Financial Statement Presentation
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.
Balance sheet | Statement ofcomprehensive income | Statement ofcash flows |
---|---|---|
Business
| Business income
| Business cash flows
|
Financing
| Financing expense | Financing cash flows
|
Financing Section
An entity may choose to exclude items from financing if one or more of the following conditions are met:
Notes to the financial statements should include:
Business Section Treasury Category
An entity may choose to exclude from the treasury category financial assets that are classified as operating working capital assets. Bank overdrafts should be excluded from cash and cash equivalents and be treated as financing liabilities. Cash and cash equivalents should be presented as a separate line item (or as a subtotal if 'cash' and 'cash equivalents' are presented separately) in the treasury category. Operating Category
Notes to the financial statements should include:
|
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.