FRSC Adopts IASB Revised Standard on Presentation of Financial Statements

The Financial Reporting Standards Council has approved the adoption of the revised version of IAS 1, Presentation of Financial Statements, issued by the International Accounting Standards Board (IASB). This will be issued as revised PAS 1, Presentation of Financial Statements. The revised Standard aims to improve users’ ability to analyze and compare the information given in financial statements.

The changes made will 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 analyze 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).

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 theirfunction 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 introduces a requirement to present a statement of financial position at the beginning of the earliest comparative period in a complete set of financial statements when the entity applies an accounting policy retrospectively or makes a retrospective restatement, as defined in IAS 8,  Accounting Policies, Changes in Accounting Estimates and Errors, or when the
entity reclassifies items in the financial statements.

The revised standard will become effective for annual periods beginning on or after January 1, 2009, but early adoption is permitted.

The publication of revised IAS 1 marks the completion of the first phase of the IASB’s joint initiative with the U.S. Financial Accounting Standards Board (FASB) to review and harmonize the presentation of financial statements.

The revised Standard has been forwarded to the Board of Accountancy and Professional Regulation Commission for approval.