial Statements (detailed review)

This standard prescribes the guide lines to be used by the entity, in the presentation of general purpose financial statements, to make sure that financial statement of the entity are comparable both with its previous periods financial statement and with the financial statements of the other entity. For this purpose, it provides overall requirements for the structure and contents of financial statements along with some general features.

The requirements of this standard are applicable to all the general purpose financial statements (individual and consolidated both) which are prepared and presented in accordance' with 'International Financial .Reporting Standards (IFRSs).

However, this standard is not applicable to the structure and contents of statement of cash flows and interim financial statements.

General Purpose Financial Statements

These are financial statements which are prepared and presented to satisfy the information needs of the general users, who are not able to require the reporting entity to prepare accounting reports according to their particular information needs.

Complete Set of Financial Statements

The complete set of financial statements entails the following:

• Statement of profit or loss and other comprehensive income
• Statement of financial position
• Statement of changes in equity
• Statement of cash flows
• Notes to accounts
• Comparative year information
• Opening Statement of financial position in respect of retrospective application or restatement of a change in accounting policy or error, or when entity first adopts the IFRSs 

International Financial Reporting Standards (IFRSs)

These are accounting standards and related Interpretations, which are issued and regulated by the International Accounting Standards Board (IASB) and these encompasses:

• International Financial Reporting Standards (IFRS)
• International Accounting Standards (IAS)
• Interpretations issued by IFRIC and
• Interpretations issued by SIC

Impracticable

It is when the entity is not able to apply the requirement of a particular standard, after any reasonable effort to do so.

These are one of the essential component of financial statements and include the information (financial and non-financial) in addition to the information which is  presented in the other components of financial statements such as statement of profit or loss and other comprehensive income, statement of changes in equity, statement of financial' position and statement of cash flows. These are in the form of narrative descriptions

Other comprehensive income

It entails the incomes and expenses which are not permitted to be recognized in profit or loss as per the requirements of the other standards. It also includes the reclassification, adjustments

Reclassification Adjustments

It is the reclassification of certain amounts to profit or loss during the current accounting period, which were previously recognized in statement of other comprehensive income

Total comprehensive income

It is the increase or decrease in the equity in the current accounting period resulting due to the events and transactions, which are other than the transactions with shareholders in their capacity as owners.

General Features

Fair Presentation

This standard requires that the financial. Performance, financial position and cash flows of an entity should be fairly presented. Fair presentation of financial statements, the events and transactions should be reported to financial statements in accordance with the recognition and measurement principle for the elements of financial statements, given in the IASB’s framework, and financial statements should be prepared in accordance with IFRS with related disclosure requirements.

To achieve the fair presentation the entity should make sure the following:

• The selection and application of accounting policies as per IAS8
• The information contained in financial statements should have all the qualitative characteristics of financial statements 
• Complete disclosure should be given as per the IFRS

Un-reserved Stat e ment

The entity which prepares financial statements in compliance with all the lFRSs, should place an un-reserved statement in the notes to accounts, in respect of such compliance with IFRSs. This is termed as un-reserved statement. However, the entity cannot make such a statement unless the financial statements are in compliance with all the requirements of IFRSs.

D i sagreement with IFRS s

If in very rare situations, the management identifies that compliance with a particular requirement of a specific standard or Interpretation will result in the information, which is in conflict with the objectives of financial statements as laid down in the Framework, the entity will account for such situation as follows:

a) If the regulatory frame work permits departure from such requirement, the entity will take departure from that requirement and will disclose the following:

• The financial statements fairly present the financial performance, financial position and cash flows of the entity, as per the judgment of management
• The financial statements of the entity are in compliance with all the relevant IFRS’s other than the departure from the particular requirement
• The title of the standard from which departure is taken, the details of departure and related reason for the departure
• The financial effect on financial statements due to such departure

b) If the regulatory frame work does not permit departure from such requirement, the entity will reduce the related impact of such compliance by giving following disclosures:

• The adjustment which is required as per the judgment of the management to achieve fair presentation

Going Concern

At the end of each reporting period, when entity will prepare its financial statements, the management is required to assess of whether the entity has ability to continue its business as a going concern. If management identifies that it has ability to continue its business as a going concern then its financial statement will be prepared on a going concern basis.

The entity will be treated as going concern, if it can continue its operations for the foreseeable future such that neither the management has intention nor the circumstances are there that the entity will have to curtail its business activities

Accrual Basis of Accounting

The entity is required to report all the events and transactions in the financial statements in the period to which these relate except for the cash flows

Consistency of Presentation

The entity should use the same accounting policies in the preparation and presentation of financial statements for the similar events and transactions, from one period to the next in order to ensure the comparability of financial statements unless the change is required by the circumstance laid down in IAS 8

Materiality and Aggregation

The entity is required to present each material class of items separately in the financial statements, unless these are immaterial.

The entity should not offset any assets and liabilities or any income and expense, except it is required by a IFRS

Frequency of Reporting

An entity shall present a complete set of financial statements (including comparative information) at least annually. When an entity changes the end of its reporting period and presents financial statements for a period longer or shorter than one year an entity shall disclose, in addition to the period covered by the financial statements (a) The reason for using a longer or shorter period, and (b) The fact that amounts presented in the financial statements are not entirely comparable.  

Comparative Information

This standard requires an entity to disclose the comparative information in respect of the previous accounting period similar to those amounts which are presented in the financial statements of the current accounting period

Identification of Financial Statements

The financial statements of the entity should be identified and distinguished from the other information using the following:

• The title of the entity presenting financial statements
• Whether these are the financial statements of an individual entity or consolidated financial statements for the group of entities:
• The reporting date for which financial statements are presented
• The presentation currency for the amounts reported in financial statements
• The level of rounding up for the amounts reported in financial statements

Contents of Financial Statements

Statement of Financial Position

The assets of the entity will be presented into current and non-current assets as per the definition on the face of statement of financial position, unless the presentation on the basis of liquidity is more appropriate

Current assets

The entity will present an asset as current asset, if it meets any of the following criteria:

• It is held for trading in the normal course of business
• It will be realized within a period of 12 months from the reporting date
• It is expected to be sold or consumed in the normal course of business
• It is cash or cash equivalent as defined in IAS 7

The entity will present all other assets as non-current assets.

Liabilities

The liabilities of the entity will be presented into current and non-current liabilities as per the definition on the face of statement of financial position as follows:

Current Liabilities

The entity will present a liability as current liability, if It relates to the normal course of the business and will be paid within 12 months from the reporting date

The entity will present all other liabilities as non-current liabilities

Statement of Profit or Loss and other comprehensive income

The entity the all items of incomes and expenses relating to the current accounting period in the form of either:

• A single statement of profit or loss and other comprehensive income or
• Two separate statements, one is the statement of profit or loss and another statement of other comprehensive income

Statement of profit or loss

The entity will present the following Information in the statement of profit or loss at minimum:

• Entity’s Revenue for the current accounting period
• Interest costs
• Entity’s share of the profit or loss from associates or joint ventures
• Any reclassification adjustment recognized during the current accounting period
• Net profit or loss for the current accounting period

Other comprehensive Income

The entity will present the line items of statement of comprehensive income into two sections as follows:

a) Items that are not reclassify to profit or loss

b) Items that may be reclassify to profit or loss, when certain conditions will meet

The line items of statement of comprehensive income may be presented either

• Net of tax or
• Before tax with the tax effect being presented as a separate line item under the respective section

The entity is required to disclose the allocation of profit or loss and comprehensive Income as follows in addition to the statement of profit or loss and other comprehensive income:

a) Profit or loss for the current accounting period attributable to:

• Owners of the group
• Non-controlling interests in the entity

b) Total comprehensive income for the current accounting period attributable to:

• Non-controlling interests, and

Statement of Changes in Equity

The entity is required to present the following in respect of each component of entity, in the statement of changes in equity:

• Changes in the elements of equity due to transaction with owners in the current accounting period
• Changes in the elements of equity due to the total comprehensive income for the year
• Changes in the components of equity due to the change in accounting policy
• Changes in the components of the equity due to the requirement of a standard

These contain the information (financial and non-financial) in addition to the information which is  presented in the other components of financial statements such as statement of profit or loss and other comprehensive income, statement of changes in equity, statement of financial' position and statement of cash flows. These are in the form of narrative descriptions and include the following:

• Basis used by the entity for the preparation of the financial statements
• Accounting policies of the entity
• Disclosures required by the standards

Format of Statement of financial position

Format of Statement of profit or loss and other comprehensive income

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Introduction to IFRS - IAS 1 Presentation of Financial Statements

If you would like to dive into the world of international financial reporting standards (IFRS), you have to be aware what IFRS and IAS means, what the difference between the standards and the conceptual framework is, what the fundamental definition of assets and liabilities is, etc. This course provides answers to these questions using practical examples.

The course consists of two parts. First part, after the introduction to the IFRS, explains the most important concepts of the Conceptual Framework. In the second part IAS 1 Presentation of financial statements standard's requirements are presented including practical examples and interim tests to enhance understanding. 

This course will enable you to:

• understand the concept of international financial reporting standards
• identify main features of the Conceptual Framework
• understand the qualitative characteristics of useful financial information (fundamental and enhancing)
• decide whether the standard or the conceptual framework prevail in case they are in conflict with each other
• understand  the definition of control
• distinguish main accounting considerations and define which are applicable to the primary statements (statement of comprehensive income, statement of financial position, statement of changes in equity, statement of cash flows and notes)

Further information:

• Training hours: 60 minutes 
• Languages: English, Hungarian, Russian, Serbian, Croatian

This e-learning course is part of an e-learning series designed by PwC Academy Hungary which aims to provide a comprehensive overview of the application of IFRS (IAS) standards to finance and accounting experts who are already familiar with fundamental (local) accounting and reporting processes.

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IASB issues IFRS 18 Presentation and Disclosure in Financial Statements

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This publication summarises the key requirements of IFRS 18 Presentation and Disclosure in Financial Statements (IFRS 18).

IFRS 18 was issued on 9 April 2024 and becomes effective for reporting periods beginning on or after 1 January 2027. IFRS 18 introduces new requirements on presentation within the statement of profit or loss, including specified totals and subtotals. It also requires disclosure of management-defined performance measures and includes new requirements for aggregation and disaggregation of financial information based on the identified ‘roles’ of the primary financial statements and the notes. In addition, there are consequential amendments to other accounting standards.

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