IAS 1- PRESENTATION OF PUBLISHED FINANCIAL STATEMENTS
IAS 1 gives a substantial guidance on the form and contents of published financial statements
which comprises of:
Statement of comprehensive income/ Income Statement
Statement of Financial position
Statement of changes in Equity
Statement of cash flows (IAS 7)
Notes of the financial statements
Published financial statements refer to audited accounts accompanied by auditor’s report and
approved by the directors of the entity.
IAS 1 specified disclosures of certain items in certain ways i.e
Some items must appear on the face of the statement of comprehensive income or the
statement of financial position
Other items appear as notes to the financial statement
Recommended format of the published financial statements.
Items which must appear on the face of the statement of financial position.
Non-current assets
They include:
Tangible assets property plant and equipment (IAS 16)
Intangible assets (IAS 38)
Financial assets of long-term nature. Any contract that gives rise to an asset (receivables)
of one entity and a financial liability of another entity (IAS 37)
Current assets are:
Expected to be realized (liquidated) in the normal course of business
Is held for sale or consumption in the normal course of business
Held primarily for trading purpose within twelve months’ form date of reporting.
Is cash or cash equivalent which is not restricted in its use.
Current liabilities
Obligations to be settled with twelve month from date of reporting.
They are expected to be settled in the normal course of business
It is held primarily for the purpose of trading.
Non – current liabilities
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,The reporting period
The acceptable reporting period is one year-twelve calendar months. If an entity reports under
different periods disclosure should be made for:
The reason as to why the period is more or less than one year
The fact that the comparative figures given are not in fact comparable.
The publication of the financial statement should be within six months from the end of the
(reporting period) accounting period.
CONCEPTUAL FRAMEWORK
A conceptual framework is a statement of generally accepted theoretical principals which form
the frame of reference in financial reporting. These theoretical principles provide the basis for
the development of new accounting standards and evaluation of the existing standards.
The primary objective is to avoid fire-fighting approach in the preparation of accounting
standards and bring about uniformity in Financial Reporting
The financial reporting process is concerned with providing information that is useful in the
business and economic decision-making process. The conceptual framework lays a foundation of
how the financial statements should be presented to the different users.
Benefits of the framework
To enhance completeness and accuracy in the preparation of the Accounting Standards
To enhance uniformity in international financial reporting
It eliminates the conflicts among the different users
To avoid interference from external parties
International Accounting standards Board (IASB)
The IASB provides the framework for the development of;
IFRSs - International Financial Reporting Standards
IASs – International Accounting Standards
The objective of financial statements is to provide information about the financial position,
performance and changes in financial position of an entity that is useful to a wide range of users
in making economic decisions.
IAS 8 – ACCOUNTING, CHANGES IN ACCOUNTING ESTIMATES AND ERRORS
Accounting policies
These are specific principles, bases, conventions, rules and practices adopted by an entity in
preparing and presenting financial statements. The same accounting polices are adapted from
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, period to period to allow users to analyze the trends over time in profits, cash flows and financial
position. Changes in accounting policies will, therefore be rare and should only be made under
the following cases;
Change in an accounting standard
Development of a new standard
By statue
If the change will result in a more appropriate presentation of events.
A change in an accounting policy must be applied retrospectively i.e the new accounting policy
is applicable to transactions and events as if it has been in use. The effect of a change in
accounting policy is disclosed as prior period adjustment in the income statements. Adjustments
are made in the retained profits.
Accounting estimates
Estimates arise in relation to business activities because of the uncertainties inherent within
them. Judgments are made based on the most up to date information and the use of such
estimates is a necessary part of the preparation of the financial statements.
Examples of estimates;
Methods of depreciation and the useful life of an asset
Provision for doubtful debts
Stock valuation
Changes in accounting estimates result from new information or new developments. The effect
of a change in an accounting estimates should be included in the accounting periods that it
relates.
Errors
Errors in the financial statements may arise through;
Arithmetic errors
Omissions
Mistakes in applying accounting polies
Oversight
Frauds and misrepresentation of facts
IAS 36 - IMPAIRMENT OF ASSETS
Impairment is the fall in value of an asset, so that the recoverable amount is now less that the
carrying value in the statement of financial position.
Carrying value of an asset is the net book value of an asset after adjusting for the accumulated
depreciation and impairment
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IAS 1 gives a substantial guidance on the form and contents of published financial statements
which comprises of:
Statement of comprehensive income/ Income Statement
Statement of Financial position
Statement of changes in Equity
Statement of cash flows (IAS 7)
Notes of the financial statements
Published financial statements refer to audited accounts accompanied by auditor’s report and
approved by the directors of the entity.
IAS 1 specified disclosures of certain items in certain ways i.e
Some items must appear on the face of the statement of comprehensive income or the
statement of financial position
Other items appear as notes to the financial statement
Recommended format of the published financial statements.
Items which must appear on the face of the statement of financial position.
Non-current assets
They include:
Tangible assets property plant and equipment (IAS 16)
Intangible assets (IAS 38)
Financial assets of long-term nature. Any contract that gives rise to an asset (receivables)
of one entity and a financial liability of another entity (IAS 37)
Current assets are:
Expected to be realized (liquidated) in the normal course of business
Is held for sale or consumption in the normal course of business
Held primarily for trading purpose within twelve months’ form date of reporting.
Is cash or cash equivalent which is not restricted in its use.
Current liabilities
Obligations to be settled with twelve month from date of reporting.
They are expected to be settled in the normal course of business
It is held primarily for the purpose of trading.
Non – current liabilities
Page 1 of 20
,The reporting period
The acceptable reporting period is one year-twelve calendar months. If an entity reports under
different periods disclosure should be made for:
The reason as to why the period is more or less than one year
The fact that the comparative figures given are not in fact comparable.
The publication of the financial statement should be within six months from the end of the
(reporting period) accounting period.
CONCEPTUAL FRAMEWORK
A conceptual framework is a statement of generally accepted theoretical principals which form
the frame of reference in financial reporting. These theoretical principles provide the basis for
the development of new accounting standards and evaluation of the existing standards.
The primary objective is to avoid fire-fighting approach in the preparation of accounting
standards and bring about uniformity in Financial Reporting
The financial reporting process is concerned with providing information that is useful in the
business and economic decision-making process. The conceptual framework lays a foundation of
how the financial statements should be presented to the different users.
Benefits of the framework
To enhance completeness and accuracy in the preparation of the Accounting Standards
To enhance uniformity in international financial reporting
It eliminates the conflicts among the different users
To avoid interference from external parties
International Accounting standards Board (IASB)
The IASB provides the framework for the development of;
IFRSs - International Financial Reporting Standards
IASs – International Accounting Standards
The objective of financial statements is to provide information about the financial position,
performance and changes in financial position of an entity that is useful to a wide range of users
in making economic decisions.
IAS 8 – ACCOUNTING, CHANGES IN ACCOUNTING ESTIMATES AND ERRORS
Accounting policies
These are specific principles, bases, conventions, rules and practices adopted by an entity in
preparing and presenting financial statements. The same accounting polices are adapted from
Page 2 of 20
, period to period to allow users to analyze the trends over time in profits, cash flows and financial
position. Changes in accounting policies will, therefore be rare and should only be made under
the following cases;
Change in an accounting standard
Development of a new standard
By statue
If the change will result in a more appropriate presentation of events.
A change in an accounting policy must be applied retrospectively i.e the new accounting policy
is applicable to transactions and events as if it has been in use. The effect of a change in
accounting policy is disclosed as prior period adjustment in the income statements. Adjustments
are made in the retained profits.
Accounting estimates
Estimates arise in relation to business activities because of the uncertainties inherent within
them. Judgments are made based on the most up to date information and the use of such
estimates is a necessary part of the preparation of the financial statements.
Examples of estimates;
Methods of depreciation and the useful life of an asset
Provision for doubtful debts
Stock valuation
Changes in accounting estimates result from new information or new developments. The effect
of a change in an accounting estimates should be included in the accounting periods that it
relates.
Errors
Errors in the financial statements may arise through;
Arithmetic errors
Omissions
Mistakes in applying accounting polies
Oversight
Frauds and misrepresentation of facts
IAS 36 - IMPAIRMENT OF ASSETS
Impairment is the fall in value of an asset, so that the recoverable amount is now less that the
carrying value in the statement of financial position.
Carrying value of an asset is the net book value of an asset after adjusting for the accumulated
depreciation and impairment
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