On 25 March 2014, the IASB has published for public comment an Exposure Draft outlining proposed amendments to IAS 1 regarding Presentation of Financial Statements. The amendments proposed have resulted mainly from the IASB’s Disclosure Initiative (pages 8-21 of the ED).
The amendments to IAS 1 arising from the Disclosure Initiative aim to make narrow-focus amendments that will clarify some of its presentation and disclosure requirements to ensure entities are able to use judgement when applying the Standard. The amendments respond to concerns that the wording of some of the requirements in IAS 1 may have prevented the use of such judgement.
The proposed amendments as follows :
Materiality and Aggregation
The IASB proposes to amend the materiality requirements in IAS 1 to emphasis that :
- entities shall not aggregate or disaggregate information in a manner that obscures useful information;
- the materiality requirements apply to the statement(s) of profit or loss and other comprehensive income, statement of financial position, statement of cash flows and statements of changes in equity and to the notes; and
- when a Standard requires a specific disclosure, the resulting information shall be assessed to determine whether it is material and consequently whether presentation or disclosure of that information is warranted
Information to be presented in the Statement of Financial Position or the Statement(s) of Profit or Loss and Other Comprehensive Income
The IASB proposes to amend the requirements for presentation in the statement of financial position and in the statement(s) of profit or loss and other comprehensive income by :
- clarifying that the presentation requirements for line items may be fulfilled by disaggregating a specific line item; and
- introducing requirements for an entity when presenting subtotals in accordance with paragraphs 55 and 85 of IAS 1
The IASB proposes to amend the requirements regarding the structure of the notes by :
- emphasising that the understandability and comparability of its financial statements should be considered by an entity when deciding the systematic order for the notes; and
- clarifying that entities have flexibility as to the systematic order for the notes, which does not need to be in the order listed in paragraph 114 of IAS 1
Disclosure of Accounting Policies
The IASB proposes to remove the guidance in paragraph 120 of IAS 1 for identifying a significant accounting policy, including removing potentially unhelpful examples.
Comments on this ED of IAS 1 is expected to be received by 23 July 2014.
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