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Accounting

IASB issues revised standard on presentation of financial statements

Friday, 07 September 2007

The International Accounting Standards Board (IASB) has issued a revised version of IAS 1 Presentation of Financial Statements. The revision is aimed at improving users’ ability to analyse and compare the information given in financial statements.

The changes made are to require information in financial statements to be aggregated on the basis of shared characteristics and to introduce a statement of comprehensive income. This will enable readers to analyse changes in a company’s equity resulting from transactions with owners in their capacity as owners (such as dividends and share repurchases) separately from 'non-owner’ changes (such as transactions with third parties).

In response to commentsreceived through the consultation process the revised standard gives preparers of financial statements the option of presenting items of income and expense and components of other comprehensive income either in a single statement of comprehensive income with subtotals, or in two separate statements (a separate income statement followed by a statement of comprehensive income).

The revisions include changes in the titles of some of the financial statements to reflect their function more clearly (for example, the balance sheet is renamed a statement of financial position). The new titles will be used in accounting standards, but are not mandatory for use in financial statements.

The revised standard will come into effect for the annual periods beginning on or after 1 January 2009, but early adoption is permitted.

The publication of IAS 1 marks the completion of the first phase of the IASB’s joint initiative with the US Financial Accounting Standards Board (FASB) to review and harmonise the presentation of financial statements. The second phase, which has already begun, is examining more fundamental questions about the presentation of information in financial statements and the IASB expects to publish a discussion paper on the subject within the next six months.

Introducing the revised IAS 1, Sir David Tweedie, Chairman of the IASB, said any changes to the way financial information is presented will quite rightly attract much interest.

"With the first phase of this project now completed we look forward to addressing the more fundamental questions as part of a broad consultation that will start at the beginning of next year. I would strongly encourage all those who have an interest in financial reporting to participate in this consultation in order to ensure that the best ideas available are given due consideration by the Board."

IAS 1 Presentation of Financial Statements is available for eIFRS subscribers from today. Those wishing to subscribe to eIFRSs should visit the online shop at www.iasb.org or contact:

ASC Foundation Publications Department,
30 Cannon Street, London EC4M 6XH
Tel: +44 (0)20 7332 2730 Fax +44 (0)20 7332 2749
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Printed copies of IAS 1 (ISBN 978-1-905590-36-0) are available, at £15.00 plus shipping, from the IASC Foundation Publications Department.