IAS 1 Presentation of Financial Statements is the basis for all IFRS reporting. It establishes general requirements for the presentation of financial statements, contains guidance on its structure and minimum requirements for content.

The purpose of financial statements is to present information about the financial position, financial performance and Money a company that is useful to a wide range of users when making economic decisions. To achieve this goal financial statements company includes information about:

• assets;
• obligations;
• own capital;
• income and expenses, including profits and losses;
• contributions received from owners and amounts distributed to owners;
• cash flows.

Together with additional information disclosed in the notes, this information helps users of financial statements to predict future cash flows companies, terms and probability of their occurrence.

What does IFRS reporting consist of?

A complete set of IFRS financial statements includes:

• statement of financial position at the end of the period;
• statement of profit or loss and other total income for the period;
• statement of changes in equity for the period;
• ;
• notes summarizing the main principles accounting policy and other explanatory information;
• comparative information.

At the same time, all financial statements are equal in terms of significance.

note!

It is possible to use report titles other than those specified in IAS 1. For example, an entity may use the title or “Statement of Comprehensive Income” instead of “Statement of Profit or Loss and Other Comprehensive Income”. However, in the opinion of the IASB, the titles presented in the standard better reflect the functional purpose of these reports and are consistent with the IFRS Conceptual Framework.

Sometimes companies present IFRS financial statements along with value added reports, environmental reports, etc. It is important to bear in mind that the requirements of IFRS apply only to the financial statements themselves, and not to such additional reports.

Basic principles for the presentation of financial statements in IAS 1

The main principles for the presentation of financial statements, which are discussed in IAS (IAS) 1 complement quality characteristics, enshrined in the Conceptual Framework of IFRS. Let's consider them in more detail.

Fair representation and statement of compliance with IFRS

The financial statements must fairly present the financial position, financial results and cash flows of the company. This goal is achieved by applying the requirements of IFRS and by disclosing additional information when necessary. An entity must clearly and unequivocally state in the notes to its financial statements that its financial statements comply with IFRS. Financial statements cannot be considered prepared in accordance with IFRS if they do not comply with all the requirements of IFRS. At the same time, deviations from the requirements of IFRS cannot be replaced by disclosure of the accounting policies used, as well as additional notes or explanatory materials.

It is possible to deviate from the requirements of IFRS only in extremely rare cases. For example, when the company's management concludes that compliance with any requirement of the standard will be so misleading to users that it would be contrary to the purpose of financial reporting. But even in such cases, IAS 1 requires numerous disclosures and clarifications in this regard.

Business continuity

The management of the company is obliged to assess the ability of the company to continue its activities. The financial statements are prepared on the basis of the going concern assumption. The exception will be cases where management intends to liquidate the company, stop economic activity or has no real alternative to avoid it. If there are any uncertainties that could affect the company's ability to continue as a going concern, they must be disclosed.

accrual accounting

The company must prepare its financial statements (other than the cash flow statement) on an accrual basis. This means that assets, liabilities, equity, income and expenses are recognized when they arise, and not as cash is received or paid.

Materiality and aggregation

A company must separately present items that differ in nature or purpose. Unless they are immaterial. Information will be material if omissions or misstatements, individually or in the aggregate, could influence the economic decisions of users. The concept of materiality suggests that the disclosure requirements of IFRS for certain information may not be met if this information is immaterial.

Offsetting

It is prohibited to present on a net basis assets and liabilities, income and expenses, unless required or permitted by any IFRS.

note!

Accounting for assets net of allowances (for example, showing inventories less an allowance for obsolescence or less an allowance for doubtful debts) is not offset.

Frequency of reporting

Financial statements are prepared at least annually.

Comparative information

Required to provide information for the current and previous reporting period for all amounts reported in the financial statements. Thus, each reporting form is submitted for at least two reporting periods. Comparative information should also be included in the narrative information if it is relevant to understanding the financial statements for the current period.

Presentation Sequence

An entity should not change the presentation and classification of items in the financial statements from one period to the next. The exception is when it is required by any IFRS or if an alternative presentation and classification would be more appropriate.

General requirements of IAS 1

Under IAS 1, an entity must clearly distinguish financial statements from other information contained in the same published document (for example, an annual report).

Each component of the financial statements must contain:

1. Title of the report.
2. The name of the reporting company.
3. Whether the financial statements are individual or consolidated.
4. Reporting date or reporting period (depending on the report).
5. Reporting currency.
6. Units of measurement (thousands, millions, etc.).

IAS 1 provides a minimum list of items that should be included in each form of financial statements other than the cash flow statement. Detailed guidance on this report is contained in IAS 7 Statement of Cash Flows, therefore, this report is not considered in this article.

There are no strict requirements for the presentation of information in the reports. Next, consider the general guidance of IAS (IAS) 1 for each of the reports.

Statement of financial position

The key requirement for the statement of financial position is to present current and fixed assets and short-term and long-term liabilities. Unless a liquidity-based presentation provides more reliable information. For example, this may be relevant for financial institutions. However, in any case, if a particular category of assets (liabilities) combines amounts to be received (redeemed) in 12 months with assets (liabilities) to be received (repaid) within 12 months, long-term amounts from amounts for 12 months.

To current assets according to IAS (IAS) 1 include assets that:

• expected to be realized within the normal operating cycle (for example, inventories and receivables);
• held primarily for trading (for example, some financial assets);
• will be realized within 12 months after the reporting date;
• are cash and cash equivalents.

Note!

Deferred tax assets cannot be classified as current assets.

All other assets are classified as non-current. It is allowed to use the terms "long-term", "non-negotiable", etc., if the user understands their meaning.

• the obligation will be settled within the normal operating cycle;
• the liability is held primarily for trading purposes;
• the obligation will be settled within 12 months after the end of the reporting period;
• the entity does not have an unconditional right to defer settlement of the liability for at least 12 months after the end of the reporting period (settlement by issuing and transferring equity instruments does not affect the classification of the liability).

Note!

Deferred tax liabilities cannot be classified as current liabilities.

All other liabilities should be classified as non-current.

With regard to the presentation of the statement, IAS 1 does not prescribe any mandatory format for the statement of financial position. The standard only contains a list of articles that should be presented in the report. Namely:

• fixed assets;
• investment property;
• intangible assets;
• financial assets;
• investments accounted for using the equity method;
• biological assets;
• reserves;
• trade and other receivables;
• cash and cash equivalents;
• the total amount of assets classified as held for sale and assets included in disposal groups classified as held for sale;
• trade and other payables;
• estimated liabilities;
• financial obligations;
• current tax liabilities and assets;
• deferred tax assets and obligations;
• liabilities included in disposal groups classified as held for sale;
• non-controlling interests presented in equity;
• issued capital and reserves attributable to the owners of the parent entity.

In addition, in the statement of financial position, or in the notes thereto, the company discloses a breakdown of the presented financial statements into subcategories in the order corresponding to the company's operations. The nature of the information disclosed will depend on the article being disclosed. For example, in relation to fixed assets, a breakdown is usually given by groups of fixed assets, stocks are divided into finished products, raw materials and materials, work in progress.

You can also present additional line items, headings, and subtotals in the statement of financial position if this is helpful in understanding the company's financial position.

An example of the format of the statement of financial position is presented in table 1.

Table 1. Statement of financial position

Alpha Group

Consolidated statement of financial position as at 31 December 2017 (in millions of Russian rubles)

Statement of profit or loss and other comprehensive income

IAS 1 defines total comprehensive income as the change in equity arising in the reporting period from transactions and other events, other than changes arising from transactions with owners. Total comprehensive income consists of profit or loss and other comprehensive income.

Profit or loss is total income less expenses, excluding components of other comprehensive income. Other comprehensive income includes items of income and expense (including reclassification adjustments) that are not recognized in profit or loss as required or permitted by other IFRSs.

note!

Companies may use other terms for totals. For example, the term "net income" instead of the term "profit or loss".

Examples of items that are not recognized in profit or loss include:

• a change in the revaluation reserve relating to property, plant and equipment or intangible assets;
• revaluation of defined benefit plans under IAS 19;
• exchange differences from the translation of functional currencies into the presentation currency in accordance with IAS 21, etc.

As for the format of the report, the company has a choice. So, you can generate a single statement of profit or loss and other comprehensive income. Then profit or loss and other comprehensive income are presented in two sections. Alternatively, the company may produce two separate reports:

1. Report about incomes and material losses.
2. Statement of comprehensive income. It must follow immediately after the income statement and begin with profit or loss.

These reports should include the following indicators:

• profit or loss;
• total other comprehensive income;
• comprehensive income for the period (the sum of profit or loss and other comprehensive income);
• distribution of profit or loss and comprehensive income for the period between non-controlling shareholders and the owners of the parent company.

The statement of profit or loss shall, at a minimum, include:

• revenue (with a separate indication of percentage revenue);
• gains and losses arising from derecognition financial assets measured at amortized cost;
• financing costs;
• impairment losses;
• the company's share of the profit or loss of associates and joint ventures accounted for using the equity method;
• gains or losses resulting from the reclassification of financial assets;
• tax expense;
• a single amount reflecting the total amount of discontinued activities.

At the same time, all expenses that are recognized in the income statement are classified either by items (raw materials, depreciation, transportation costs, employee benefits expenses, etc.), or by their functional purpose(cost, selling expenses, administrative expenses, etc.).

Note!

If an entity uses the classification of expenses by function, it must also disclose information about the items of expense.

Other comprehensive income reflects items classified by nature and grouped between those items that will or will not be reclassified to profit or loss in subsequent periods. At the same time, components of other comprehensive income can be presented after taxes or before taxes (in this case, disclose total amount regarding taxes).

An example of the format of the statement of comprehensive income is presented in Table 2.

Table 2. Statement of comprehensive income

Alpha Group

Statement of changes in equity

The following information is presented in the statement of changes in equity:

1) total aggregate income for the period. Separately reflect the total amounts attributable to the owners of the parent company and non-controlling interests;

2) for each component of equity, the effects of retrospective application or retrospective restatement in accordance with IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors;

3) for each component of capital - a reconciliation between book value at the beginning and end of the period. In this case, it is necessary to disclose separately the changes due to:

• profit or loss;
• other comprehensive income;
• transactions with owners (displaying separately contributions and distributions to owners and changes in ownership interests in subsidiaries that do not result in a loss of control).

The statement, or in the notes thereto, should also provide an itemized analysis of other comprehensive income for each component of equity, the amount of dividends recognized during the period, and the amount of dividends per share.

An example of the format for a statement of changes in equity is presented in Table 3.

Table 3 Statement of changes in equity

Alpha Group

Consolidated statement of changes in equity for the year ended 31 December 2017 (in millions of Russian rubles)

Reporting notes

Notes are a mandatory part of IFRS financial statements, no less important than the reporting forms themselves. They include:

• information about the basis for the preparation of financial statements (for example, on the functioning of the company or liquidation) and the accounting policies applied;
• information required by IFRS, or that is relevant to understanding the financial statements, if it is not presented in other sections;
• significant accounting policies, including the basis of value and related accounting policies, necessary for understanding the financial statements;
• judgments, other than value judgments, made by management in the process of applying accounting policies that have a significant effect on the amounts recognized in the financial statements;
• key assumptions about the future and key sources of uncertainty associated with estimates that could result in material adjustments to the carrying amounts of assets and liabilities over the next 12 months;
• information that will enable users of the financial statements to evaluate the objectives, policies and processes of managing the company's capital.

As well as in cases with reporting forms, IAS (IAS) 1 does not establish strict requirements for the format of presentation of notes. It is noted that notes should be presented in a systematic manner, as far as practicable. Articles submitted in reporting forms should have a link to the corresponding note. Notes are usually placed in the following order:

• statement of compliance with IFRS;
• main provisions of the applied accounting policy;
• additional information on the accounting objects presented in the report forms (in the same order in which each report and each article is presented);
• other information, including:

1) contingent liabilities and unrecognized contractual liabilities;

2) non-financial information, such as the company's financial risk management objectives and policies.

When the world financial system reached intercontinental dimensions, and the financial interaction of business from different countries became ubiquitous, at the level of perception of financial information, it became necessary to form certain international standards.

Standards were needed so that business stakeholders from different countries, financial regulators and supervisory authorities could speak the same language when discussing financial information about a particular commercial company. financial standards, like any other standards, must guarantee the similarity of the forms and types of content of the public financial information one company compared to others.

We will talk about what the international financial reporting standard IFRS (IAS) 1 is, what is included in it and how modern business structures use it - we will talk in this article.

General information on the IFRS standard (IAS) 1

IFRS Standard (IAS) 1 was developed with the aim that information from these types of financial statements could be used by a wide range of interested users. It can be said that this standard was originally planned as the most widely used standard in international financial reporting: a kind of starting point in immersing a stakeholder in the financial statements of a commercial company. At the same time, the IAS 1 English standard or any other country is the most general non-specific type of statement of financial position of a company for users who do not have the authority or ability to request financial data in a special form.

In a word, developing this standard and accepting it for execution at the level of financial systems within countries, the task was to create a certain consistent system for compiling a general report on the company's financial results. Since the specifics of a business in terms of its field of activity or, for example, on a geographical basis can impose significant adjustments to financial data, a certain set of indicators included in the standard was adopted, which can quite fully and reliably present the financial side of the company's business to those who need to know this. .

For example, investors and lenders can monitor business performance indicators in order to assess the likelihood of defaults on obligations or non-fulfillment of their implementation obligations. investment programs and payment of dividends. Company managers, using data on the current financial position and results from financial transactions, can plan their work more carefully and focus on the choice of solutions that will ensure maximum economic productivity.

Auditors and external consultants based on the International Financial IAS reporting 1 can plan and offer the owners of the company the most balanced options for the development of the financial system of the company, demonstrating as an example other companies in similar market conditions or even direct competitors. The scope of IFRS 1 is very broad. Suffice it to say in addition that the analytical potential of this reporting standard is huge, both for internal users and for external, for example, financial regulators or authorities who want to study the company's business.

Since, in a broad sense, the scope of reporting under IFRS 1 is limited only by the talent of a specialist who works with this information, it becomes clear that the standard includes a wide range of interrelated and interdependent indicators, each of which can be worked within the framework of the task. The main idea of ​​any standard in the field of finance is not only digestibility (in the sense of understanding information by a wide range of specialists), but also the maximum truthfulness and transparency of business information, which cannot be reflected in the context of finance without using the following indicators:

• Assets, liabilities and capital as a grouping of indicators of the company's financial position and its dynamic changes under the influence of any external business factors or decisions that were made at the intracorporate level.
• Income and expenses of the firm, including data on changes in the ratio of profits and losses, depending on the market position of the company and other external and internal factors.
• Contributions and payments to company owners as an indicator dividend policy and financial efficiency of the business in question main task making a profit.
• Cash flow data show the dynamics of financial movements within the company, expenses, sources of cash and the effectiveness of the financial responsibility centers. This information grouping, among other things, allows you to make forecasts for future cash flows and make important management decisions on these issues in advance.

Figure 1. Ratios used in financial statements.

In addition to the fact that the annual standardized presentation of financial information allows management to evaluate the business "in the language of numbers", breaking away from operational problems, such reporting shows how efficiently management allocates and uses the resources that are entrusted to it, which is extremely important if we mean international non-local business.

Globally, the standard is designed so that the reporting of different companies has the same characteristics, and any person who needs it to perform their official duties can familiarize themselves with such information and analyze it. Therefore, the standard "IFRS IAS 1 presentation of financial statements" assumes the most complete, structured (in accordance with the standard) and reliable presentation of the company in the context of its financial results, current economic situation and cash flows, which are recorded in the form of a set of financial statements documentation.

Credibility requires financial management a consistent and thorough analysis of the actions taken in the company that caused or affected the actual results, as well as a comprehensive review of the company's financial issues in order to set out as clearly as possible required list information.

Substantive aspects of reporting IFRS IAS 1

"Unwavering" Credibility

The very idea of ​​financial reporting standards suggests that the implementation and application of IFRS standards, as is customary - “without reservations”, will provide a company with a transparent financial management system, and therefore a financial reporting system that meets the criterion of fair presentation, even without taking into account the possibilities for additional disclosures. The standards are initially focused on maximum transparency and unambiguity of data, therefore, an organization that submits reports under IFRS, “as it were” has no opportunity to maneuver in financial data, although in reality the situation is different.

In general, the problem of intentional misrepresentation of information is caused, first of all, by the needs of the business. Usually, external parties, whether they are investors or auditors, new shareholders or other users, look at reporting in the context of three indicators - revenue, net profit and assets.

If the reporting owner needs to present the company in a more favorable light, for example, in order to satisfy someone's expectations or get some points, the task may be to change the reporting in a certain way. Typically, the changes relate to the profit and loss statement, the balance sheet, and the data of the notes to the statements are adjusted. In fact, it will not be difficult for a talented financier (if initially planned) to carry out financial management in such a way that the reporting turns out as it should. Consider, as an example, simple possibilities for “decorating” financial statements:

• Distort information about the revenue and profit of the company, using the scheme of counter transactions for the purchase and sale of goods or services. With this method of data improvement, the product is sold twice: the first time - fictitiously, with a refund to the buyer when the goods are allegedly returned to the seller, and the second time is already real - to the buyer from the market. So the company can reflect the revenue at the time when it is profitable.
• Recognition of revenue and expenses separately in order to inflate profit figures. For example, revenue is recognized as received in the last month at the junction of quarters, and expenses for its receipt - in the first month of a new quarter. Then the profit of the first quarter significantly improves the reporting figures, although it does not quite correspond to reality.
• Hiding costs without going beyond accounting standard, is carried out by transferring part of the costs to controlled companies, allowing to embellish the profitability indicators.
• Fictitious receivables arise in the company from transactions that either never took place or were carried out with defective or non-existent goods. Such contractual relationships with semi-fictitious controlled companies allow to increase the amount of declared revenue and thereby show interested parties different from the real business achievements.

As can be seen from these examples, the reflection of real data in the reporting remains at the discretion of the management and financial management, since, if we take into account that we are talking about a multibillion-dollar business, organizing the process of “decorating” IFRS reporting costs much less than those acquired from such actions. privilege.

Continuity

By preparing financial statements in accordance with IFRS, the company's management guarantees to persons for whom the statements are of interest that the company plans its activities in the future. If management is aware of any facts that can have a significant impact on the business and cast doubt on its continuity, then these data should be set out in the notes to the financial statements.

Returning to the previous point, I would like to note that deliberate reservations in the notes are an extremely convenient tool for improving reporting data on the principle of “know less, sleep better”. Therefore, although the presentation of financial statements in accordance with IFRS, “as if” excludes this, but in fact, there are many examples in history when the omission of important data about guarantees, obligations, reputational risks or leaks greatly improved the mood when perceiving the statements, but subsequently resulted in big intra-corporate scandals.

Comparison Principle

When preparing current financial statements, a company must disclose comparative data for the same period in the past, so that users of the financial statements can best understand the company's business in dynamics. It is customary to provide comparative data for the current, past and first (earliest) comparative period.

Data materiality principle

Reporting on financial condition of a company's business is a huge array of information that has been processed and combined. Data aggregation is OK when it does not compromise the intrinsic meaning and disclosure of the data, and not when data compression provides a limited or truncated view.

• Non-offsetting implies that the company must reflect as fully as possible all the necessary items in a fair formula, whether it be assets, liabilities, income or expenses of the company.
• Periodicity, as one of the basic principles, is, in fact, also a criterion that ensures the reliability, comparability and identity of reporting. If you call a spade a spade, then putting reporting on the rails of periodicity makes financial management "live" according to a certain calendar, that is, it always demonstrates the achievements of its business in approximately the same form. Of course, the flexibility of the standard provides for the possibility to change the timing of the frequency of reporting, but a reservation is made regarding how financial managers will have to supplement such reporting and explain how to compare data for shorter or longer reporting periods. The normal reporting interval is one year.

Figure 2. Basic reporting principles under IFRS 1.

The listed basic principles of IFRS 1, in fact, are the basis on which this standard stands, but in order to better understand how the standard demonstrates the company's business "at a glance", it is necessary to consider its constituent parts in more detail.

Components of financial statements in accordance with IAS 1 Presentation of Financial Statements

The indicators that are analyzed and interpreted in the preparation of financial statements ultimately form a specific set of documents, which, in accordance with the standard, is a comprehensive set of financial statements:

1. Statement of financial position ("SFP" or Statement of financial position) - a report that reflects the value of assets as of the date of the period, the amount of liabilities of various nature and the equity of the company. "OFP" is one of the main accounting reports under IFRS, which is similar to Russian standards, therefore, we immediately note that in RAS the full “namesake-analogue” is balance sheet. IAS 1 standardizes the minimum composition of assets, liabilities and equity that an enterprise must report and, if necessary, decipher in order to most fully demonstrate its financial position.

The statement of financial position should be based on the actual performance of the company's business and include, as a minimum, the amounts of property, plant and equipment, investment property, intangible and financial assets, equity investments, inventories, trading and accounts receivable, amounts of assets held for sale, reserves, deferred tax and financial obligations and share. All this information must be fully disclosed and classified in such a way that will enable the most transparent presentation of the financial position of the enterprise.

2. The profit and loss statement demonstrates and classifies the financial performance of the organization in the format of the ways of occurrence and dynamic changes in income and expenses. Comparing income and expenses, analyzing the composition and dynamics of profit, the organization gets a comprehensive idea of ​​its own financial productivity. Using this knowledge, firstly, it is possible to control the efficiency of the organization's "financial authorities", and secondly, based on the analysis, to find missed opportunities to increase the company's profitability and increase the return on its capital. The profit and loss statement is very important in terms of investment appraisal enterprise, since it can show future creditors the level of efficiency of the financial model of the enterprise and support or, conversely, slow down their investment investments to the assets of this company.

Some companies separate the profit and loss statement and make a second statement (say, extended), which also includes information on comprehensive income. Others immediately produce a large detailed statement of comprehensive income. Both the first and second approaches are allowed by the standard, but in any case, it requires financial management to present a certain set of data in the reporting (regarding this grouping of indicators), including:

• Revenue;
• Expenses;
• tax burden;
• Profit detailing before and after taxes;
• Actual profit or operating loss;
• The total and possible income of the company from the share in the profits of subsidiaries.

3. Statement of Changes in Equity "SCE" or "Statement of Changes in Equity" demonstrates to stakeholders how the capital structure of the company, which is owned by business owners, has changed. Owners' equity can change depending on various circumstances, so the IFRS 1 statement of changes in equity answers a number of questions regarding the indicators, values ​​and reasons for changes in the equity of business shareholders:

• Growth or fall in net profit attributable to shareholders of the company?
• Increase or outflow of share capital during the reporting period?
• Size and characteristics of past dividend payments to shareholders?
• The effectiveness of accounting policies and changes?
• Efficiency of managerial decisions made on the basis of past mistakes?

This report helps analysts to determine the reasons for changes in equity over the reporting period. This type The report is a broader tool for analyzing the equity of shareholders, since, unlike the statement of financial position, it contains an expanded list of indicators and decrypted information that allows you to get the most complete picture of the situation. The following classified data is included in the statement of changes in equity: and the income of the owners of the enterprise, the book value and its changes, the amount of dividends attributable to the owners and the amount of dividends per share.

4. Cash flow statement is the basic instrument of any financial analysis, as well as one of the main standard reports that can demonstrate the actual values ​​​​and reasons for certain production results of a company in financial terms. This type of report is widely used by all organizations, regardless of the size of the business, since it is, in a sense, an intuitive report that shows the incoming cash receipts and outgoing cash expenses of the company, classified by type, type and direction during the period. Based on the data of the cash flow statement, it is possible to draw conclusions and make forecasts regarding the short-term liquidity of the company, as well as its current creditworthiness with a forecast for future period. AT general sense, this report is the most a simple tool for financial analysis of the company.

Information from the cash flow statement is essentially aggregated information that characterizes economic efficiency company, that is, its ability to generate cash flows.

5. Notes to the financial statements, which may explain the main specific points of accounting policies or features of the interpretation of financial data, as well as the reasons for such changes compared to generally accepted practice. The notes can include a wide range of possible additions, which, in essence, disclose to external stakeholders part of the company's management information about the most effective decisions that made it possible to achieve certain figures reflected in the financial statements:

• About forecasts and assumptions on the basis of which management makes financial decisions in the company;
• About restrictions of a managerial nature that cannot be reflected in the financial statements, but which may have a significant impact on the company's business.

6. A statement of financial position in the earliest available period if the company maintains a retrospective accounting policy and applies restatements to its financial statements.

Along with the financial statements, a good team of financial managers provides their IFRS statements with comprehensive supplements that are necessary to explain the key characteristics of the company's business, and explain the facts of uncertainty that the numbers from the report cannot reveal. Such summary supplements contain information about the factors and causes of factors that affect the financial statements or the business of the enterprise as a whole. For enterprises to which this is relevant, various managerial and official data are disclosed from the sections of anthropogenic and environmental impact, which can help interested users of financial statements draw conclusions and draw parallels between the data of financial results and this grouping.

The principle of the totality of documents prepared according to the standard assumes that when considering a set, external and internal users use all the information aggregated in the reporting. According to this, the IFRS 1 scheme involves the preparation and subsequent consideration of statements as a whole, that is, such an information set of documentation that is able to most fully, transparently and, most importantly, reliably state the situation of the financial condition of the company in question.

Figure 3. Components of financial statements under IFRS 1.

Today, the standard IFRS 1 Presentation of financial statements is required integral part financial system of enterprises that conduct serious business. Major Players markets, for which external sources of financing and investments are important, the prestige of business and its transparency, are switching to international financial reporting standards, because today it is becoming something of a mandatory element for companies from a large segment.

At the same time, it should be noted that the implementation of IFRS 1 does not guarantee the company a managed financial system and reliable reporting, but rather requires the company to comply with these principles. Entering a kind of "major league", IFRS companies assume not only obligations to comply with these standards, not only in financial system, but also the obligation to rationally expand this approach to business organization as a whole. It can be said that today a new era has come when large companies should realize the productivity and importance of the transition to IFRS, which will significantly increase the speed of widespread implementation of this standard in all industries.

In the previous article, we have already considered the elements of financial statements in accordance with IFRS, and also understood its basic principles and methods of preparation. This material is devoted directly to the main issues of work on reporting, as well as the requirements that apply to it. The main idea, which is embodied by international financial reporting standards and which is reflected in the financial statements of companies, is freedom in compiling, standardization and accessibility of information for any user. How exactly this is expressed in the financial statements under IFRS, we understand the material presented below.

Composition of financial statements in accordance with IFRS

Recall that the preparation of financial statements under IFRS is carried out in several ways: primary accounting and transformation of financial statements. Companies that have subsidiaries are required to consolidate their financial statements.

The main standard that governs the procedure for preparing financial statements under IFRS is IAS (IAS) 1 “Presentation of Financial Statements”. It defines the criteria for its compliance with IFRS rules, as well as establishes requirements for materiality, going concern, specifies the mandatory components of financial statements, as well as the sequence of presentation. The standard contains recommendations for the preparation of each of the main reporting forms and establishes general requirements for the recognition and evaluation of reporting entities.

Paragraph 8 of IAS 1 specifies the composition of a complete set of financial statements, which includes:

• balance;
• report about incomes and material losses;
• a statement of changes in equity showing either all changes in equity or changes in equity other than those arising from transactions with equity holders (shareholders);
• cash flow statement;
• notes, including short description significant elements of accounting policies and other explanatory notes.

In addition to the above documents, financial statements may include environmental reports, value added reports and other additional reports that facilitate the work of users in making economic decisions.
The frequency of financial reporting under IFRS is specified in paragraph 37 of IAS (IAS) 1, which states that companies are allowed to report for a period of 52 weeks (364 days). This is less than a calendar year (approximately 52.14 weeks), but more convenient for companies reporting for this period.
Financial statements can also be generated for shorter periods. Under IFRS, this period is 6 months. However, such reports are often prepared for more than short term which increases the usefulness of financial statements. Regardless of the complexity of the transactions carried out in the company, it is important that information about them is useful in the financial statements.

IFRS reporting requirements

Reporting

The presentation of financial statements in accordance with IFRS should be carried out in accordance with the requirements of IAS (IAS) 1. Namely: such reporting should be useful to users, should ensure comparability, both with reporting for other periods, and with reporting of other enterprises.
It is understood that the financial statements are prepared on the basis of the going concern of the enterprise. The exception is when management plans to cease trading activities of the enterprise or liquidate it, if there are no alternative solutions to the situation. Management prepares the financial statements on an accrual basis, with the exception of cash flow information.
There is no single set format for financial statements, but IAS 1 contains examples of them, and the requirements for the notes to the statements - they must disclose a minimum amount of information.
The financial statements disclose relevant information for the prior period, unless IFRS or Interpretations permit or require otherwise.
Preparation of financial statements in accordance with IFRS is a responsible process that requires extensive knowledge and skills from specialists. Many companies use more in a simple way reporting under IFRS - transformation.

If you want to improve your professional level in the application of IFRS for the transformation of reporting and expand your career prospects, then corporate training on this topic will become the best way master the layer of demanded skills. Order a training consultation and find out how quickly we can organize training for you and your colleagues!

International Financial Reporting Standards (IFRS) are a set of international accounting standards that specify how certain types of transactions and other events should be treated in financial statements. IFRS are published by the International Accounting Standards Board and they specify exactly how accountants should maintain and present accounts. IFRS were created to have a "common language" for accounting because business standards and accounting practices can differ both from company to company and country to country.

The purpose of IFRS is to maintain stability and transparency in the financial world. This allows businesses and individual investors to make informed financial decisions as they can see exactly what is going on with the company they want to invest in.

IFRS are standard in many parts of the world, including the European Union and many countries in Asia and South America, but not in the United States. Commission on securities and exchanges (SEC) is in the process of deciding on the adoption of standards in America. The countries that benefit the most from standards are those that do and invest in international business. Experts suggest that the global implementation of IFRS will save money on comparative opportunity costs, as well as allow for more free transfer of information.

In countries that have adopted IFRS, both companies and investors benefit from using this system, as investors are more likely to invest in a company if the company's business practices are transparent. In addition, the cost of investment is usually lower. Companies that conduct international business benefit the most from IFRS.

IFRS standards

Below is a list of current IFRS standards:

Presentation of financial statements in accordance with IFRS

IFRS cover a wide range of accounting transactions. There are certain aspects of business practice for which IFRS establish binding rules. Fundamentals of IFRS are the elements of financial reporting, the principles of IFRS and the types of basic reports.

Elements of financial reporting in accordance with IFRS: assets, liabilities, capital, income and expenses.

IFRS principles

Fundamental Principles of IFRS:

• accrual principle. Under this principle, events are recorded in the period in which they occur, regardless of cash flows.
• the principle of business continuity, which implies that the company will continue to work in the near future, and the management has neither plans nor the need to wind down activities.

Reporting in accordance with IFRS should contain 4 reports:

Statement of financial position: It is also called balance. IFRS affect how the components of the balance sheet are interconnected.

Statement of comprehensive income: this can be one form, or it can be divided into an IFRS income statement and a statement of other income, including property and equipment.

Statement of changes in equity: also known as report on retained earnings. It reflects the changes in earnings for a given financial period.

Cash flow statement: This report summarizes a company's financial transactions for a given period, with cash flows broken down into operating, investment, and funding flows. Guidance for this report is contained in IFRS 7.

In addition to these basic reports, the company must also submit attachments summarizing its accounting policies. The full report is often reviewed in comparison to the previous report to show changes in profit and loss. The parent company must create separate statements for each of its subsidiaries, as well as consolidated IFRS financial statements.

Comparison of IFRS standards and American standards (GAAP)

There are differences between IFRS and generally accepted accounting standards in other countries that affect the calculation of financial ratios. For example, IFRS is not as strict in determining revenue and allows companies to report earnings faster, so therefore the balance sheet under this system can show a higher revenue stream. IFRS also have other expense requirements: for example, if a company spends money on development or investments for the future, it does not have to show it as an expense (i.e., it can be capitalized).

Another difference between IFRS and GAAP is how inventories are accounted for. There are two ways to track inventory: FIFO and LIFO. FIFO means that the most recent inventory item remains unsold until previous inventory is sold. LIFO means that the most recent inventory item will be sold first. IFRS prohibit LIFO, while US and other standards allow participants to use them freely.

History of IFRS

IFRS originated in European Union with the intention of spreading them throughout the continent. The idea quickly spread around the world as the "common language" of financial reporting allowed for greater connections around the world. The United States has not yet adopted IFRS as many view US GAAP as the "gold standard". However, as IFRS become more of a global norm, this could change if the SEC decides that IFRS are appropriate for US investment practice.

Currently, about 120 countries use IFRS, and 90 of them require companies to report in full in accordance with IFRS.

IFRS are supported by the IFRS Foundation. The mission of the IFRS Foundation is to “ensure transparency, accountability and efficiency in financial markets around the world". The IFRS Foundation not only provides and monitors financial reporting standards, but also makes various suggestions and recommendations to those who deviate from practical recommendations.

The purpose of the transition to IFRS is to simplify international comparisons as much as possible. It's tricky because every country has its own set of rules. For example, US GAAP is different from Canadian GAAP. The synchronization of accounting standards around the world is an ongoing process in the international accounting community.

Transformation of financial statements in accordance with IFRS

One of the main methods of preparing financial statements in accordance with the requirements of IFRS is transformation.

The main stages of the transformation of financial statements in accordance with IFRS:

• Development of accounting policy;
• Choice of functional and presentation currency;
• Calculation of opening balances;
• Development of a transformation model;
• Evaluation of the corporate structure of the company in order to determine the subsidiaries, associates, affiliates and joint ventures included in the accounting;
• Determining the characteristics of the company's business and collecting the information necessary to calculate the transformation adjustments;
• Regrouping and reclassification of financial statements according to national standards up to IFRS.

IFRS automation

It is difficult to imagine the transformation of IFRS financial statements in practice without its automation. There are various programs on the 1C platform that allow you to automate this process. One such solution is WA: Financier. In our solution, it is possible to broadcast accounting data, map to IFRS chart of accounts accounts, make various adjustments and reclassifications, and eliminate intra-group turnovers when consolidating financial statements. In addition, 4 main IFRS reports are configured:

Fragment of the Statement of financial position IFRS in "WA: Financier": IFRS tab "Fixed assets".

IFRS No. 1 Presentation of Financial Statements

This standard is fundamental in determining the principles for the preparation and presentation of financial statements.

The objective of this Standard is to provide a basis for the presentation of general purpose financial statements so as to achieve comparability both with an entity's prior period financial statements and with the financial statements of other entities. To achieve this objective, this Standard establishes a number of considerations for the presentation of financial statements, guidance on their structure and minimum requirements to content.

Financial reporting is a structured presentation of information about the financial position, operations and performance of a company.

The purpose of financial reporting is to disclose information about the assets, liabilities, capital, income, expenses and financial results of the company.

This information should be useful to a wide range of users in making economic decisions. Financial reporting also characterizes the quality of company management, i.e. resource management results (assets).

The management body of the enterprise (board of directors, administration) is responsible for the preparation and presentation of financial statements.

In accordance with paragraph 9 of IAS 1 Presentation of Financial Statements, the objective of general purpose financial statements is to present fairly information about the financial position, financial performance and cash flows of an entity that is useful to a wide range of users in making economic decisions. General purpose financial reporting refers to financial reporting intended for those users who are not in a position to require reporting that meets their specific information needs. Financial statements also show the results of the management of resources entrusted to the management of the company.

To achieve this goal, financial statements provide information about the following indicators of the company:

assets;

Obligations;

capital;

Income and expenses, including profit and loss;

Contributions and distributions to owners;

Cash flow.

This information, together with other information in the notes to the financial statements, helps users predict the company's future cash flows, in particular the timing and certainty of the generation of cash and cash equivalents.

At the same time, it must be remembered that the same transaction may be reflected in several basic forms of financial statements, therefore these forms are interconnected. For example, the purchase of goods can be shown as: national international financial standard

Assets in the statement of financial position;

Disposal of cash from the customer in the statement of financial position and statement of cash flows.

According to IFRS 1, financial statements must contain the following components:

Balance sheet;

Report about incomes and material losses;

A statement showing either all changes in equity or changes in equity other than capital transactions with owners;

Cash flow statement;

Accounting policy and explanatory notes.

In accordance with general requirements IFRS 1, “The statements must present fairly the financial position, financial performance and cash flows of an entity.”

Each material item must be presented separately in the financial statements.

Insignificant amounts should not be presented separately. They must be combined with amounts of a similar nature or purpose.

At a minimum, the balance sheet must include line items that represent:

fixed assets;

Intangible assets;

Financial assets;

Investments accounted for using the participation method;

Cash and cash equivalents;

Indebtedness of buyers and customers and other receivables;

Tax obligations and requirements;

reserves;

Long-term liabilities, including interest payments;

Minority share;

Issued capital and reserves.

Additional line items, headings and subtotals should be presented on the balance sheet when required by International Financial Reporting Standards or when such presentation is necessary to present fairly the financial position of the entity.

An entity shall disclose, in or in the balance sheet notes, further subclasses of each of the line items presented, classified in accordance with the entity's operations. Each item should be subclassified according to its nature and the amount of payables and receivables of the parent company, related subsidiaries, associates and other related parties.

An entity shall disclose on the balance sheet or in the notes the following information:

1) for each class of share capital:

Number of shares authorized for issue;

The number of issued and fully paid shares, as well as shares issued but not fully paid;

The par value of the share, or an indication that the shares have no par value;

Reconciliation of the number of shares in circulation at the beginning and at the end of the year;

Rights, privileges and restrictions associated with the respective class, including restrictions on the distribution of dividends and capital refunds;

Company shares held by the company itself or its subsidiaries or associates;

Shares reserved for issuance under option or sale agreements, including terms and amounts;

2) a description of the nature and purpose of each reserve within the holders' capital;

3) when dividends have been offered but not officially approved for payment, the amount included (or not included) in liabilities is shown;

4) the amount of any unrecognized dividends on preferred cumulative shares.

As a minimum, the income statement should include the following line items:

Revenue;

Operating results;

Financing costs;

Share of profits and losses of associates and joint ventures accounted for using the participation method;

tax expenses;

Profit or loss from ordinary activities;

The results of extraordinary circumstances;

Minority share;

Net profit or loss for the period.

Additional line items, headings and subtotals must be presented in the income statement when required by International Financial Reporting Standards, or when such presentation is necessary to present fairly the financial results of the company.

The company must present in the income statement or in the notes thereto an analysis of income and expenses, using a classification based on the nature of income and expenses, or their function within the company.

The first variant of the analysis is called the cost nature method. Expenses are aggregated in the income statement according to their nature (for example, depreciation, purchase of materials, transportation costs, wage and salaries, advertising costs), and are not redistributed between different functional areas within the company. This method is easily applicable in small companies where there is no need to allocate operating expenses according to the functional classification.

The second variation of the analysis is called the cost function or "cost of sales" method, and classifies expenses according to their function as part of the cost of sales, distribution, or administrative activities. This presentation often provides users with more relevant information than classifying costs by nature, but the allocation of costs to functions can be controversial and largely subjective.

A company must present, as a separate form of its financial statements, a statement of changes in equity that shows:

Net profit or loss for the period;

Each item of income and expense, profit and loss, which, according to the requirements of other Standards, is recognized directly in equity, as well as the amount of such items;

The cumulative effect of changes in accounting policies and the adjustment of fundamental errors.

In addition, the company must present either in this report or in the notes to it:

Capital transactions with owners and distributions to them;

The balance of accumulated profit or loss at the beginning of the period and reporting date, as well as change over the period;

A reconciliation between the carrying amount of each class of share capital, share premium and each provision at the beginning and end of the period, with separate disclosure of each change.

In a note to the financial statements, entities must:

Provide information about the basis for preparing financial statements and specific accounting policies selected and applied for significant transactions and events;

Disclose information required international standards financial statements that are not presented elsewhere in the financial statements;

Provide additional information that is not presented in the financial statements themselves but is necessary for a fair presentation.

The accounting policy section of the notes to the financial statements should describe the following:

The basis (or bases) of valuation used to prepare the financial statements (acquisition cost, replacement cost, realizable value, possible selling price, present value). When more than one measurement basis is used in the financial statements, for example, when only certain long-term assets are subject to revaluation, it is sufficient to indicate the categories of assets and liabilities to which each basis applies.

Each specific accounting policy matter that is material to a proper understanding of the financial statements.

Table 1

The main provisions of the regulation of financial (accounting) reporting