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EFRAG issues draft endorsement advice on amendments to IAS 1 under the Disclosure initiative

  • EFRAG (European Financial Reporting Advisory Group) (dk green) Image

03 Mar 2015

The European Financial Reporting Advisory Group (EFRAG) has issued for comment its draft endorsement advice for the use of the amendments to International Accounting Standard (IAS) 1 ‘Presentation of Financial statements’ in the European Union (EU).

In December 2014, the International Accounting Standards Board (IASB) published Disclosure Initiative (Amendments to IAS 1).  The amendments result from the IASB’s Disclosure Initiative which comprises several smaller projects to improve presentation and disclosure requirements in existing standards.  The amendments aim at clarifying IAS 1 to address perceived impediments to preparers exercising their judgement in presenting their financial reports. 

Disclosure Initiative (Amendments to IAS 1) makes the following changes:

  • Materiality. The amendments clarify that (1) information should not be obscured by aggregating or by providing immaterial information, (2) materiality considerations apply to the all parts of the financial statements, and (3) even when a standard requires a specific disclosure, materiality considerations do apply.
  • Statement of financial position and statement of profit or loss and other comprehensive income. The amendments (1) introduce a clarification that the list of line items to be presented in these statements can be disaggregated and aggregated as relevant and additional guidance on subtotals in these statements and (2) clarify that an entity's share of OCI of equity-accounted associates and joint ventures should be presented in aggregate as single line items based on whether or not it will subsequently be reclassified to profit or loss.
  • Notes. The amendments add additional examples of possible ways of ordering the notes to clarify that understandability and comparability should be considered when determining the order of the notes and to demonstrate that the notes need not be presented in the order so far listed in paragraph 114 of IAS 1. The IASB also removed guidance and examples with regard to the identification of significant accounting policies that were perceived as being potentially unhelpful.

EFRAG supports the adoption of the amendments to IAS 1 and recommends their endorsement.  EFRAG’s initial assessment is that the amendments to IAS 1 meet the technical requirements of the Regulation (EC) No 1606/2002 of the European Parliament and of the Council on the application of international accounting standards.      

EFRAG also considers that the overall benefits of the amendments are likely to outweigh the associated costs to implement them.

Comments are requested by 27 March 2015.  

EFRAG has also updated its endorsement status report to reflect the issuance of the draft endorsement advice.

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