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IASB finalizes amendments to IAS 1 as part of its disclosure initiative

  • IASB document Image

Dec 18, 2014

The IASB has published Disclosure Initiative (Amendments to IAS 1). The amendments are intended to clarify IAS 1 to address perceived impediments to the exercise of judgment by preparers in presenting their financial reports. They are effective for annual periods beginning on or after January 1, 2016, with earlier application permitted.



The IASB added a disclosure initiative to its work program in 2013 to complement its efforts in  conceptual framework project. The initiative consists of a number of smaller projects involving the exploration of opportunities to improve the presentation and disclosure principles and requirements in existing standards. Among them was a narrow-scope project on IAS 1, Presentation of Financial Statements, to ensure that entities were able to use judgement when presenting their financial reports because the wording of some of the requirements in IAS 1 had in certain cases been interpreted to prevent the use of judgement. An exposure draft of proposed amendments was published in March 2014, with comments due by July 23, 2014.


Key provisions of the amendments

The amendments to IAS 1 do the following:

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


Changes to guidance proposed in exposure draft

ED/2014/1, Disclosure Initiative (Proposed amendments to IAS 1), stated that entities "shall not aggregate or disaggregate information in a manner that obscures useful information." Because disaggregation often means expanding totals and subtotals and thus providing added transparency, the IASB decided to rephrase the clarification to state that entities "shall not reduce the understandability of its financial statements by obscuring material information with immaterial information."

ED/2014/1 also proposed that the term "disclose" would be used to mean information in the notes and that the term "present" would be used otherwise. Because respondents to the ED noted that a change in terminology should be part of a comprehensive review of IAS 1 and would be outside the scope of a narrow-scope amendment, the IASB did not finalize the proposals regarding use of the terms "present" and "disclose."

Finally, the ED proposed that an entity would disclose the fact that it applied the amendments when it did so for the first time. However, the transition provisions in the standard state that an entity need not disclose the fact that it has applied these amendments (regardless of early application or application on the effective date) because the IASB considers the amendments to be clarifying (i.e., they do not directly affect an entity's accounting policies or accounting estimates).


Additional information

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