AS 1: Presentation of Financial Statements is an International Accounting Standard that sets out the overall requirements for the presentation of general-purpose financial statements. Its primary objective is to ensure comparability of financial statements, both with an entity's own statements from previous periods and with the statements of other entities.
Here's a brief summary of its key aspects:
1. Purpose of Financial Statements: Financial statements aim to provide information about an entity's financial position, financial performance, and cash flows that is useful to a wide range of users (like investors, lenders, and creditors) in making economic decisions.
2. Complete Set of Financial Statements: A complete set of financial statements, as per IAS 1, includes: * Statement of Financial Position (Balance Sheet): Presents assets, liabilities, and equity at a specific point in time. * Statement of Profit or Loss and Other Comprehensive Income (Income Statement): Presents all income and expenses for a period. This can be a single statement or two separate statements (one for profit or loss, and another for other comprehensive income). * Statement of Changes in Equity: Shows changes in an entity's equity during the period. * Statement of Cash Flows: Presents information about cash inflows and outflows, classified into operating, investing, and financing activities. * Notes to the Financial Statements: Provide a summary of significant accounting policies and other explanatory information. * A statement of financial position as at the beginning of the earliest comparative period when an entity applies an accounting policy retrospectively or makes a retrospective restatement, or reclassifies items.
3. General Features of Financial Statements: IAS 1 outlines several general features that financial statements must adhere to: * Fair Presentation and Compliance with IFRSs: Financial statements must present a true and fair view of the entity's financial position, performance, and cash flows, and explicitly state compliance with IFRS. * Going Concern: Financial statements are prepared assuming the entity will continue in operation for the foreseeable future, unless management intends to liquidate or cease trading. * Accrual Basis of Accounting: Except for cash flow information, financial statements are prepared using the accrual basis of accounting. * Materiality and Aggregation: Each material class of similar items must be presented separately. Immaterial items can be aggregated. * Offsetting: Assets and liabilities, and income and expenses, should not be offset unless permitted or required by another IFRS. * Frequency of Reporting: Financial statements must be prepared at least annually. * Comparative Information: Comparative information for the preceding period must be presented for all amounts reported. * Consistency of Presentation: The presentation and classification of items in the financial statements should be consistent from one period to the next, unless a change is required or a more appropriate presentation is chosen.
4. Structure and Content: IAS 1 provides guidelines for the structure of financial statements, including minimum line items to be presented on the face of each statement and in the notes. It also specifies how to classify assets and liabilities as current or non-current based on the entity's normal operating cycle or expectation of realization/settlement within 12 months.
In essence, IAS 1 is the foundational standard that dictates how financial information should be presented to ensure clarity, relevance, reliability, and comparability for users.