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In December 2019, the International Accounting Standards Board (“IASB”) issued an Exposure Draft (“ED”) proposing a new IFRS standard,
General Presentation and Disclosures, which would replace IAS 1
Presentation of Financial Statements (“IAS 1”). The proposed new standard would apply to all entities that use IFRS to prepare their financial statements, regardless of whether public or private entities. The ED’s comment period will end on September 30, 2020.
The ED includes the proposals of the IASB to improve how information is communicated in the financial statements, with a focus on information about performance in the statement of profit or loss. The ED adds new requirements on presentation and disclosure and retains some IAS 1 requirements with limited changes to the wording. The ED also proposes amendments to other IFRS standards.
The ED is the IASB’s response to stakeholder feedback, including from users of financial statements:
The proposed new standard is part of the IASB’s Primary Financial Statements project to enhance the relevance and usefulness of IFRS financial statements and wider work on ‘Better Communication in Financial Reporting’.
The main features of the ED are summarized below.
To aid comparability when assessing financial performance, the ED proposes a new structure for the statement of profit or loss and requires new defined subtotals to be presented. Specifically, entities would be required to:
Figure 1: Example statement of profit or loss
The ED contains several proposals aimed at improving how entities disaggregate information both in the primary financial statements and in the notes.
Non-GAAP measures are often provided in documents external to the financial statements and are not audited. To add transparency and discipline to the use of non-GAAP measures, and make it easier for investors to find the information they need to perform their own analysis, the ED proposes:
Entities would be required to:
Figure 2: Classification of interest and dividend cash flows
The new standard would be applicable for annual reporting periods beginning on or after 18 to 24 months from the date of publication of the new standard. Retrospective application would be required. Earlier application would be permitted.
Interim Financial Reporting (“IAS 34”) would continue to apply to interim financial statements. IAS 34 requires the presentation of the same subtotals in the interim financial statements as the annual financial statements. In the year of adoption, the interim financial statements would be required to present each of the headings and subtotals described above for both the current and comparable period.
The full history of this IASB project, including related supporting materials, can be accessed
For more information on the financial reporting library, contact a local
MNP Assurance Professional, or
Jody MacKenzie, Director, Assurance Professional Standards.
This communication contains a general overview of the topic and is current as of July 24, 2020. The application of the principles addressed will depend upon the particular facts and circumstances of each individual case. Accordingly, this publication is not a substitute for professional advice and we recommend that any decisions you take about the application or not of any of the information presented be made in consultation with a qualified professional who can address any variance that may be required to reflect your circumstances. Please contact your local MNP representative for customized assistance with the application of this material. MNP LLP accepts no responsibility or liability for any loss related to any person's use of or reliance upon this material. © MNP LLP 2020. All rights reserved.
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