• Discussed at April 2005 Joint IASB-FASB Meeting – Phases A and B*

  *Phases A and B are described in the notes to the Joint IASB-FASB Meeting of April 2005 (below)

• Discussed at May 2005 IASB Meeting – Phase A
• Discussed at June 2005 IASB Meeting – Phases A and B
• Discussed at October 2005 IASB Meeting – Phase A
• Discussed at October 2005 Joint IASB-FASB Meeting
• Discussed at November 2005 IASB Meeting – Phase A
• Discussed at January 2006 IASB Meeting – Phase A
• 16 March 2006: IASB issues Exposure Draft on Phase A - proposed amendments to IAS 1
• Discussed at March 2006 IASB Meeting – Phase B
• Discussed at July 2006 IASB Meeting – Phase B
• Discussed at September 2006 IASB Meeting – Phase B
• Discussed at October 2006 IASB Meeting – Phase B
• Discussed at December 2006 IASB Meeting – Phase B
• Discussed at January 2007 IASB Meeting – Phase B
• Discussed at February 2007 IASB Meeting – Phase B
• Discussed at March 2007 IASB Meeting – Phase B
• Discussed at May 2007 IASB Meeting – Phase B
• Discussed at June 2007 IASB Meeting – Phase B
• Revised IAS 1 issued on 6 September 2007 – Phase A
• Discussed at October 2007 IASB Meeting – Phase B
• Discussed at November 2007 IASB Meeting – Phase B
• Discussed at March 2008 IASB Meeting – Phase B

IAS Plus Newsletter

• March 2006 – Special Global Edition – Proposals to Revise Presentation of Financial Statements (PDF 74k)

Timetable

• Click for IASB Project Timetable

Background

This project addresses broadly the issues related to the display and presentation in the financial statements of all recognised changes in assets and liabilities from transactions or other events except those related to transactions with owners as owners (sometimes called comprehensive income). Thus, it will consider items that presently are reported in the income statement, cash flow statement, and statement of changes in equity.

Currently, IAS 1, Presentation of Financial Statements, permits but does not require a single comprehensive performance statement.

The IASB worked on this project from 2001 to 2004. In November 2004, the IASB and FASB jointly appointed a new Joint International Group on Performance Reporting to assist the boards in their joint project to establish standards for presenting, in the financial statements, information that is useful in assessing the financial performance of a business enterprise. The list of members is shown below. Click for IASB Press Release (PDF 42k). That press release said:

Discussion at the Joint IASB-FASB Meeting April 2005 – Phases A and B

At the 22 April 2004 joint Board meeting, the US Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB) (collectively, the Boards) agreed to jointly conduct their respective projects on Performance Reporting and that the work should be performed in two phases:

The staff gave an update on the progress on the Joint International Group and noted that there had been some delays to date in setting out the necessary policies and procedures that they were expected to follow. There was some discussion amongst the Board as to the role of the JIG. It was concluded that they are not a decision maker but should be used in the consultation process by both the FASB and the IASB in forming decisions on performance reporting.

Required Financial Statements

The staff asked the Boards the following questions:

Question 1: What information should comprise a Full Set of Financial Statements?

• A statement that shows (at a point in time) balances of assets, liabilities, and equity as of the beginning of the period-referred to as a Beginning of the Period Statement of Financial Position.
• A statement that shows (at a point in time) balances of assets, liabilities, and equity as of the end of a period-referred to as the End of the Period Statement of Financial Position.
• A statement or two statements that show (for a period of time) the changes in assets and liabilities other than from transactions with owners in their capacity as owners-referred to collectively as a Statement(s) of Earnings and Comprehensive Income.
• A statement that shows (for a period of time) the changes in assets and liabilities from transactions with owners in their capacity as owners-referred to as a Statement of Changes in Equity.
• A statement that shows inflows and outflows of cash-referred to as a Statement of Cash Flows.

Question 2: Should individual Financial Statements within the Full Set of Financial Statements be shown with equal prominence to each other?

The IASB noted that there is currently a difference between IFRS and US GAAP in that under IFRS and US GAAP, certain information can be shown in the notes to the financial statements rather than in a financial statement format. However, it was agreed by the Boards unanimously that all individual statements should be shown with equal prominence.

Question 3: With regard to the Statement of Earnings and Comprehensive Income, should that information be presented as:

• (1) A single statement with a total representing all non-owner changes in financial position and no subtotal for net income or profit or loss. (The Pure Single Statement Approach);
• (2) A single statement with a total for non-owners' changes in financial position and a required subtotal called net income or profit or loss. (The Modified Single Statement Approach); or
• (3) Two separate statements broken down into a traditional Income Statement and a Statement of Other Comprehensive Income similar to that described in FASB Statement No. 130, Reporting Comprehensive Income, paragraph 22. (The Two-Statement Approach)?

There was extensive debate on this question and the following points were made:

• The staff recommended alternative (2) modified single statement approach as it provides the best layout of information for users.
• Certain Board members preferred alternative (1) pure single statement approach but recognised that such an option would require a greater degree of modifications in existing standards and create issues for items such as recycling which are to be dealt with in Phase B of the project.
• Some FASB members were strongly in favour of the pure single statement and felt that the issues to be debated in Phase B should be addressed earlier.
• There was concern that certain items that were currently presented outside of the statement of income (e.g. the Statement of Total Recognised Gains and Losses for UK companies) were given less prominence in considerations of analysts. Therefore, a single comprehensive statement of income was seen as a positive step to improved financial reporting.
• The IASB members noted that alternative (1), which would eliminate the concept of net income, would be a major issue for IFRS reporters, and that the alternative (2) modified single statement approach offered the best solution.

1. Items included in net income (profit or loss), and
2. Items excluded from net income (profit or loss) and therefore included in other comprehensive income.

In future deliberations the Boards will develop criteria or characteristics for determining which items that fall into each of the two categories.

Question 4: Based on the Boards' decisions on Questions 1 through 3, at this time, do the Boards prefer to make the proposed revision by amending their existing guidance rather than create a new replacement standard?

The Boards debated the merits of issuing a consultation document prior to an exposure draft on the above changes. It was stated that some of the proposals are a major change and therefore discussions would be required in order to persuade interested parties as to the merits of the Boards' recommendations. IASB members specifically noted that European and other IFRS adopters would be resistant to these changes if they felt the IASB are merely falling in line with the FASB.

A vote was taken and the Boards opted (by majority) for issue of an Exposure Draft (without discussion paper) with the proviso that round table discussions would be held.

Comparative Financial Statements

The staff introduced this topic and the need to eliminate existing differences between IFRS and US GAAP relating to the requirements for presenting comparative financial statements.

The staff asked the Boards the following questions:

Question 1: Do the Boards agree with the staff recommendation to require comparative financial information for all entities, and to limit the required information to two annual periods (the current and prior annual period)?

There was some debate regarding the SEC's rule for 3 years of financial information. The Boards voted (by majority) with the staff recommendation to require comparative financial information for two annual periods. Clarification was made (with reference to the full set of financial statements) that this would include 3 balance sheets and 2 sets of period statements (earnings and comprehensive income, cash flows and changes in equity).

Question 2: Do the Boards agree with the staff recommendation that the presentation of financial information by those entities that elect to provide information for annual periods beyond the required minimum should be encouraged but not be required?

The Boards determined that provision of financial information beyond the required two annual periods should not be encouraged. The rationale was that most jurisdictions (including standard setters, securities regulators, and stock exchanges) currently require comparative financial information for the prior annual period and, thus, would most efficiently achieve convergence. While true convergence may not be achieved for public entities, convergence will be achieved at least at the standard setters' level.

The Boards' main decisions may be summarised as follows:

The staff asked the Boards to consider specific questions noted below. The staff acknowledged that the Boards may have felt that certain questions had been debated before but the staff felt that clarity was required.

1. Is the Boards' objective to develop a single standard that would apply broadly to all entities?

The Boards agreed unanimously that this is their objective.

2. Do Board members agree that they should first develop a standard that would apply to entities other than financial institutions, and then consider the application of such a standard to financial institutions?

The Boards agreed unanimously that this is the best approach.

3. Do Board members agree with the staffs' approach regarding interim financial statements and notes to financial statements?

Because the staff believes the scope of this project never included fundamental reconsideration of interim reporting requirements or note disclosures, the staff plans to change existing reporting requirements only as needed through consequential amendments made necessary by Board decisions. The Boards agreed (by majority) with the staff.

4. Should the scope of this project include a comprehensive reconsideration of FASB Statement 95, Statement of Cash Flows, and IAS 7, Cash Flow Statements, including whether to require a particular method and presentation of the cash flow statement?

The Boards agreed unanimously that this question should be addressed in Phase B of this project.

5. Do the Boards believe that there are any additional topics that should be added to either Phase A or Phase B? If so, what are these additional topics and should they be addressed in Phase A or Phase B?

An IASB Board member stated that a statement of returns to shareholders should be considered as an additional part of the full financial statements. The Boards also highlighted that additional input from the financial services sector (specifically buy side companies) would be welcomed on the JIG.

6. Timing and Staffing Issues

The Boards agreed (by majority) with the staff proposal to continue with one joint staff team that would complete Phase A of the project through Board deliberations and working toward issuing an Exposure Draft addressing Phase A only. After that the staff will work toward the issuance of a public discussion document on only Phase B issues.

Discussed at the May 2005 IASB Meeting – Phase A

At the 21 April 2005 joint Board meeting, the FASB and the IASB agreed that non-owner changes in net assets (the Statement of Earnings and Comprehensive Income) should be presented in a single statement with a total for non-owner changes in net assets (often referred to as 'comprehensive income') and a required subtotal called 'net income' or 'profit or loss'.

The staff asked the Board to consider the effect of this decision on the presentation of per-share measures, namely earnings per share (EPS) and comprehensive income per share (CPS). Specifically, the Board was asked whether they would require a measure of CPS? The Board debated this issue extensively with a number of Board members expressing a desire to ultimately eliminate IAS 33 as a way of de-emphasising EPS in financial reporting. The Board agreed to retain IAS 33 as presently drafted for purposes of completing the performance reporting project. Consequently, CPS would be a measure that is permissible but not required. In answering a subsequent question posed by the staff, the Board agreed that should CPS be disclosed, this would be in the notes to the financial statements and the disclosure provisions would apply that require reconciliation of the numerator used and a line item that is reported in the income statement.

Discussed at the June 2005 IASB Meeting – Phases A and B

The Board was updated on the work of the Joint International Group on Performance Reporting (JIG). After discussing the structure of the project (the issues within Phases A and B) in the context of how to proceed, the Board tentatively decided that the staff should commence work on an exposure draft dealing with Phase A issues only. That exposure draft would consist of a detailed preamble designed to communicate clearly, the intentions of the Board on issues such as the single statement and the fact that there would be no emphasis placed on the comprehensive income amount in Phase A (as opposed to net profit). While preparing the exposure draft, the FASB would be consulted about how best to proceed and if it is decided that a discussion paper is necessary, the exposure draft would be converted into a discussion paper format.

Discussed at the October 2005 IASB Meeting – Phase A

Five issues were tabled for the Board to consider and on which the staff recommended that:

1. The term 'comprehensive income' is replaced with 'recognised income and expense'.

A lengthy debate took place over this issue and the Board eventually agreed to use the term 'total recognised income and expense' in its literature although preparers would be allowed to use any other description.

2. The titles of the four primary financial statements are:

• statement of financial position,
• statement of changes in equity,
• statement of profit and other recognised income and expense; and
• statement of cash flows.

The Board agreed with the staff recommendation provided the FASB concurs.

3. The term 'profit or loss' is used to describe the mandatory subtotal in the statement of profit and other recognised income and expense (subject to the decision on issue 1 above).

The Board agreed with the staff recommendation on the basis that this issue will be revisited and considered as part of the concepts project.

4. Accumulated other recognised income and expense is presented on the face of the statement of changes in equity, and represents items that have been initially recognised in other recognised income and expense (that is, outside profit or loss) and will be recognised in retained earnings in the future.

The Board agreed with the staff recommendation.

5. The tax effects associated with each component of other recognised income and expense is not required to be disclosed in the financial statements.

The Board agreed to follow the FASB approach which is to require disclosure of tax effects associated with each component of other comprehensive income, either on the face of the statement or in the notes to the financial statements. Joint issues (that is, IASB and FASB)

The Board was asked to consider a memorandum addressing Phase A issues that are common to both the IASB and the FASB with regard to finalising work on Phase A.

Questions asked of the IASB were as follows:

Does the IASB agree that the IASB's Amendment to IAS 1 should be effective for annual periods beginning on or after January 1, 2007, with earlier application encouraged?

The Board agreed.

Do the Boards agree that transitional provisions are not necessary for the forthcoming Statement or Amendment?

The IASB agreed. The FASB will be asked to consider this issue at the forthcoming joint meeting of the two Boards. Do the Boards agree that the comment period should be 120 days? The IASB agreed. The FASB will be asked to consider this issue at the forthcoming joint meeting of the two Boards.

Single statement or two?

The Board was informed of the resistance that seems to be prevalent amongst constituencies about the move to a single statement of profit and other recognised income and expense as opposed to a two statement approach. Board members discussed this issue with many questioning the source of the resistance as there appeared to be no conceptual arguments for a two statement approach besides 'paranoia'. Some Board members indicated that they still had a preference for a single statement and some indicated that they would allow either a single or a two statement approach, whichever route the FASB would find acceptable in order to achieve convergence. The issue was deferred to the forthcoming joint meeting of the two Boards.

Discussed at the October 2005 Joint IASB-FASB Meeting – Phase B

The staff presented a paper on the treatment of financing costs in the financial report. The Boards agreed that a financing section should be required in the performance report.

Staff recommended that the Boards develop a definition of 'financing' before developing definitions for any other category. This was partly a pragmatic recommendation, given the historical difficulties that have been encountered in developing a definition for 'operating activities'. Staff believed that financing should be defined first and that definition should be applied consistently across all entities other than financial institutions. Earlier in the project the Boards agreed to develop a model for entities other than financial institutions, and then determine subsequently how that model should be applied to or adapted for financial institutions.

The staff proposed that the first step in developing a working definition of 'financing' would be to identify the type of transactions that represent the financing activities of an entity. These generally result in the recognition of an asset or a liability in the statement of financial position. Then, a definition would be developed for those types of transactions that change the balance of identified financing assets and liabilities. Then the Boards should determine how the developed definition can be applied in the other financial statements.

The Boards noted that their starting point was that anything related to the time value of money represents a 'financing amount'. The Boards agreed that they do not want to look first at assets and liabilities; rather they want to examine the change statements and endeavour to develop a definition based on transactions in those change statements.

Two further questions were asked of the Boards: Which assets and liabilities may give rise to financing transactions, and what bases should be used to differentiate the types of transactions that should be aggregated into a financing category on the statement of earnings and comprehensive income. The Boards noted that given their responses on the method for determining a definition, any answers given to these questions represented a selection of random thoughts rather than a comprehensive response that the staff could use in their work. The staff will endeavour to develop a definition of financing based on the Boards' discussion, and will then determine what might be outside of that definition that should be within financing to determine whether a small list of exceptions may be required.

Discussion at the November 2005 IASB Meeting – Phase A

The Board was asked whether the forthcoming exposure draft on Phase A of the reporting financial performance project should require all non-owner changes in equity to be included in the financial statements but allow preparers the choice of one statement (a statement of recognised income and expenses) or two statements (an income statement and a statement of total recognised gains and losses – or similarly labelled statements).

A majority of Board members stated a preference for one statement, but said that, as political compromise, they were prepared to accept a two-statement approach as an interim step. The staff was asked to explain this in as candid a manner as possible in the exposure draft.

The Board agreed to issue the exposure draft permitting the alternative of presenting two statements.

Mr Cope and Mr Garnett signalled their intention to dissent from the ED, for the reason that they wish to require a single statement now. Mr Leisenring may dissent on the same basis, but he wants to see the proposed Basis for Conclusions first. Mr Engstrom might dissent if the Basis for Conclusions appears to prejudge the issue of moving to one statement in the near term.

Discussion at the January 2006 IASB Meeting – Phase A

The Board deliberated issues identified by the staff when drafting the pre-ballot of Proposed Amendments to IAS 1. The paper consists of issues that the Board discussed during this session.

Composition of a complete set of financial statements

Some members had concern about the controversy it could create if the IASB is going ahead of FASB on this issue (as FASB has decided to postpone this until Phase B) when the objective from the beginning of this project was convergence.

Other members respond by emphasising the importance of giving users comparative information, rather than trying to converge with the FASB.

The Board decided that the ED should propose that a complete set of general purpose financial statements should include a statement of financial position at the beginning of the period as well as one as of the end of the period.

Proposed consequential amendments to IAS 34

The Board decided not to make any amendments to the wording in IAS 34 so that it will continue to require a complete or condensed statement of financial position as at the beginning and end of the interim period.

Proposed consequential amendments to IFRS 1

The Board was asked whether they would amend IFRS 1 to require a reconciliation of total recognised income and expense, rather than profit and loss.

Comments were made that, as preparers have to consider all numbers when reconciling equity, IFRS 1 should be amended to require reconciliation of total recognised income and expense.

The Board voted in favour of the staff recommendation.

Proposed amendments to titles of standards

The Board voted in favour of:

• IAS 7 Statement of Cash Flows
• IAS 10 Events after the Reporting Date

Presentation of dividends

The Board agreed with the staff's recommendation that because dividends are distributions of equity to owners, they should not be shown on the face of the statement of recognised income and expense.

16 March 2006: Exposure Draft Issued on Phase A

On 16 March 2006, the IASB issued an Exposure Draft of proposed amendments to IAS 1 Presentation of Financial Statements. The Exposure Draft results from the first stage (Phase A) of the IASB's project on performance reporting and, if adopted, would bring IAS 1 largely into line with the equivalent US standard. The second stage of the project is being undertaken jointly with the US Financial Accounting Standards Board (FASB), and includes a reconsideration of the presentation and display of information in the financial statements. Under the proposals an entity would present all income and expenses separately from changes in its equity that arise from transactions with its owners.

Under the ED, an entity would have a choice of presenting income and expenses in a single statement or in two statements. An entity would also be required to include in its set of financial statements a statement showing its financial position (or balance sheet) at the beginning of the previous period. Comment deadline is 17 July 2006.

Click for Press Release (PDF 68k).

Discussion at the March 2006 IASB Meeting – Phase B

Project scope - Phase B

The Board affirmed and clarified (by a clear majority) the scope of their joint project with the FASB as follows:

• a. This project will address the organisation and presentation of financial information on the face of the financial statements; it will not address recognition or measurement guidance that is provided in other Statements/Standards.

• b. This project will address the necessity for totals and subtotals within the financial statements including the subtotal of net income/profit or loss. This project will assess whether to make changes to the mechanism of recycling as it is used today.

• c. This project will not include a comprehensive review of the notes to the financial statements. However, this project may result in amendments to existing disclosure requirements due to changes made to the face of the financial statements. In addition, this project may result in new disclosure requirements in areas where the project objective cannot be achieved on the face of the financial statements.

• d. This project will address all the financial statements that constitute a complete set of financial statements, not just the income statement/statement of recognised income and expense (statement of earnings and comprehensive income).

• e. This project will focus on a complete set of financial statements (most commonly annual financial statements); it will not address condensed financial information (most commonly interim financial information or reports). Reporting requirements for condensed financial information may be addressed, but that decision will be left open for now.

• f. The resulting standard will apply to all business entities (both public and non-public). However, the Boards will consider whether there should be different presentation provisions for financial institutions.

• g. The resulting standard will not apply to non-business entities such as not-for-profit organisations or defined benefit plans (therefore, it will not amend or replace FASB Statements 35 Accounting and Reporting by Defined Benefit Plans and 117 Financial Statements of Not-for-Profit Organizations).

• h. This project will not address:
  • i. Management discussion and analysis or management commentary
  • ii. Pro-forma measures (while pro-forma reporting, which is not part of IFRS/ GAAP, may diminish as the result of this project, reduction or elimination of pro-forma reporting is not an objective of this project)
  • iii. A comprehensive review of segment reporting requirements (FASB Statement No 131 Disclosures about Segments of an Enterprise and Related Information and IAS 14 Segment Reporting). However, this project may result in amendments to the segment reporting requirements due to changes made to the financial statements. (The IASB has issued ED 8 proposing amendments to IAS 14 as a separate short-term convergence project.)
  • iv. Financial ratios (except EPS and other per-share amounts)
  • v. Forecasts of information
  • vi. Non-financial ratios or other non-financial information
  • vii. Financial statements for specific industries (except for, as noted in (f) above, how the implications of decisions in this project may affect the financial statements of financial institutions).

Project objective

The Board agreed that the project's objective should be described as follows:

In this project, the Boards will address how the presentation of information in the individual financial statements (and in the financial statements as a whole) can be improved to help investors, creditors, and others fully understand an entity's financial position and changes in that position and use that information to assess the amounts, timing, and uncertainty of an entity's future cash flows.

In doing so, the Boards will address the classification and display of line items in the financial statements, including their aggregation into subtotals and totals. In addition, the Boards will address how to best present information in the financial statements so that those statements are complementary.

Project name

The Board agreed to change the working title of the project to 'Financial Statement Presentation for Business Entities'.

Working principles

The Board approved a set of 'Working Principles' designed to aid both it and the FASB in making specific decisions regarding how information should be displayed and presented in the financial statements. The following working principles are in no particular order (that is, they do not represent a hierarchy) and all have equal priority.

Principle 1

Financial statements should present information in a manner that portrays a cohesive financial picture of an entity and is comparative and consistent from one period to another.

Board members criticised the use of 'cohesive', which is not a word seen in IFRS materials. In addition, Board members expressed concern about how the staff was using 'comparable.' It was determined that, for the purposes of this project, comparable was with respect to the same entity through time; some Board members said that comparability among entities was also desirable.

Principle 2

Financial statements should present information in a manner that helps a user assess the liquidity of an entity's assets and liabilities (nearness to cash or time to maturity).

Principle 3

Financial statements should present information in a manner that separates an entity's value-creating activities from its capital activities.

This principle is likely to be redrafted to emphasise that the separation should be between transactions with owners in their capacity as owners; financing transactions not with owners; and other activities. Board members found the term 'value-creating activities' unhelpful.

Principle 4

Financial statements should present information in a manner that helps a user understand:

• a. The different methods used to measure assets and liabilities
• b. The relative precision of those measurements
• c. What caused a change in reported amounts of individual assets or liabilities (such as a transaction or a change in value or measurement method). [This was clarified as being the cost/amortised cost vs remeasurement issue.]

Principle 5

Information in the financial statements should be disaggregated and categorized into groups that respond similarly to changes in the same economic condition.

In deciding how to apply this Principle, the Boards will consider differentiation in display and presentation by nature or function; gross or net; continuing or discontinued operations; before or after income taxes; expected or known volatility; and the risks associated with the final settlement of the asset or liability.

Financial Statements

The Board agreed that the starting point for what constitutes 'a complete set of financial statements' should be as proposed in the March 2006 Exposure Draft of proposed amendments to IAS 1.

Purpose of each financial statement

The Board agreed not to define the purpose of individual financial statements.

Earnings per share

The Board agreed to defer consideration of per share amounts until after the initial document had been through the public comment process.

Conflicts with the IASB's March 2006 ED of proposed amendments to IAS 1

The Board agreed that decisions in this project should not be constrained by the amendments to IAS 1 proposed in the IASB's March 2006 ED. However, the Board agreed that it would have to be sensitive in this project to the progress of the IASB's work on the March 2006 ED, and the suggestions raised by constituents.

Discussion document

The Board agreed that the first product of the project should be a Discussion/ Preliminary Views Document. The current plan is to issue the discussion paper sometime in 1Q 2007. The staff acknowledged that this timetable was ambitious, but achievable.

The Board discussed how best to involve the Joint International Group in the run-up to issuing the discussion document. An open meeting in September was suggested. The staff will investigate this further.

Discussion at the July 2006 IASB Meeting – Phase B

The purpose of the July meeting on financial statement presentation was to discuss application of some, but not all, of the project's working principles. The goal was for the Board to reach agreement on the basic format for the financial statements (the sections and categories for each financial statement) that will be included in the initial discussion document. Issues regarding notation / labelling and recycling will be discussed at the September meeting.

The Board agreed in principle that there should be a distinction between business and financing. The Board is yet to discuss and finalise the exact terminology. The Board agreed with the following staff recommendations although some individual Board members expressed concerns about specific issues which the staff will work to resolve:

Summary of staff recommendations for how items would be presented in the financial statements

Following the table are defined terms and related application and implementation guidance.

Some Board members were concerned that the proposals appeared to provide preparers with a free choice of where in the financial statements certain items would be presented. Those members want minimum requirements to be introduced that will standardise presentation to a greater extent across preparers.

Other Board members indicated that they would like to see how derivatives are to be dealt with before subscribing to this approach.

Discussion at the September 2006 IASB Meeting – Phase B

Financing liabilities and treasury assets

The Board agreed that financing liabilities, treasury assets, and related activities shall be presented gross in the same section in the statements of financial position, comprehensive income, and cash flows.

There was much discussion about the approach being adopted, in particular what the impact of a 'through the eyes of management' approach meant in practice, in particular the extent to which management could include or exclude items from the definition of financial liabilities and treasury assets. Part of the problem was that the Board had not yet agreed the definition of these items. However, the basic approach was agreed.

The Board agreed that financing liabilities and treasury assets should be defined 'narrowly' for the purposes of presentation on the face of the financial statements.

The staff outlined that the IASB and the FASB had similar definitions of financial liabilities and treasury assets but used different methodologies to arrive at them. It would be helpful to constituents to have one approach! The IASB shifted its position in July 2006 and agreed to adopt the 'narrow' definition – one that attempts to define financing liabilities directly. The Standard would directly describe the amounts to be reported in the financing section, as opposed to giving a broad definition and describing allowable exclusions. Board members noted that this approach provides more flexibility.

Strategic investments

The Board noted that the Joint International Group on Financial Statement Presentation (JIG) had not supported a category of 'strategic investments'. The Board, also, does not like the idea. The Board agreed not to include in the Preliminary Views document the notion of a strategic investment. However, the Board agreed that the Invitation to Comment should ask a series of questions about whether 'certain financial assets' should be classified in the business activities section of the financial statements and whether those assets could be a category within that section.

Income taxes

The Board agreed that income taxes should be presented as a separate section (along with the business and financing sections) in the financial statements, thereby eliminating the need for intraperiod tax allocation and the presentation of discontinued operations and items of other comprehensive income on a net-of-tax basis.

In addition, the Board agreed that income taxes related to transactions with owners should not be recognised directly in equity. The Board noted that the income tax consequences did not represent a transaction with owners in their capacity as owners.

Discontinued operations

Definition of a 'discontinued operation'

The Board noted that IFRS 5 defines a discontinued operation, while the equivalent FASB standard does not. It was agreed that developing a common definition of discontinued operation should be part of the scope of this project.

Presentation

The Board agreed that agree that discontinued operations should continue to be presented separately in the financial statements and that information related to a discontinued operation should be displayed as a separate section in the financial statements.

Display

The Board agreed that:

• the assets and the liabilities of a discontinued operation should be presented separately and not be offset;
• the income statement effects be presented as one amount on the face of the income statement and further disaggregated either on the face of the statement or in the notes; and
• the cash flows from a discontinued operations be presented as a single amount in the statement of cash flows.

Disaggregation

Working principle

The Board agreed to revise the working principle as follows:

The staff noted that the revised working principle did not include the phrase "and present subtotals and totals where appropriate" because it is already included in the project objective. (Note that the issue of sub-totals is now not part of the working principle.)

Nature vs Function

The Board agreed that information should be presented on the statement of comprehensive income by function with supplemental information provided by nature about items important to understanding an entity's business.

Presentation on a gross or net basis

The Board agreed that assets and liabilities and income (revenues and gains) and expenses (expenses and losses) be shown on a gross basis except when:

• net presentation is required or permitted by a standard other than the financial statement presentation standard; or
• there is no incremental value in the additional information provided in a gross presentation.

Nature of guidance

The Board agreed to retain the language in IAS 1 paragraphs 83 and 84 in the financial statement presentation standard and to apply it to each of the financial statements. No 'bright line' guidance should be provided.

Working principles on comparability

The Board agreed to eliminate the working principles related to comparability as they are encompassed by the qualitative characteristics of financial reporting.

Other

Board members noted that the meeting of the JIG held on 15 September had been very good; well run and productive. They expressed their thanks to all involved – JIG members, FASB and IASB members, and staff.

Discussion at the October 2006 IASB Meeting – Phase B

The Board continued its discussions on the financial statement presentation project. The purpose of the October discussion was to get tentative views from the Board on three issues to be discussed at the joint meeting with the FASB next week:

• The financing section and investing category
• Presenting information about the short- and long-term nature of assets and liabilities
• Measurement, other comprehensive income (OCI) and recycling, and statement of comprehensive income

Financing section and investing category

Issue 1: Defining the financing section

The Board had previously agreed that the financing section in the statement of financial position should comprise equity, treasury assets, and financing liabilities.

The first issue the Board discussed was whether non-financial items should be excluded from the financing section of the financial statement. To increase consistency, all non-financial assets could be excluded from the financing section. This would still not prevent financial items from being excluded when they are not a part of financing activities. Board members noted some concerns but tentatively agreed with the proposal.

The second part of this issue was related to a proposed definition of the financing section and proposed application guidance to be included in the Standard. The Board seemed to agree with the proposed definition, under which the financing section should include only financial items that management views as part of the financing of the entities business activities. However, the Board stated concern about the list of proposed items to be excluded and included, and noted that it could not issue such a list with out a thorough discussion of the items included.

Issue 2: Defining the investing category in the business section

The Board discussed the following proposed definition of the investing category of the statement of financial position which was based on the Board's request from the September meeting.

"The investing category should include only financial assets and liabilities (as defined in the literature) not classified in the financing section that management views as incidental to the entity's main business activities (referred to as investing assets and liabilities). Items typically included in the investing category are

• a. Available-for-sale financial instruments
• b. Equity method investments
• c. Financial instruments held to hedge (a) or (b) above."

As for the financing category, an entity would be required to explain any items listed in the definition above that is not included in the investing category.

Board members asked for clarification as to why certain items like investment property would be excluded from the investing category. No decisions were made to this section.

Issue 3: Presentation of pension assets and liabilities

At the staff's request, the Board did not discuss this issue.

Presenting information about the short- and long-term nature of assets and liabilities

Issue 1: Short-term classification for assets and liabilities

The Board discussed whether assets and liabilities should be classified as short-term based on the operating cycle of the business or based on when the expected realization or settlement of the asset is within one year. It then discussed whether an entity should be required to present operating assets and liabilities in short- and long-term categories on the face of the income statement.

Board members were divided on whether classification of short-term assets and liabilities should depend on the operating cycle or a one year settlement/realisation criterion. They expressed agreement to splitting short- and long-term items on the face of the income statement if it provides useful information.

Issue 2: Information about liquidity

The Board had previously decided that information about the liquidity of an entity's assets and liabilities should be presented in the notes to the financial statement to help users assess the liquidity of an entity. At the October meeting the Board discussed the following three alternatives:

• a. Information about short and long-term assets and liabilities would be presented by line item in order of liquidity. (for example, short-term assets as inventory presented separately).
• b. Information about short- and long-term asset and liabilities would be presented by category. (for example, short-term assets as financing assets presented separately).
• c. Information about short- and long-term asset and liabilities would be presented by line item for all but the operating category (similar to the requirement in alternative 'a' except for operating assets and liabilities, which are disclosed in the aggregate).

The Board did not choose one of these alternatives. However, it concluded that the most important issue is to understand how much information is needed rather than to focus on whether this information is stated on the face of the income statement or disclosed in the notes.

The Board did not discuss the third issue in the paper regarding deferred taxes.

Measurement, OCI and recycling, the statement of comprehensive income

Issue 1: Information regarding measurement of assets and liabilities

The Board discussed and indicated agreement that the financial statement presentation standard should include the general guidance in IAS 1 that requires disclosure of measurement basis used in preparing the financial statements in the summary of significant accounting policies. It also agreed that, if items included within a certain line item in the statement of financial position are measured on more than one measurement basis, an entity should be required to disclose the measurement bases used and the amount included in that line item based on each measurement basis.

The Board then expressed agreement that disclosure of information about the significant uncertainty in the current measure of assets and liabilities and how the measured amount was selected, within the context of the particular measurement attribute used should be prescribed in individual standards when the Board deems it appropriate.

The Board also discussed whether the financial statements should provide information that would allow a user to distinguish between changes in assets and liabilities that are due to remeasurements and changes that are not. It also discussed how remeasurements should be defined. No indications were made on this issue but the Board asked the staff to explore this further.

Issue 2: OCI and the mechanism of recycling

The Board discussed whether other comprehensive income (OCI) should be a separate section in each of the financial statements or whether OCI items should be classified in the appropriate categories that are based on functional activities of an entity (that is not to add the OCI section to the working format). The Board members expressed split views on how to move forward on this.

Discussion at the December 2006 IASB Meeting - Phase A

The staff presented an analysis of comment letters received on the Exposure Draft of Proposed Amendments to IAS 1 Presentation of Financial Statements (A Revised Presentation) (ED IAS 1). The following decisions were made and the staff was directed to amend ED IAS 1 accordingly.

Titles of a complete set of financial statements

Paragraph 81 of ED IAS 1 states that:

"An entity shall present all components of income and expense recognised in a period: (a) in a single statement of recognised income and expense; or
(b) in two statements: a statement displaying components of profit or loss and a second statement beginning with profit or loss and displaying components of other recognised income and expense."

The Board confirmed to maintain the two-statement approach and the single-statement approach as alternatives. After having discussed several alternatives the Board decided that in case of the single statement approach the statement should be titled 'Statement of comprehensive income'.

In case of a two statement approach the statements should be titled 'Income Statement' and 'Statement of recognised income and expenses'. This is the same terminology used in the existing IAS 1. The Board pointed out that it intends to await the outcome of phase B of the project before changing the titles.

The Board decided to keep the names in ED IAS 1 proposed for 'statement of financial position' (previously balance sheet), 'statement of changes in equity' and 'statement of cash flows'. In response to concerns expressed in various comment letters the Board agreed to explicitly define the term "financial position" in the framework.

Further the Board agreed to the staff recommendation to keep the changes in nomenclature non-mandatory in ED IAS 1.

Statements of financial position at the beginning of the period

ED IAS 1 proposes that a complete set of financial statements should include a statement of financial position as at the beginning of the period. Therefore, an entity presenting comparative information should be required to present three statements of financial position in its financial statements.

The Board decided that the third statement of financial position should only be required when the statement of financial position as at the beginning of the period had been subject to reclassifications and/or restatements. Segregation of owner and non-owner changes in equity

The ED proposes that 'non-owner changes in equity' (components of recognised income and expense) be referred to as 'recognised income and expense' (bearing in mind that an entity is not required to use this term in its financial statements).

Some respondents noted an inconsistent use of the terms 'equity holder' and 'owners' within ED IAS 1. The Board agreed that the definition of these terms is outside the scope of this project but decided to clarify in the introductory paragraphs of ED IAS 1 that the statement of changes in equity should apply to transactions with equity holders acting in their capacity as equity holders and to refer to these equity holders as owners within ED IAS 1.

Other recognised income and expense

Reclassification adjustments

ED IAS 1 requires the disclosure of the reclassification adjustments relating to each component of other recognised income and expense.

The Board confirmed the current guidance in ED IAS 1 on reclassifications. To make it consistent with paragraph 93 and the wording in FAS 130, the Board decided to define reclassifications as follows: 'Reclassification adjustments are amounts reclassified to profit or loss in the current period that were recognised in other recognised income and expense in current or previous periods'.

Related tax effects

The Board confirmed the provisions in paragraphs 90 and 91 of ED IAS 1.

Presentation of per-share measures

Some respondents interpreted the current requirements of paragraph 73 of IAS 33 Earnings per Share to allow presentation of alternative per share measures on the face of the income statement.

The Board confirmed that ED IAS 1 does not propose changes to IAS 33. Therefore, earnings per share will be the only per-share measure presented on the face of the statement of recognised income and expense. If an entity presents any other per share measure, that information is required to be calculated in accordance with IAS 33 and presented in the notes. The Board indicated that an amendment of paragraph 73 of IAS 33 might be necessary to clarify this.

Definition of general purpose financial statements

Paragraph 7 of ED IAS 8 states:

"General purpose financial statements include those that are presented separately or within other public documents such as a regulatory filing or report to shareholders".

A large number of respondents alleged that the reference to 'regulatory filing' could be interpreted as defining all financial statements filed with any regulator to be general purpose financial statements. This may lead to controversy considering that a great number of registrants, public or not, report to various types of regulatory authorities (e.g. in Australia small private companies and subsidiaries of public companies with no external users of financial reports, will be required to prepare general purpose financial reports because they are required to place their financial statements as a public file).

The Board noted that this was not the intention and decided to clarify this by amending paragraph 7 of ED IAS 1.

Discussion at the December 2006 IASB Meeting – Phase B

Other comprehensive income

The staff identified alternative formats for presenting other comprehensive income (OCI) that could serve until the IASB and FASB can achieve their long-term goal of eliminating the separate presentation of some OCI items.

The staff developed the following alternatives for presenting OCI items on the statement of comprehensive income (the alternatives are illustrated in the observer notes):

• Alternative A Present OCI items within the functional section or category to which the events or transactions relate and recycle (if necessary) within the section or category.

• Alternative B Presentation is the same as Alternative A, except that each category or section that has an associated OCI item would have a subcategory to distinguish OCI items from non-OCI items.

• Alternative C Present OCI items in a separate section (that would be presented with equal prominence as the business, financing, income tax, and discontinued operations sections). OCI items that are recycled would be recycled among sections and categories. The OCI section would include operating, investing, and financing categories. The OCI section would have a subtotal like the other sections.

• Alternative D. Presentation is the same as Alternative C, except that OCI items would be presented on a net of tax basis. This presentation is the most consistent with the current presentation of OCI items and the sum of the business, financing, discontinued operations, and income taxes sections would equal net income, as currently presented.

The Board discussed the alternatives and was nearly equally divided between the positions 'A or B' on the one hand and 'C or D' on the other side. Those who supported 'A or B' noted that this presentation would be closer to the long-term goal of eliminating the separate presentation of OCI items.

A Board member presented an additional alternative with no label OCI but with income and expense items classified as long-term and short-term similarly to the current/non-current classification in the balance sheet (statement of financial position). This concept could be presented using the formats of Alternatives B or C.

The staff noted that a majority of the FASB agreed with Alternative B with minority votes for A and C.

No decisions were made.

The statement of cash flows

Proposed working principles

The staff recommended that the objectives of the statement of cash flows in FAS 95 Statement of Cash Flows be adopted in this project as working principles, modified in part, as follows. Information should be presented in the financial statements in a manner that will help investors, creditors, and others to assess:

• (a) an entity's ability to generate future cash inflows;
• (b) an entity's ability to meet its obligations, its ability to pay dividends, and its needs for external financing;
• (c) the differences between cash transactions and accrual accounting; and
• (d) the effects of non-cash activities during the period on an entity's financial position.

The Board agreed to these principles but said that it should be made clear that the objectives can only be achieved by financial statements as a whole not by cash flow statements alone.

Direct method versus indirect method

At the April 2004 joint Board meeting, IASB and FASB decided that the financial statement presentation project should address whether the statement of cash flows should be required or permitted to be prepared under the direct method or the indirect method.

The current guidance in FAS 95 formed the basis of the discussion. FAS 95 describes the direct method as a method which reports 'major classes of gross cash receipts and gross cash payments and their arithmetic sum' (paragraph 27) and the indirect method as a method which determines and reports 'net cash flow from operating activities indirectly by adjusting net income to reconcile it to net cash flow from operating activities' (paragraph 28).

Many Board members felt that the direct method provides more useful information. However, some raised the concern that the direct method might be too complex and that the cost might outweigh the benefits.

The Board decided that the direct method as outlined in an Agenda Paper (not provided to observers) should be applied.

Reconciliation from operating income to cash flows from operating income

Currently, FAS 95 requires a reconciliation of net income to cash flows from operating activities if the direct method is used. That reconciliation is not required by IAS 7 Cash Flow Statements.

The Board agreed that the information needed to reconcile (comprehensive) operating income to cash flows from operating activities should be required to be presented in the financial statements.

The staff was asked to explore whether similar information should be provided for the investing, financing and other categories.

Non-cash activities

The Board agreed that all relevant information about significant non-cash activities should be provided. The issue was not discussed in detail.

Application of the working format of cash flow statements to financial institutions

At the outset of the convergence project on financial statement presentation, the IASB and FASB agreed that issues related to financial statement presentation should be addressed first for non-financial institutions and second for financial institutions. While that is the approach that has been taken, the staff's underlying goal was to develop, if possible, principles for presentation that would apply to all entities.

The staff presented a paper based on meetings with the Financial Institutions Advisory Group (FIAG).

The Board agreed to the staff's recommendations on the following issues (without discussing them in detail):

• An eyes-of-management approach should be used to classify information in the financial statements. The Board noted that this is the same approach as for non-financial institutions.
• The criteria for classifying items in the financing, investing and operating section should similarly apply to financial institutions
• Cash and cash equivalents are required to be classified in a single category.

Discussion at the January 2007 IASB Meeting – Phase B

The FASB staff joined the meeting by video link for this session.

Definition of Discontinued Operations

The Board was asked which of the following criteria should be included in the definition of Discontinued Operations:

• Separate major line of business
• Operating Segment
• Continuing involvement
• Capital appreciation

The Board discussion concentrated on the first two criteria. At the beginning of the discussion it appeared that a majority of Board members supported a level 'one level below Operating Segments'. Those in favour of this noted that an Operating Segment criterion would exclude significant business line within a segment from being presented as Discontinued Operations.

The FASB staff in formed the Board that the FASB had agreed on the Operating Segment criterion. The FASB considered it to be sufficient to only show and restate Operating Segments since disclosures for all other components are to be provided in the notes.

One Board member pointed out that because of the restatement issue there should be no GAAP difference.

Finally Board members voted 8 to 6 in favour of the Operating Segments criterion. No final decision was made on the scope of disclosures for the other components classified as held for sale.

It appeared from the discussion that the last two criteria should not be considered. However, no vote was taken on this.

FASB staff informed the Board that the FASB intends to revise FAS 144 Accounting for the Impairment or Disposal of Long-Lived Assets. The Board acknowledged that it might be necessary to launch a similar project for IFRS 5. However, it was decided to await the outcome of the FASB project first.

Disaggregation on the Statement of Comprehensive Income

The staff presented the following alternatives:

Alternative A: Pure Management Approach

Under Alternative A, an entity would be required to present the following:

• Information based on the primary activities (functions) in which the entity engages
• For each of those functions, information about the significant related costs (by their nature) that would provide information useful in predicting future cash flows.

The standard would include examples of functional activities and related costs that an entity might present separately. Those examples would include:

a. Functional activities:

• 1. Sales of product
• 2. Sales of services
• 3. Cost of product sales
• 4. Cost of services sales
• 5. Marketing
• 6. General and administrative
• 7. Research and development

• 1. Salaries and wages
• 2. Pension and other benefits
• 3. Materials
• 4. Depreciation
• 5. Amortization
• 6. Rent
• 7. Energy
• 8. Lease
• 9. Maintenance
• 10. Technology
• 11. Royalty fees
• 12. Licensing fees.

Alternative B: Modified Management Approach

Alternative B would be the same as Alternative A except that the first seven costs listed in Alternative A under related costs by their nature would be required to be presented separately unless the cost is deemed to be insignificant. As with Alternative A, an entity also would be required to break out any other cost that is important in understanding its operating results that may not be or relate to a functional line item because it does not relate to what the entity does on a regular basis (not a primary activity). Examples would be a gain or loss on the disposal of an asset or impairment of goodwill.

Alternative C: Permit Nature Only (as exception to Modified Management Approach)

Alternative C would add an exception to Alternative B that would permit an entity to present information only based on the nature of expenses (materials, labour, depreciation, and so forth) if classifying costs (expenses) into functional activities provides information that is not relevant.

No formal decision was made. The majority of Board members supported Alternative A for disaggregation by function and were in favour of having Alternative C in certain situations (e.g. holding companies).

Hybrid Entity considerations

Some Board members noted that issues associated with applying the working format to the financial statements of hybrid entities are of high importance. Hybrid entities were considered to be the 'rule rather than the exception' (e.g. manufacturers providing significant finance services).

The Board decided to further explore this issue prior to the issuance of the initial discussion document and asked the staff to prepare a paper for discussion at the March meeting.

Statement of changes in equity and other equity-related issues

The Board discussed the following five issues.

1. Whether the statement of comprehensive income should be expanded to include all changes in net assets including investments by and distributions to owners

The Board decided not to expand the statement of comprehensive income to become a statement of changes in net assets. The statement of changes in equity should be viewed together with the statement of comprehensive income, thereby making the set of financial statements cohesive and complete.

2. What format the statement of changes in equity should take

The staff provided a schedule including details of the change in the beginning and ending balance of each of the following components of equity:

• Common Stock
• Warrants
• Retained Earnings
• Accumulated OCI

The Board agreed to the format but pointed out that within the caption Common Stock an entity should be allowed to show the par value and the additional paid-in capital separately.

3. Whether the working format should be modified such that the equity category would be presented as a separate section distinct from the financing section

The Board agreed to have a separate equity section.

An illustrative example is provided on page 11 of Agenda Paper 13D of the Observer notes available from the IASB website.

4. Whether the Board should be pursuing another statement that would provide information about how capital is allocated

The Board decided not to have this additional statement on grounds that the information can be extracted from the existing statements.

5. Whether Board members are interested in pursuing a schedule that would present equity items (and possibly financing liabilities) at fair value

The Board decided not to have this additional statement as outlined in the Observer Notes.

In this connection the Board discussed and approved a suggestion submitted by one Board member dealing with the presentation of equity components at fair value. However, no details were made available to observers.

Discussion at the February 2007 IASB Meeting – Phase B

The Board discussed a principle for presenting liquidity information that would apply to both financial institutions (FIs) and non-financial institutions (non-FIs).

Issue 1: The liquidity working principle

The staff asserted that the liquidity working principle should encompass both short-term and long-term liquidity and proposed the following revised wording of the liquidity working principle:

'Financial statements should present information in a manner that helps a user assess an entity's solvency (the ability to pay debt and other borrowings from external sources as they come due) by providing information about the liquidity of the entity's assets and liabilities (nearness to cash, the means to assessing solvency or time to conversion to cash).'

The Board directed the staff to further elaborate the interdependencies between liquidity and solvency for discussion at a future meeting.

Issue 2: Application of the liquidity working principle

The proposed concept requires an entity to provide the following information in the financial statements (further details are available in Observer Note 9, available on the IASB Website):

• Qualitative information regarding liquidity management activities (liquidity management policy and processes).
• Details of maturities of its long-term assets and liabilities with contractual maturities.
• Maturities of its short-term assets and liabilities as described below:

If an entity manages its needs for cash based on a horizon shorter than one year, the detailed maturities of assets and liabilities with contractual maturities should be provided for more than one time band.

If an entity does not manage its needs for cash based on a horizon shorter than one year, the maturity information may be provided either on the face of the statement of financial position or in the notes. However, if it presents the information on the statement of financial position, all of its assets and liabilities should be classified as either short- or long-term.

No decisions were made but the staff was asked to prepare a detailed comparison of the concept to existing guidance in IFRSs, particularly in IFRS 7.

Discussion at the March 2007 IASB Meeting – Phase B

Presentation of changes in assets and liabilities

The Board held a discussion that focused on what information should be presented in the financial statements. The issue of how that information should be presented was left to a subsequent meeting.

Clarification of working principles

The Cohesiveness Working Principle

The Board agreed that the Cohesiveness Working Principle should be applied at the line item level. However, several Board members noted that this Principle should not result in 'reconciling individual accounts', but to keep cohesiveness across statements. By agreeing this Principle, the Board was not advocating masses of information on the face of the financial statements; some of the information would be in the footnotes.

Disaggregation working principle

By a majority, the Board agreed that information related to changes in assets and liabilities should be disaggregated based on whether the information is assigned the same valuation multiple for the same reason. (I.e. Different types of income and expense will have a different multiple assigned to them by analysts related to persistence, estimation error, etc. This Working Principle implies that items of income and expense would be disaggregated on this basis.) The staff agreed that the explanation of this Working Principle needed a bit of work.

Reconciliation of statements of financial position [balance sheets]

Presenting a reconciliation of statements of financial position

The Board agreed that an entity should present a reconciliation of statements of financial position for each period for which financial statements are presented. This reconciliation would be in the footnotes. Board members noted that there are already many reconciliations required for balance sheet items. Some Board members wanted to ensure that any additional reconciliations were justified.

Cash transactions

The Board did not agree a staff recommendation that would have disaggregated cash transactions during the period into various components. Board members thought that the staff's approach would be burdensome on preparers and that there were surrogates, such as 'number of day's sales in accounts receivable', that were easier to prepare and just as useful.

The staff will return to this issue later.

Direct cash transactions and the classification of cash

The Board did not accept a staff recommendation that would require direct cash transactions (cash sales) to be accounted for as two transactions (an account receivable [an asset] followed by an immediate settlement for cash [a financing item]). The Board thought that the staff's approach was unnecessary. If the level of cash sales was important, the cash flow statement should show this.

Disaggregation of remeasurements

The Board agreed that only recurring fair value changes (as those arise as a result of applying FAS 157 Fair Value Measurements should be discerned from other remeasurements. This means that changes in fair values would not be aggregated with changes in carrying amount based on fair value-like measures.

Other comprehensive income items

The Board agreed that there was no need to display the remeasurement of items of other comprehensive income separately from remeasurements of other items. In other words, items displaying the same characteristics would be displayed in the same way, even if they were components of other comprehensive income.

Exemptions to remeasurements

The Board agreed that, for the purposes of the reconciliation, there should be no exceptions to what is presented in the remeasurement component.

Disaggregation of non-cash non-remeasurements that are recognised in income or expense for the current period.

The Board agreed that the initial recognition of an estimate (for example, the initial recognition of a non-financial liability) should be presented separately from other components within non-remeasurements that are recognised in income and expense for the year. The Board agreed that systematic allocation of costs (e.g. depreciation) and other timing differences between the period in which income is recognised and the period in which the cash flow occurs (for example, accrued expenses, deferred income), could be aggregated and need not be presented separately.

The staff will bring to a subsequent meeting examples to illustrate this issue. Some Board members were concerned that the staff were attempting to identify a distinction without a difference.

Non-cash changes in assets and liabilities that are not recognised in income or expense for the current period The Board agreed that changes in assets and liabilities that affect neither income nor expense nor accompany cash should be presented separately.

Statement of Comprehensive Income

A disaggregated statement of comprehensive income

The Board agreed that the reconciliation of statements of financial position [balance sheets] should include information that indicates how the changes in assets and liabilities relate to line items presented in the statement of comprehensive income and the statement of cash flows.

Although the Board agreed the staff recommendation, it was evident that not all Board members understood what the issue was attempting to communicate. The staff suggested that the suggested format of the statement would help to clarify what the staff is attempting to articulate.

Statement of Cash Flows

The Direct Method and the cohesiveness principle

A minority of the Board (six members) supported a mandatory requirement to present the cash flow statement using the direct method, that is, based on the actual cash receipts and payments, disaggregated in a manner that parallels the line items that are presented in the statement of comprehensive income as far as possible.

Reconciliation

As a result of the previous decision, it was evident that a majority of the Board thought that they should require a reconciliation between items in the statement of comprehensive income and the statement of cash flows.

The FASB staff present at the meeting notified the Board that the FASB had discussed the statement of cash flows on 21 March 2007 and had indicated a leaning of being unanimously in favour of mandating the direct method.

Other comprehensive income presentation

Presentation of other comprehensive income items in the statement of comprehensive income

The Board discussed various alternative presentations for the statement of comprehensive income (see Observer Note 9B). The staff was seeking guidance on which presentations it should include in the forthcoming Discussion Paper. The discussion centred on a presentation, designated as 'E-prime' (E1) and other formats in the Observer Note. It was not immediately obvious whether E1 was that reproduced in the Observer Note. E1 was distinguished from other possible presentations in that it presented items of comprehensive income within the business, investing and financing categories on the basis of whether the underlying assets and liabilities were short-term or long-term in nature. Thus, pension expense would be included within Business-operating, long-term; realised gains on available for sale financial instruments in Business-investing, short-term; and interest on long-term debt within Financing Expenses, long-term. The other innovation in this format was that income tax expense was also split between short- and long-term, something that violates a previously-agreed position that income tax expense should not be allocated.

After a lengthy debate, it was agreed that the Discussion Paper would include alternative statement presentations that included a category of 'other comprehensive income' and did not include the category; and examples that provided for the recycling of items of other comprehensive income and not.

Classification of other comprehensive income items in the working format

Classification of foreign currency translation adjustments

The Board agreed that foreign currency translation adjustments should be included in the statement of comprehensive income based on the nature of the underlying assets and liabilities (for example, in investing if the subsidiary is a 'treasury' activity; in business if it is a trading activity, etc). There was little enthusiasm for requiring a more detailed allocation of foreign currency amounts.

Classification of other comprehensive income items other than foreign currency adjustments

The Board agreed that there should be no additional classification guidance for items of other comprehensive income other than foreign currency adjustments.

Plan for achieving the Board's long-term goal

The Board had a brief discussion of this topic but did not make any decisions, thinking such decisions to be premature.

Initial Discussion Document [Discussion Paper]

The Board had a brief discussion about whether the discussion paper should include the Board's Preliminary Views. Although no definitive decision was taken, at least one Board member was fundamentally opposed to including Preliminary Views and would prefer the document to be silent in this respect.

Cash Equivalents

Whether the notion of 'cash equivalents' should be retained in the financial statements After a short debate, the Board voted (by majority) to eliminate the concept of cash equivalents. The statement of cash flows would present flows related to cash alone; items currently classified as cash equivalents would be classified in the same manner as other short-term investments.

Discussion at the May 2007 IASB Meeting – Phase B

The Board discussed issues to be discussed in the forthcoming joint IASB/FASB Discussion Paper Preliminary Views on Financial Statement Presentation.

Presentation of liquidity information

Revisions to the Working Principle

At previous meetings, the Board agreed that:

• entities that are not financial institutions should be required to classify the assets and liabilities in each of the categories on the statement of financial position into short- and long-term subcategories. An asset or liability would be classified as short-term if the shorter of (a) the contractual maturity or (b) the expected realisation or settlement of the asset or liability is within one year. Otherwise, the asset or liability would be classified as long-term; and
• financial institutions should not be required to present short- and long-term subcategories for each category on the statement of financial position. The Board asked the staff to develop a principle for presenting liquidity information that would apply to all entities.

The Board first discussed a revision to the Liquidity Working Principle. Board members noted that solvency and liquidity are related but not the same. Solvency refers to an entity's ability to meet its financial commitments as they come due. Solvency is both long- and short-term. The short-term bit is a function of liquidity; the long-term is a function of the entity's ability to withstand financial shocks and surprises.

After a lengthy debate, the Board agreed to amend its Liquidity Working Principle along the lines of (staff and Board members agreed to discuss detailed drafting outside the meeting):

Financial statements should present information in a manner that helps a user assess an entity's ability to meet its financial commitments as they come due and to invest in business opportunities.

Application of the Working Principle

(a) Quantitative disclosures

The Board confirmed their view that the Preliminary Views would suggest that:

• Entities that present a classified statement of financial position (balance sheet) would present short- and long-term subcategories for operating, investing, and financing activities. An asset or liability would be classified as short-term if the shorter of (a) the contractual maturity or (b) the expected realisation or settlement of the asset or liability is within one year.
• Entities that present their statement of financial position based on liquidity because it provides information that is reliable and more relevant should present a detailed maturity schedule for short-term contractual assets and liabilities.
• All entities should present a maturity schedule for long-term contractual assets and liabilities (much of this information is already disclosed, such as for leases, pensions, and long-term debt.)
• The Board thought that using the approach to determining the classified/unclassified presentation that is in IAS 1.51 currently was better than trying to define a 'financial institution'. The staff will present this suggestion to the FASB at a later date.

(b) Qualitative disclosures

After a short and curtailed debate, the Board decided that it would not include a discussion or preliminary view on qualitative disclosures about capital adequacy and financial flexibility in the Discussion Paper. Rather, it would leave the existing disclosures required by IAS 1 paragraphs 124A-C and IFRS 7.33 alone for the time being.

Classification in consolidated financial statements by entities with significantly different businesses

The Boards' proposed working format for the primary financial statements disaggregates financial information between value creating ('business') activities, and the funding of that value creation ('financing activities' and 'equity'). The Boards' preliminary view is that an entity should classify its assets and liabilities as business or financing based on how it manages its activities or functions. In January 2007, the Boards decided to include their preliminary view on how a consolidated reporting entity consisting of significantly different businesses should apply the classification guidance. 'Entities consisting of significantly different businesses' are those entities that classify assets and liabilities of the same nature (for example, receivables) in different places (that is, in operating and financing).

In particular, the Board discussed how a consolidated reporting entity that is comprised of significantly different businesses should:

• Apply the classification criteria to separate its value creating assets and liabilities from financing assets and liabilities.
• Present the financial information for those different businesses in its consolidated financial statements.

The Board discussed three alternatives that would enable an entity presenting consolidated financial statements to report the activities of significantly different businesses (for instance, manufacturing activities for motor vehicles or airplanes and financing/leasing activities). There was clearly some degree of confusion about what the three alternatives would report and how they differ. Part of the confusion was because the Board was using terminology from IFRS 8 Operating Segments but not in the manner in which IFRS 8 uses it; part was a lack of clarity over the objective of the alternatives.

The Board asked the staff to do further work, but did suggest that:

• The classification ('tagging' in XBRL) of assets and liabilities should be done at the segment level according to the nature (operating or financing) of those assets and liabilities in that segment. How the assets and liabilities are aggregated for consolidated financial statement purposes is a separate issue.
• The Discussion Paper should propose that information about assets and liabilities in consolidated financial statements reporting the activities of significantly different businesses additional to that required by IFRS 8 be required; and that such information be required for operating and financing activities.
• If different segments classify assets and liabilities in the same way, those segments could be aggregated in the balance sheet.
• An illustration of the staff proposals compared with what is required now might help the Boards understand the effect of the staff proposals.

Discussion at the June 2007 IASB Meeting – Phase B

The FASB staff joined the meeting by video link for this session.

Basket Transactions and Foreign Currency Translation

At their respective July 2006 Board meetings, the Boards agreed that the cohesiveness principle should be the governing principle in the financial statement presentation project. Under the cohesiveness principle, assets and liabilities are classified into a functional category (operating, investing, financing, and the like). The income and expense (including gains and losses) associated with those assets and liabilities are presented in the corresponding category in the statement of comprehensive income, and the cash flows associated with those assets and liabilities are presented in the corresponding category in the statement of cash flows.

However, it is not uncommon that a single transaction involves multiple assets (or a combination of assets and liabilities) that would be classified in more than one category under the proposed presentation format. These are referred to as 'basket transactions'.

The staff presented a memorandum discussing how basket transactions should be classified in the Statement of Cash Flows and in the Statement of Comprehensive Income.

Classification in the Statement of Cash Flows

Alternative A:

Require an entity to allocate cash flows related to all basket transactions to existing categories. This option was further split into:

• A-1 Allocate cash flows based on the relative carrying values of the assets and liabilities
• A-2 Allocate the cash flow to one category based on the function that is likely to be the predominant source of that cash flow
• A-3 Do not prescribe how to allocate cash flows to categories

Alternative B:

Require an entity to present cash flows related to all basket transactions in a new 'Acquisitions and Disposals' section.

Alternative C:

Require an entity to allocate cash flows related to certain basket transactions to existing categories and to present cash flows related to other basket transactions in a new 'Acquisitions and Disposals' section. Classification in the Statement of Comprehensive Income The memorandum discussed whether the income and expenses (including gains and losses) related to a basket transaction should be allocated to each category the assets or combination of assets and liabilities are classified in.

These issues were discussed at a FASB education session recently and a number of concerns were raised. The Board agreed with these concerns, which included:

• The grossing up of cash flows under Alternative A-1;
• An allocation based on relative fair values was not considered; and
• The allocation of cash flows was considered prior to the allocation of gains and losses rather than vice versa.

No decision was reached by the Board and it was agreed that the staff would rework the paper for future discussion based on the concerns raised at this meeting.

Presenting Information about the Cause of Change in Reported Amounts of Assets and Liabilities

The Board continued the discussion on applying the working principle that states: 'Financial statements should present information in a manner that helps a user understand what caused a change in reported amounts of individual assets and liabilities.'

Basis on which to disaggregate amounts recognised as income or expense

The disaggregation working principle states that line items should be disaggregated 'if that disaggregation enhances the usefulness of that information in predicting future cash flows'. The Boards' preliminary view in March was that amounts recognised as income or expense should be disaggregated based on the characteristics of persistence and measurement subjectivity. Persistence was defined as 'recurring and having predictive value'.

In their memo the staff concluded that it would be difficult to define and operate a disaggregation scheme that relies on the notion of 'measurement subjectivity'. Furthermore, it is nearly impossible to develop an operational definition of 'recurring'. The staff therefore recommended that disaggregation based on the predictive value of an amount recognised in income or expense would disaggregate information in a manner that enhances the usefulness of that information in predicting future cash flows.

The staff also proposed that both predictive and not predictive amounts recognised as income or expense be further disaggregated into (a) fair value adjustments and (b) all other changes, on the basis that disaggregation of amounts recognised as income or expense in this manner will help a user understand the cause of a change in reported amounts of assets and liabilities.

The Board discussed the issues and reached the following conclusions with regard to producing an initial discussion paper:

• The Board did not agree with disaggregating changes in assets and liabilities recognised as income and expense based on predictive value, as the concept of predictive value was not clear. In particular, the Board was unsure whether predictive value related to future cash flows or the future line item amount recognised (or both).
• The definition of 'fair value adjustments' needed to be clarified, such that it referred to all valuation adjustments.
• The staff should consider whether disaggregation based on (a) valuation adjustments and (b) other than valuation adjustments, would provide incremental information to the users given that, under the proposed presentation format, distinction between line items according to measurement basis is already required.
• If such a disaggregation scheme does provide incremental information, the Board believed that a 'through the eyes of management' accounting policy exclusion should be available. This would allow management the option of not disaggregating certain valuation adjustments that they considered integral to ordinary business activities (for example, inventory obsolescence, doubtful debt allowances), which could be retained in (b) other.

Methods of presenting information about changes in assets and liabilities

The board discussed the following three alternatives for presenting information about what caused a change in the reported amounts of assets and liabilities:

• Alternative A: Statement of Financial Position Reconciliation
• Alternative B: Statement of Comprehensive Income Matrix
• Alternative C: Reconciliation of the Statement of Cash Flows and Comprehensive Income

These formats were discussed in terms of three of the project's working principles related to this issue – that financial statements should present information in a manner that:

• Portrays a cohesive financial picture of an entity
• Helps a user understand what causes a change in reported amounts of individual assets and liabilities
• Helps a user assess the differences between cash transactions and accrual accounting.

Incorporating FCTA and Acquisitions and Disposals in a Statement of Financial Position Reconciliation

The board did not discuss this issue since the Statement of Financial Position Reconciliation (Alternative A above) was not the preferred method.

September 2007: Revised IAS 1 Is Issued

On 6 September 2007, the IASB issued a revised IAS 1 Presentation of Financial Statements. The main changes from the previous version are to require that an entity must:

• Present all non-owner changes in equity (that is, 'comprehensive income' – see box below) either in one statement of comprehensive income or in two statements (a separate income statement and a statement of comprehensive income). Components of comprehensive income may not be presented in the statement of changes in equity.
• Present a statement of financial position (balance sheet) as at the beginning of the earliest comparative period in a complete set of financial statements when the entity applies an accounting policy retrospectively or makes a retrospective restatement.
• Disclose income tax relating to each component of other comprehensive income.
• Disclose reclassification adjustments relating to components of other comprehensive income.

IAS 1 changes the titles of financial statements as they will be used in IFRSs:

• 'balance sheet' will become 'statement of financial position'
• 'income statement' will become 'statement of comprehensive income'
• 'cash flow statement' will become 'statement of cash flows').

The publication of IAS 1 Revised marks the completion of the first phase of the IASB's joint initiative with the US Financial Accounting Standards Board (FASB) to review and harmonise the presentation of financial statements. The second phase, which has already begun, is examining more fundamental questions about the presentation of information in financial statements and the IASB expects to publish a discussion paper on the subject within the next six months.

Discussion at the October 2007 IASB Meeting – Phase B

(The FASB staff joined the meeting by video link for this session.)

The Board continued its deliberations on various issues to be addressed in the initial discussion document of this project.

Classified statement of financial position

The Board reaffirmed by majority vote its tentative decision that an entity would not be required to present a classified statement of financial position when a presentation of assets and liabilities in order of liquidity provides information that is reliable and is more relevant. The Board noted that this decision will require judgement and that the initial discussion document should include examples to illustrate circumstances in which a statement of financial position presented in order of liquidity may be more relevant.

Capital management disclosures

The Board discussed the capital management disclosures currently required in paragraphs 134 to 136 of IAS 1 (revised 2007) Presentation of Financial Statements.

The staff pointed out that the term 'capital' may include operating items and suggest to change paragraph 135(a)(i) of IAS 1 to something like "A description of what is managed as capital (including as appropriate, operating, financing and equity items)". Some Board members stated that in current IFRSs, the term 'capital' relates to long-term financing and equity items and that the disclosures under paragraphs 134 to 136 of IAS 1 should focus on such items.

The Board decided not to amend the existing guidance in this respect.

Netting in the statement of cash flows

At the March 2007 meeting, the Board tentatively decided to eliminate the concept of cash equivalents. Accordingly, the statement of cash flows would present flows related to cash alone; items currently classified as cash equivalents would be classified in the same manner as other short-term investments.

At this meeting, the Board discussed whether net or gross amounts of cash receipts and payments related to items currently classified as cash equivalents should be presented on the statement of cash flows.

At previous meetings the IASB and the FASB had tentatively agreed a 'netting principle' stating that entities should prepare financial statements using a gross presentation except when (a) net presentation is required or permitted by the authoritative accounting literature or (b) there is no incremental value in the additional information provided in a gross presentation – that is – the net amount provides all of the information that is necessary.

The Board tentatively decided to eliminate the existing general netting guidance in paragraph 22 of IAS 7 Cash Flow Statements, as this would be covered by the general netting principle. The current specific netting guidance in paragraph 24 of IAS 7 should be retained to provide additional application guidance.

Based on these decisions, the guidance regarding netting in the statement of cash flows would be something like:

Cash receipts and payments should not be offset (presented net) in the statement of cash flows unless there is no incremental value in the additional information provided in a gross presentation – that is, there is no benefit in a user of the financial statements knowing the two amounts; the net amount provides all of the information that is necessary.

Net presentation of cash flows is permitted in the following circumstances for financial institutions:

• Cash receipts and payments for the acceptance and repayment of deposits with a fixed maturity date
• The placement of deposits with and withdrawal of deposits from other financial institutions
• Cash advances and loans made to customers and the repayment of those advances and loans.

Application of the cohesiveness principle

At previous meetings, the IASB and the FASB agreed that the cohesiveness principle should be the governing principle in the financial statement presentation project.

Under the cohesiveness principle, assets and liabilities are classified into a functional category (operating, investing, financing, and the like). The classification in the statement of financial position dictates the treatment in the other statements. Accordingly, the income and expense (including gains and losses) associated with those assets and liabilities are presented in the corresponding category in the statement of comprehensive income, and the cash flows associated with those assets and liabilities are presented in the corresponding category in the statement of cash flows.

Classification and presentation of dividends payable

The Board discussed whether the corresponding dividend payment should be classified in the financing or equity section of the statement of cash flows. Under the current working principles, a liability for dividends payable is likely to be classified in the financing category. The cohesiveness principle would require classify the dividend payment in the financing section.

However, because dividend payments normally relate to transactions with owners in their capacity as owners, a classification in the equity section of the statement of cash flows may be more appropriate.

The Board decided that dividends payable and the related changes should be classified in the financing section.

Classification and presentation of foreign currency translation adjustments (FCTAs)

FCTAs relating to consolidated subsidiaries and proportionately consolidated joint ventures

The Board discussed the following alternatives:

Alternative 1:

Allocate FCTAs to the categories in which assets and liabilities of the subsidiaries and joint ventures are classified in the statement of financial position.

Alternative 2:

Do not allocate FCTAs but classify them in:

• (a) the operating category within the business section
• (b) a new FCTAs section.

There seemed to be consensus that alternative 1 would not be practicable for all entities. One Board member suggested to give entities the choice to apply alternative 1.

The Board agreed to include alternative 2(b) as the preferred view in the initial discussion document. However, both alternatives should be explored and constituents should explicitly be asked for their views.

FCTAs relating to equity method investments

The Board considered the following alternatives:

Alternative 1:

Classify FCTAs in the category in which the equity method investment is classified in the statement of financial position.

Alternative 2:

Classify FCTAs in a new FCTAs section.

The discussion focused on the question whether proportionally consolidated joint ventures and equity method joint ventures should be treated differently (which would be the case under alternative 1).

Finally, by majority vote the Board decided in favour of alternative 1. Board members in favour noted that this alternative is in compliance with the governing cohesiveness principle and that exceptions to this principle should be kept to a minimum.

Basket transactions

For the purpose of this project, basket transactions are defined as single transactions that involve multiple assets (or a combination of assets and liabilities) that would be classified in more than one category under the proposed presentation format.

The Board discussed whether the effects of basket transactions (revenues, expenses, and gains and losses in the statement of comprehensive income, and cash flows in the statement of cash flows) should be allocated to multiple categories.

The discussion focused mainly on the presentation of basket transactions in the statement of cash flows. Some Board members raised the concern that such an allocation may be arbitrary and/or burdensome and asked the staff whether an allocation method has been developed. The staff responded that it was seeking the Board's general view on allocation before continuing to develop an allocation method.

The Board tentatively decided to include the allocation requirement in the initial discussion document and directed the staff to develop an allocation method. Some Board members in favour of allocation noted that their views are subject to the development of a practicable allocation method.

Discussion at the November 2007 IASB Meeting

(The FASB staff joined the meeting by video link for this session.)

The Board continued its deliberations on various issues to be addressed in the initial discussion document of this project.

Statement of cash flows

The Board discussed which presentation formats for the statement of cash flows should be presented in the initial discussion document.

The discussion mainly focussed on the question whether the direct or indirect method of presentation provides more useful information to users of financial statements. Two Board members pointed out that, in their view, the indirect method is superior to the direct method in relation to the projection of future cash flows and that it has broad acceptance in practice. Board members in favour of the direct method stressed that this method achieves a high degree of cohesiveness with the statement of comprehensive income. Other Board members noted that both methods have their merits.

Finally, the majority of Board members were of the view that the direct method should be the preferred method. To generate discussion with constituents on this issue it was decided to illustrate both the direct and indirect method in the initial discussion document and to also describe advantages and disadvantages of both methods. When using the direct method an entity should use the same line items within the operating category on both the statement of comprehensive income and the statement of cash flows. The Board decided to describe two approaches of the direct method in the initial discussion document:

• 'Direct-direct" or 'bottom-up' approach: Under this approach, cash receipts and payments are determined by aggregating the cash flows amount from the cash ledger.
• 'Indirect-direct' or 'top-down' approach: Under this approach, cash receipts and payments are determined by adjusting items in the statement of comprehensive income (that is, revenue, expense, gains and losses) for the change in the related items in the statement of financial position over the period.

The Board acknowledged that the direct-direct approach may be very costly to implement and, therefore, an entity should be permitted to use the indirect-direct method. In addition, the Board agreed to seek input regarding the following issues:

• Costs and benefits associated with preparing a direct method statement of cash flows.
• For entities for which a statement of cash flows may not be relevant (such as financial institutions) ask how the statement could be modified to increase its relevance, or what information might be more relevant to be provided in place of the statement of cash flows.
• Whether the indirect schedule should continue to be required when the statement of cash flows is presented under the direct method and a reconciliation of statement of cash flows to statement of comprehensive income is presented.

Reconciliation schedule

The Board reaffirmed its preference for the disclosure of a reconciliation of the statement of cash flows to the statement of comprehensive income (the 'reconciliation schedule'). Such a schedule would begin with the line items and amounts in the statement of cash flows (based on the direct method) and reconcile to the amounts in the statement of comprehensive income.

The Board discussed which reconciling items (columns) should be required in the reconciliation schedule. The staff proposed that at a minimum the reconciling items should be disaggregated into the following four columns:

• Cash flows not affecting income
• Accruals and systematic allocations
  This column includes contractual accruals (such as changes in payables and receivables), systematic allocations (such as depreciation expense), other accruals and other non-remeasurements.
• Recurring valuation changes
  This includes changes to fair value from fair value only.
• Remeasurements other than recurring valuation changes
  In the staff's view these remeasurements are considered to be more persistent and separating these from recurring fair value changes would improve information.

The proposed format combines attributes of the preliminary IASB and FASB views and was labelled 'the converged view'. It is illustrated on page 4 of the appendix of agenda paper 7A available on the IASB website.

A number of Board members pointed out that it may be difficult to allocate reconciling items to the four columns and that divergence in practice may arise; for example, should impairment of inventories be included in 'accruals and systematic allocations' or 'remeasurements other than recurring valuation changes'? One Board member raised the concern that a fixed schedule could result in 'number crunching' to ensure that the schedule works out rather than providing useful information.

The Board decided to describe and illustrate the converged view in the initial discussion document and to seek feedback on the reconciling items (columns) including the definitions of the columns. In deviation from the format illustrated in agenda paper 7A the Board decided not to require a separate presentation of unusual or infrequent items.

Totals and subtotals in the financial statements

The Board discussed various alternatives for presenting totals and subtotals in the statement of financial position, statement of comprehensive income, and the statement of cash flows.

Common totals and subtotals

The staff presented the revi