Professional Documents
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Objective
This standard prescribes the guide lines to be used by the entity, in the presentation of
general purpose financial statements, to make sure that financial statement of the
entity are comparable both with its previous periods financial statement and with the
financial statements of the other entity. For this purpose, it provides overall
requirements for the structure and contents of financial statements along with some
general features.
Scope
The requirements of this standard are applicable to all the general purpose financial
statements (individual and consolidated both) which are prepared and presented in
accordance' with 'International Financial .Reporting Standards (IFRSs).However, this
standard is not applicable to the structure and contents of statement of cash flows and
interim financial statements.
Definition
General Purpose Financial Statements
These are financial statements which are prepared and presented to satisfy the
information needs of the general users, who are not able to require the reporting entity
to prepare accounting reports according to their particular information needs.
General Features
Fair Presentation
This standard requires that the financial. Performance, financial position and cash flows of an
entity should be fairly presented. Fair presentation of financial statements, the events and
transactions should be reported to financial statements in accordance with the recognition and
measurement principle for the elements of financial statements, given in the IASB’s
framework, and financial statements should be prepared in accordance with IFRS with related
disclosure requirements.
To achieve the fair presentation the entity should make sure the following:
The selection and application of accounting policies as per IAS8
The information contained in financial statements should have all the qualitative
characteristics of financial statements
Complete disclosure should be given as per the IFRS
Un-reserved Statement
The entity which prepares financial statements in compliance with all the lFRSs, should place
an un-reserved statement in the notes to accounts, in respect of such compliance with IFRSs.
This is termed as un-reserved statement. However, the entity cannot make such a statement
unless the financial statements are in compliance with all the requirements of IFRSs.
Disagreement with IFRSs
If in very rare situations, the management identifies that compliance with a particular
requirement of a specific standard or Interpretation will result in the information, which is in
conflict with the objectives of financial statements as laid down in the Framework, the entity
will account for such situation as follows:
a) If the regulatory frame work permits departure from such requirement, the entity will take
departure from that requirement and will disclose the following:
The financial statements fairly present the financial performance, financial position and
cash flows of the entity, as per the judgment of management
The financial statements of the entity are in compliance with all the relevant IFRS’s
other than the departure from the particular requirement
The title of the standard from which departure is taken, the details of departure and
related reason for the departure
The financial effect on financial statements due to such departure
b) If the regulatory frame work does not permit departure from such requirement, the entity
will reduce the related impact of such compliance by giving following disclosures:
The title of the standard from which departure is taken, the details of departure and
related reason for the departure
The adjustment which is required as per the judgment of the management to achieve fair
presentation
Going Concern
At the end of each reporting period, when entity will prepare its financial statements,
the management is required to assess of whether the entity has ability to continue its business
as a going concern. If management identifies that it has ability to continue its business as a
going concern then its financial statement will be prepared on a going concern basis.
The entity will be treated as going concern, if it can continue its operations for the
foreseeable future such that neither the management has intention nor the circumstances are
there that the entity will have to curtail its business activities
Consistency of Presentation
The entity should use the same accounting policies in the preparation and presentation
of financial statements for the similar events and transactions, from one period to the next in
order to ensure the comparability of financial statements unless the change is required by the
circumstance laid down in IAS 8
Materiality and Aggregation
The entity is required to present each material class of items separately in the financial
statements, unless these are immaterial.
Offsetting
The entity should not offset any assets and liabilities or any income and expense,
except it is required by a IFRS.
Frequency of Reporting
An entity shall present a complete set of financial statements (including comparative
information) at least annually. When an entity changes the end of its reporting period and
presents financial statements for a period longer or shorter than one year an entity shall
disclose, in addition to the period covered by the financial statements
(a) The reason for using a longer or shorter period, and
(b) The fact that amounts presented in the financial statements are not entirely comparable.
Comparative Information
This standard requires an entity to disclose the comparative information in respect of the
previous accounting period similar to those amounts which are presented in the financial
statements of the current accounting period