• Added to Agenda at October 2009 IASB Meeting
• Discussed at October 2009 IASB Meeting (jump to notes below)
• Discussed at October 2009 Joint IASB-FASB Meeting (jump to notes below)
• Discussed at 2 February 2010 Special Joint IASB-FASB Meeting (jump to notes below)
• Discussed at 4 May 2010 Special Joint IASB-FASB Meeting (jump to notes below)
• Exposure Draft published 27 May 2010. Click for More Information
• Discussed at October 2010 IASB Meeting (jump to notes below)
• Discussed at November 2010 IASB Meeting (jump to notes below)
• Discussed at March 2011 IASB Meeting (jump to notes below)
• Discussed at Special 31 May - 2 June 2011 IASB Meeting (jump to notes below)
• 6 June 2011 Near Final Draft of amendments to IAS 1 published. Click for More Information
• 16 June 2011 IASB publishes Presentation of Items of Other Comprehensive Income (Amendments to IAS 1). Click for More Information

Timetable

• Click for IASB Project Timetable

IASB Project Insights

• A quick overview of this project is available on our IASB Project Insights page

Background

This project involves a proposal for a possible limited scope amendment to IAS 1 Financial Statement Presentation that would require all entities to present a single statement of comprhensive income and would prohibit the 'two statement approach' (separate statements of income and comprehensive income) now permitted by IAS 1.

Discussion at the October 2009 IASB Meeting

The Board discussed a proposal for a possible limited scope amendment to IAS 1 Financial Statement Presentation. This amendment might be necessary to preserve a degree of comparability between the presentation of the statement of comprehensive income between IFRS and US GAAP, depending on the actions that the FASB might take in its Financial Instruments: Recognition and Measurement project.

Specifically, the staff presented a proposal to remove the option in IAS 1 paragraph 81 to present a statement displaying the components of profit or loss and a second statement beginning with profit or loss and displaying components of other comprehensive income (the 'two statement' option). The staff stressed that nothing in their proposal would change the items that could or should be presented in OCI, or whether an item should be reclassified upon derecognition.

Board members expressed surprise that the staff was bringing this proposal forward at this time. The latest version of IAS 1 had been in effect for less than ten months, and the last time the Board had suggested a single statement of comprehensive income it had faced near universal opposition. Now was not the time to reignite the embers of opposition and provide additional ammunition to those ill-disposed towards the IASB.

Noting the foregoing arguments, a Board member warned that, should they proceed with this proposal, all Board members voting in favour of the proposal before exposure must have the backbone to maintain their position afterwards: it was unlikely that the exposure process would raise any information or insight of which it was unaware already.

The Chairman noted that the proposal would need to be addressed carefully and as a true US GAAP convergence item. He noted also that the topic would be discussed with the FASB at its joint public meeting on 26-28 October, after which the IASB would be in a better position to judge whether the amendment would be needed.

The Board tentatively agreed to eliminate the alternative in IAS 1 paragraph 81 that permits the 'two statement approach' to presenting the statement of comprehensive income.

The Board also tentatively agreed to require that the single statement of comprehensive income be displayed with two sections: profit or loss and other comprehensive income.

By a majority (at least two opposed), the Board tentatively agreed that

• components of OCI that would not be reclassified into profit or loss in future periods should be displayed together, and
• components of OCI that would be reclassified into profit or loss in future periods should be displayed together.

The Board tentatively agreed to remove the option to permit an entity to display components of OCI net of tax. In addition, the Board agreed that income taxes related to items reported in OCI should be allocated between the two sub-classifications.

The Board will make a further determination about this possible project after the joint meeting with the FASB on 26-28 October 2009.

Discussion at the October 2009 Joint IASB-FASB Meeting

Proposal for limited scope amendment to IAS 1 Presentation of Financial Statements

The staff recommended that the Board eliminate the option in paragraph 81 of IAS 1 that permits an entity to present all items of income and expense recognised in a period in two statements. In recommending that the two statement option be removed, the staff recommended that the Board decide to require that a single statement of comprehensive income be displayed with two sections: profit or loss and other comprehensive income (OCI).

The Board tentatively agreed with the staff recommendation to require a single statement of comprehensive income with the two sections (as described above). The Board also emphasised that this proposal would not change items that can or must be presented in OCI or whether an item must be reclassified upon derecognition.

The staff recommended that the Board tentatively decide to require that components of OCI that will not be reclassified into profit or loss in future periods be displayed together and that components of OCI that will be reclassified into profit or loss in future periods be displayed together. The Board agreed with the staff's recommendation to display items with similar reclassification requirements together.

Lastly, the staff recommended that the Board tentatively decide (a) to remove the option that allows an entity to display components of OCI net of income tax effects and (b) that the income tax effect of an OCI item be displayed with the related OCI item in the statement of comprehensive income. The Board tentatively agreed to remove the option to permit an entity to display components of OCI net of tax. In addition, the Board agreed that income taxes related to items reported in OCI should be allocated between those items that will not be reclassified into profit or loss in future periods and those items that will be reclassified into profit or loss in future periods.

The IASB and FASB agreed to work together to develop exposure drafts to amend their respective requirements under IAS 1 and the FASB Accounting Standards Codification in order to allow the Boards to expose the proposals at the same time. The FASB indicated that it would be beneficial if the timing of the proposal could coincide with the pending release of the exposure draft on Financial Instruments: Recognition and Measurement later this year.

Discussion at the 2 February 2010 Special Joint IASB-FASB Meeting

Statement of Comprehensive Income

The Boards considered and confirmed their decisions regarding the exposure draft that would propose to eliminate the option to present a separate income statement and statement of comprehensive income.

The IASB Chairman noted that the current proposal would be extremely controversial and urged the Boards to consider a wording that would reflect the nature of the proposal (continuous statement) and avoid the rumours regarding what the Boards decided not to do (eliminate the notion of net income).

The Boards decided that an entity must display total comprehensive income and its components in a continuous statement of comprehensive income, containing two sections: profit or loss and other comprehensive income.

Some Board members were concerned that this discussion is difficult to explain and the Boards have more important issue to be solved than to engage in the fight over this issue (given it was a source of major controversy last time it was proposed by the IASB).

Other Board members were concerned with the confusion created as by the EPS measure that would be based on net income and not based on the bottom line. They argued that 'Earnings' were not used anywhere else in the Statement of Comprehensive Income and thus EPS measure might mislead the users. The Boards disagreed and confirmed the decision as proposed. They argued that any changes to EPS would be extremely controversial.

Finally the Boards confirmed all the related decisions made at a previous meeting. The Boards also agreed that the amendment shall not influence which items should be reclassified between net profit or loss and the other comprehensive income and how those reclassifications were presented under IFRSs and the US GAAP.

One IASB member expressed his concerns that this narrow project was planned to be published at the end of March, whereas the comprehensive Financial Statement Presentation (FSP) proposals would be published later in April and suggested combining them. Other IASB members responded that this is a narrow project that should be finalised irrespective of the decisions made in the comprehensive Financial Statement Presentation project. Moreover this narrow amendment is connected with the decisions made in the scope of the financial instruments and post-employment befits projects. The Boards agreed that the Basis for Conclusion would explicitly state that rationale.

Discussion at the 4 May 2010 Special Joint IASB-FASB Meeting

The Boards discussed the title of the statement of comprehensive income. After a very brief discussion the IASB with a large majority of votes supported the alternative to call the statement of comprehensive income 'Statement of Profit or Loss and Other Comprehensive Income'. The IASB members suggested that this change would better reflect the nature of the statement and would help to gain the Board a more positive reaction to its proposal. Nonetheless, usage of the new title will not be prescribed.

The FASB disagreed and decided to retain the original title. The FASB members noted that the current title is understood and the change could be seen as trying to hide the true nature of the change.

Finally, the Boards agreed to go with two different names, one in the US GAAP literature and one in the IFRSs literature with the reference to the other as an alternative name (similar to the reference to 'Profit or Loss' under IFRSs and 'Net income' under US GAAP).

May 2010: Exposure Draft on statement of comprehensive income

On 27 May 2010, the IASB published for public comment an exposure draft (ED) proposing to require that all entities present profit or loss and other comprehensive income (OCI) in separate sections of a single continuous statement. This would amend IAS 1, which currently allows entities a choice of presenting results of operations either (a) in a single, continuous statement similar to the proposal in the ED or (b) in two separate statements – an income statement and a statement of comprehensive income. Other proposals in the ED include:

• Items of OCI should be grouped on the basis of whether they will eventually be 'recycled' (reclassified) into the profit or loss section of the statement of comprehensive income.
• Income tax on items presented in OCI would be allocated between items that might be subsequently 'recycled' and those that will not be 'recycled', if the items in OCI are presented before tax (which is an option).
• The title of the statement of comprehensive income would be changed to 'Statement of profit or loss and other comprehensive income' when referred to in IFRSs, though entities could use another title (such as 'statement of comprehensive income').

June 2010: Newsletter on reporting comprehensive income

Deloitte's IFRS Global Office has published an IFRS in Focus Newsletter – IASB Proposes Changes to the Presentation of Profit or Loss and Other Comprehensive Income (PDF 68k). The newsletter explains the IASB's 27 May 2010 proposal to amend IAS 1 Presentation of Financial Statements to require:

• Presentation of 'profit or loss' and 'other comprehensive income' (OCI) as separate components in a single, continuous financial statement; and
• Separate presentation in OCI of items that will be reclassified to profit or loss ('recycled') in a subsequent period.

Discussion at the October 2010 IASB Meeting

The staff presented the Board with a summary of the comment letters in response to Exposure Draft, Presentation of Items of Other Comprehensive Income which closed on 30 September 2010. The Board received 139 comment letters from various constituents across all geographic regions.

Respondents generally agreed with the proposal to combine the statement of profit and loss and the statement of other comprehensive income (OCI) into a single performance statement and rename the "Statement of profit or loss and other comprehensive income." However, respondents did not support the proposal to remove the option within IAS 1 to present all items of income and expense in two statements.

Even though respondents were generally supportive of the proposal, many suggested that the Board also needed to address the conceptual basis behind the use of other comprehensive income within financial reporting as well as address the issue of recycling of amounts recognised within OCI.

One Board member asked what the view of financial statement users were with respect to the exposure draft. The staff mentioned that users were generally supportive although two users did not support the proposals.

Another Board member mentioned that constituents already have concerns over the different philosophies of recycling amounts within OCI between the FASB and IASB. Additionally, the Board keeps increasing the usage of recognising items within OCI such as the credit component of financial liabilities measured at fair value. Therefore addressing these issues are an important task for the Board to undertake.

A couple of Board members mentioned their feeling that there is a lack of enthusiasm for the project with one stating she has heard the Board is "putting the carriage before the horse" by not addressing the conceptual issues around OCI before addressing the presentation issues. However, one Board member retorted that she feels that including profit and loss and OCI in a single statement is appropriate because of the lack of conceptual consideration around what constitutes recognition in OCI.

The Boards considered the summary of comment letters from the ED Presentation of Items of Other Comprehensive Income. The Boards noted that constituents supported all aspects of the proposal apart from the most significant one — presentation of one continuous statement of profit or loss and other comprehensive income with two sections (i.e. support was limited to change of name, separate presentation of recycled and non-recycled items as well as presentation of income taxes). Nonetheless, constituents in general questioned the merits of the proposals before the Boards first addressed conceptual issue what is performance or the principle when items of OCI should be recycled and when not.

Almost all the discussion focussed on the requirement to present a single performance statement with two sections. The Boards remained split on whether to mandate single performance statement (supported by a slight majority of the IASB members), to mandate two separate performance statements (idea suggested by some FASB members) or to maintain status quo for the IASB. The FASB seem to see some attraction in the current IASB guidance on an option between a single statement or two statements that follow each other (what would be a change from current requirements in US GAAP that allows presenting items of OCI within the Statement of changes in equity). Given these diverse opinions the Boards asked the staff to provide an additional analysis of this issue (as other issues were relatively uncontroversial) and suggest some middle ground that would emphasise the importance of information in other comprehensive income but without de-emphasising the importance of net income. The Boards will continue discussion about this issue at the December joint meeting.

Discussion at the November 2010 IASB Meeting

The Boards continued their discussions on the presentation of comprehensive income project. Having provided a preliminary summary of respondent feedback at the October joint meeting, the staff presented the Boards with a detailed analysis of respondent feedback, and posed several questions to the Boards, including:

• whether the Boards should postpone the project until a convergent concept for other comprehensive income (OCI) is developed
• alternatives for the presentation of comprehensive income and its components;
• effective dates and transition
• whether the Boards want to redeliberate other prior decisions or to affirm those decisions
• IASB-only issues on separating OCI items based on whether they may be reclassified (recycled) or not and title of the statement containing profit or loss and other comprehensive income
• FASB-only issue regarding the presentation of OCI for entities with non-controlling interests.

The staff provided the Boards with a summary of respondent feedback, noting that both the IASB and FASB received significant feedback from constituents who urged the Boards to develop a conceptual framework to define the concept of OCI prior to issuing any specific presentation guidance. However, the staff recommended the Boards continue with the presentation project, citing the long period of time it would take to develop such a framework, and that certain users expressed a pressing need for a single statement.

By majority votes, both Boards agreed with the staff's recommendation to continue with the project as planned. However, members of both the IASB and FASB agreed with constituents' comments regarding the need to develop a conceptual framework for OCI. In this regard, Board members also recognised there are still underlying differences between IFRSs and U.S. GAAP regarding which items are recognised in OCI, and which items are reclassified into profit and loss. While supporting the recommendation to continue with the project, some Board members also suggested that a conceptual framework project for OCI be added to its calendars to address the issue. In citing support for continuing with the project now, a FASB member noted that aligning the presentation of OCI for IFRSs and U.S. GAAP would help users to better understand and more clearly identify the fundamental differences that currently exist.

In responding to the summary of feedback received on the project, one FASB member suggested that the diverse opinions received from constituents should be captured in the final standard's basis for conclusions.

The staff also noted that mixed views were received on whether or not to require a single continuous statement of comprehensive income. Accordingly, the staff presented the Boards with three presentation alternatives:

• Alternative 1: Retain the current requirement to present OCI in a continuous statement of comprehensive income while eliminating other presentation options for OCI
• Alternative 2: Permit the option for reporting entities to present OCI in a continuous statement of comprehensive income or in two separate but consecutive statements (currently one of the presentation options in IFRS and U.S. GAAP)
• Alternative 3: Require reporting entities to present OCI using a consecutive two-statement approach.

The Boards discussed the three alternatives, including the examples provided by the staff. Multiple Board members noted the similarities between the examples, and, that in practice, the alternatives may all lead to similar results (i.e. a single statement that is split into two pages and two separate statements on consecutive pages would be largely similar). After deliberations, both the IASB and the FASB voted in favor of Alternative 2.

Having voted in favor of the alternative permitting the option for either a single comprehensive statement or two consecutive statements, the staff presented the Boards with possible titles for the statements. The staff indicated it would be clearer to use separate titles if two statements are presented, and therefore recommended to the Boards the titles "Statement of Profit and Loss" and "Statement of Other Comprehensive Income", noting that preparers are permitted to use alternate titles. The Boards agreed with the need to maintain simplicity, and both voted in favor of the staff's recommendation.

The FASB unanimously voted to make its final standard effective for fiscal years beginning after December 15, 2011. The IASB voted to make its final standard effective for fiscal years beginning after January 1, 2012. In addition, both Boards agreed with the Staff's recommendation to require full retrospective application of the final standard.

The IASB confirmed its proposal to require entities to present items of OCI that will be reclassified to profit or loss (recycled) in subsequent periods separately from items of OCI that will not be reclassified to profit or loss.

The FASB agreed with the staff's recommendation on the requirement to allocate net income and comprehensive income to non-controlling interests and to owners, in order to be consistent between IFRS and U.S. GAAP. The staff noted this was already required under U.S. GAAP, and was brought to the Board's attention to clarify a misconception expressed by certain respondents.

Lastly, both the IASB and the FASB voted unanimously to permit the staff to begin the drafting and balloting process for the final standard.

Discussion at the March 2011 IASB Meeting

Effective Dates and Transition

The IASB reconfirmed their previous decisions on effective date and transition requirements for other comprehensive income project.

Those decisions were:

• An effective date of 1 January 2012
• Require full-retrospective application for the final standard.
   

Discussion at the 31 May - 2 June 2011 IASB Meeting

Effective date

The IASB is expected to issue its standard related to financial statement presentation of other comprehensive income during mid-June. The Board had previously made a tentative decision that the effective date for the amendments would be for periods beginning on or after 1 January 2012. However, the FASB has recently decided to require an effective date for periods beginning on or after 1 July 2012. As the IASB usually provides at least twelve months for implementation of new standards, and to coincide with the effective date of the FASB, the Board tentatively agreed to delay the effective date until periods beginning on or after 1 July 2012.
 

June 2011: IASB publishes Near Final Draft of Amendments to IAS 1

The IASB has released a Near Final Draft (NFD) of amendments to IAS 1 Presentation of Financial Statements to change how components of other comprehensive income (OCI) are presented.

The amendments:

• preserve the amendments made to IAS 1 in 2007 to require profit or loss and OCI to be presented together, i.e. either as a single statement of comprehensive income, or separate income statement and a statement of comprehensive income (rather than requiring a single continuous statement as was proposed in the exposure draft)
• require entities to group items presented in OCI based on whether they are potentially reclassifiable to profit or loss subsequently. i.e. those that might be reclassified and those that will not be reclassified
• do not change the option to present items of OCI either before tax or net of tax, however tax associated with items that are presented before tax must be shown separately for each of the two groups of OCI items.

The amendments are expected to be issued later in June and will apply to reporting periods beginning on or after 1 July 2012. Click for Access to the NFD on the IASB's website (for subscribers only).
 

June 2011: IASB publishes Presentation of Items of Other Comprehensive Income (Amendments to IAS 1)

On 16 June 2011, the IASB published Presentation of Items of Other Comprehensive Income (Amendments to IAS 1). The amendments to IAS 1 Presentation of Financial Statements retain the 'one or two statement' approach at the option of the entity and only revise the way other comprehensive income is presented: requiring separate subtotals for those elements which may be 'recycled' (e.g. cash-flow hedging, foreign currency translation), and those elements that will not (e.g. fair value through OCI items under IFRS 9).

The changes to the presentation of other comprehensive income (OCI) were 'spun out' of the wider project on Performance Reporting, which promised a major overhaul of the way the primary financial statements were presented. The OCI ED had originally itself proposed the mandatory presentation of other comprehensive income in one financial statement, but constituent comment proved the change to be too controversial to be included in the final amendments. Instead, the amendments to IAS 1 Presentation of Financial Statements retain the 'one or two statement' approach at the option of the entity and only revise the way other comprehensive income is presented: requiring separate subtotals for those elements which may be 'recycled' (e.g. cash-flow hedging, foreign currency translation), and those elements that will not (e.g. fair value through OCI items under IFRS 9). In addition, the FASB has issued corresponding guidance with the issuance of ASU 2011-05. While the boards' new guidance essentially converges the requirements for presenting OCI, there are still differences between U.S. GAAP and IFRSs concerning (1) what items are included in comprehensive income and (2) reclassification requirements.

Click for:

• IASB press release on the amendments to IAS 1 (link to IASB website)
• IFRS in Focus — IASB issues Amendments to IAS 1 on Presentation of Items of Other Comprehensive Income (PDF 67k).