IFRS 1 Presentation financial reporting»

We talked about what is meant by International Financial Reporting Standards (IFRS) and who is obliged to apply them in our country in ours.

IFRS 1, except for its paragraphs 15-35, does not apply to the structure and content of condensed interim financial statements prepared in accordance with IAS 34 Interim Financial Reporting (paragraph 4 of IFRS 1).

Purpose and composition of financial statements

The purpose of financial statements is to provide information about the financial position, financial performance and cash flows of an entity that will be useful to a wide range of users in their decision making. economic decisions(clause 9 of IFRS 1).

In general, a complete set of financial statements includes (clause 10 of IFRS 1):

• statement of financial position;
• statement of profit or loss and other total income;
• statement of changes in equity;
• traffic report Money for the period;
• notes ( short review significant accounting policies and other explanatory information).

For each form of reporting, IFRS 1 describes their structure and content.

General aspects of financial reporting

IFRS 1 provides for the following features and requirements for the preparation of financial statements:

• fair presentation and compliance with IFRS;
• business continuity;
• accrual accounting;
• materiality and aggregation;
• netting;
• frequency of reporting;
• comparative information;
• presentation sequence.

Each of these aspects in IFRS 1 is disclosed in detail.

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. results of resource management (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 the general requirements of IFRS 1, "the statements must fairly present the financial position, financial performance and cash flows of the company."

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 for fair presentation the financial position of the company.

An entity shall disclose on 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 amounts payable and accounts receivable 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 for a fair presentation. financial results company activities.

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 by International Financial Reporting Standards that is 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 measurement basis(s) used to prepare the financial statements (acquisition cost, replacement cost, realizable value, possible price sales, discounted 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

International Financial Reporting Standards (IFRS) is a set international standards accounting that specify how specific types of transactions and other events should be reported in the 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 record keeping 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 happening 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 the company's financial transactions for a given period, with cash flows are divided into flows by operating activities, investments and financing. 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 American 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 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 1 First-time Adoption of International Financial Reporting Standards

In 2003, the IASB issued IFRS (IFRS) 1 “First time application of International Financial Reporting Standards”, which replaced the CRP Interpretation (SIC) 8 “Application of IFRS for the first time as the main basis of accounting”. This standard is the first in new edition international standards. It is effective for financial statements for periods beginning on or after January 1, 2004.

The standard was adopted so that companies transitioning to IFRS in the near future could prepare in advance all the necessary data for the formation of opening balance sheets and comparative information so that reporting is fully compliant with IFRS.

The need for a separate standard on the issue of the first application of IFRS is caused by a number of reasons, which include:

• 1) high costs of preparing financial statements in accordance with IFRS for the first time, including employee training, payments audit companies, obtaining various expert assessments, recalculations;
• 2) an increase in the number of companies moving to IFRS, and the associated requirement for a more detailed explanation of some important issues;
• 3) the requirement for retrospective application of IFRS, which causes additional difficulties. It is often difficult to change accounting estimates retrospectively due to the lack of information available at the date of the financial statements. For particularly complex cases of IFRS (IFRS) 1 suggests exceptions to the retrospective application of IFRS requirements to avoid costs outweighing the benefits to users of financial statements. The standard allows six voluntary and three mandatory exceptions to the retrospective application of IFRS requirements;
• 4) coverage of additional requirements but disclosure of information explaining how the transition to IFRS affected the financial position, results financial activities, in the form of a reconciliation of capital and net profit companies;
• 5) the need to form a new accounting policy that meets the requirements of all standards as of the reporting date;
• 6) the need to form an opening balance sheet according to IFRS on the date of transition;
• 7) presentation of comparative data for at least the year preceding the year of the first reporting under IFRS.

First-time IFRS financial statements should provide users with useful information:

• 1) understandable;
• 2) comparable with the information of all periods presented;
• 3) which can serve as a starting point for further preparation of financial statements in accordance with IFRS;
• 4) the costs of compiling which would not exceed the benefits of its value to users of financial statements.

IFRS (IFRS) 1 applies to the first IFRS financial statements and to each interim IFRS financial statements for any period that is part of the year covered by the first IFRS financial statements.

Financial reporting in accordance with IFRS (compliance with IFRS) are financial statements that satisfy all of the accounting and disclosure requirements of each applicable standard and interpretation under IFRS. The fact of compliance with IFRS should be disclosed in such financial statements.

First IFRS financial statements - it is the first annual financial statement to clearly and unequivocally state that it complies with IFRS.

The starting point for preparing IFRS financial statements is the opening IFRS balance sheet prepared as of the date of transition to IFRS. Publication of the opening balance sheet is not required.

Date of transition to IFRS (date of transition to IFRS ) is the beginning of the earliest period for which the company presented full comparative information in accordance with IFRS in its first IFRS financial statements.

At the transition date, an opening IFRS balance sheet is prepared. As a rule, the opening balance sheet is prepared two years before the reporting date of the first IFRS financial statements.

Opening IFRS balance sheet - is the company's balance sheet prepared in accordance with IFRS at the date of transition to IFRS.

Reporting date (balance sheet date, reporting date) - this is the end of the most recent period for which the financial statements are prepared.

Retrospective judgment (hindsight) - it is a judgment about a past event in the light of experience gained since then.

Estimated estimates - These are estimates associated with the uncertainty inherent in the activities of any company. The value of some properties cannot be measured, but can only be calculated based on professional judgment. The use of reasonable estimates is important part preparation of financial statements that objectively reflect financial condition, results of operations and cash flows under IFRS.

According to IFRS (IFRS) 1 in the first IFRS financial statements:

• 1) Comparative data must be provided for at least one year;
• 2) accounting policy must comply with the requirements of each applicable IFRS in effect at the reporting date of the first financial statements and be used to develop opening balance sheet and financial statements for all comparative periods included in the first IFRS financial statements;
• 3) the date of transition to IFRS, which is also the date of the incoming balance sheet, depends on the number of periods for which comparative information is presented.

By general requirement the date of transition to IFRS is two years from the date of the first reporting under IFRS. So, when switching to IFRS, starting with the financial statements for 2012, the opening balance sheet must be drawn up as of January 1, 2011. For 2011, a complete set of financial statements according to IFRS is presented, but so far without comparative information, and for 2012 d. a complete set of financial statements in accordance with IFRS is formed already with comparative information.

The company should prepare the opening balance sheet as if it were based on the assumption that IFRS financial statements have always been prepared, i.e. retrospectively apply the requirements of all international standards. To this end, the company must:

• 1) recognize assets and liabilities in accordance with IFRS;
• 2) exclude items recognized as assets or liabilities if IFRS does not allow such recognition;
• 3) to reclassify items that were recognized in accordance with national accounting rules as one type of assets, liabilities or equity, and according to IFRS represent another type of assets, liabilities or equity;
• 4) include in the opening balance sheet all items in the valuation corresponding to IFRS;
• 5) calculate how the result of changes in financial statements prepared in accordance with national standards, after its adjustment to IFRS, will affect the amount of retained earnings or another item of equity.

If the opening balance sheet is formed on January 1, 2012, and the company has existed for 10 years, when reflecting assets and liabilities in the balance sheet, information should be examined starting from the moment of initial recognition of accounting objects. Taking into account the fact that such information is not always available at the date of transition and the cost of its formation may exceed the corresponding economical effect for users of financial statements, in IFRS (IFRS) 1 provided exceptions to retrospective application individual standards when first applying IFRS. As already noted, these are two types of exceptions: voluntary (which the company's management can choose at its discretion) and mandatory (which should be applied regardless of the decision of the company).

Cases for applying exceptions and summary adjustments are presented in table. 2.3 and 2.4.

Disclosures in the first IFRS financial statements.

Information must be disclosed in full, as required by the relevant IFRS standards, taking into account additional requirements of IFRS (IFRS) 1.

Table 23

The end of the table. 23

application of IFRS

Table 2.4

IFRS (IFRS) 1 requires disclosure of information about the impact of the transition to IFRS.

The first IFRS financial statements must include a reconciliation of the following:

• - capital under previously used national rules and capital at the date of transition to IFRS and at the end of the most recent period presented in the company's most recent financial statements under national rules;
• - net profit under previously used national rules and net profit under IFRS for the most recent period, reflected in the company's most recent financial statements under national rules.

The reconciliation should contain sufficient information for users of the financial statements to understand:

• 1) significant adjustments to articles balance sheet and income statement;
• 2) adjustments due to changes in accounting policies;
• 3) corrections of errors identified during the transition to IFRS.

Disclosure under IAS (IAS) 36 is given when

impairment losses are reflected in the opening IFRS balance sheet.

Reveals line by line total amount fair value and the total adjustment to the previously used carrying amount. The first IFRS financial statements must also include comparative information prepared in accordance with IFRS for at least one year. In Russia, there is no standard regulating the first application of national accounting standards - PBU.