International Financial Reporting Standards
Review of the Conceptual Framework
Presentation and disclosure
Kristy Robinson Amy Bannister
Technical Principal
The views expressed in this presentation are those of the presenter,
not necessarily those of the IASB or IFRS Foundation.
© 2013 IFRS Foundation. 30 Cannon Street | London EC4M 6XH | UK. www.ifrs.org
Li Li Lian
Technical Associate Technical Manager
Before we start…
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• A recording of the webcast will be available after the
presentation at http://go.ifrs.org/Conceptual-Framework
• The views expressed are those of the presenters, not
necessarily those of the IASB or IFRS Foundation
© IFRS Foundation. 30 Cannon Street | London EC4M 6XH | UK. www.ifrs.org
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Project overview
Project objectives
• Not a fundamental re-think
• Focus on weaknesses that have given problems in practice
• Filling in gaps, and updating and improving existing guidance
Discussion Paper objectives
• Preliminary views
• Starting point for further discussion and consultation
• Seeking your views by 14 January 2014
Project consequences
• New Conceptual Framework will not override existing IFRSs
© IFRS Foundation. 30 Cannon Street | London EC4M 6XH | UK. www.ifrs.org
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Overview
Objective of this webinar
• Describe and explain the concepts in the Discussion Paper on
presentation and disclosure
What we will cover
•
•
•
•
What ‘presentation’ and ‘disclosure’ mean
The primary financial statements
The notes to the financial statements
Form of disclosure and presentation requirements
Questions
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What do ‘disclosure’ and ‘presentation’ mean?
Disclosure
Presentation
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“the process of providing useful
financial information about the
reporting entity to users”
“the disclosure of financial
information on the face of an entity’s
primary financial statements”
© IFRS Foundation. 30 Cannon Street | London EC4M 6XH | UK. www.ifrs.org
Primary financial statements
The Discussion Paper identifies the
primary financial statements as:
Statement of financial position
Statement(s) of profit or loss and OCI
Statement of changes in equity
Statement of cash flows
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No primary financial
statement is more
important than the
other primary
statements.
They should be
looked at together.
Objective of the primary financial statements
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“to provide summarised information about recognised assets, liabilities,
equity, income, expenses, changes in equity and cash flows that has been
classified and aggregated in a manner that is useful to users of financial
statements in making decisions about providing resources to the entity”
Disclosure
• recognised economic resources and claims
• changes to those resources and claims
• how efficiently and effectively the entity’s management and governing
board have discharged their responsibilities to use the entity’s
resources
© IFRS Foundation. 30 Cannon Street | London EC4M 6XH | UK. www.ifrs.org
Classification and aggregation
Classification
• The sorting of
items based on
shared qualities
Aggregation
• The adding
together of
individual items
within those
classifications
© IFRS Foundation. 30 Cannon Street | London EC4M 6XH | UK. www.ifrs.org
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Line items
• Present useful
summarised
information
Determined
by entity,
but IASB
may decide
to require a
particular
line item to
be
presented
Offsetting
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• Offsetting will generally not provide the most useful information
because it combines dissimilar items, eg:
– assets & liabilities
– income & expenses
– cash receipt & cash payments
Disclosure
• The IASB may choose to require offsetting when:
– provides a faithful representation of items
– necessary on cost-benefit grounds
© IFRS Foundation. 30 Cannon Street | London EC4M 6XH | UK. www.ifrs.org
The notes to the financial statements
Objective
• To supplement the primary financial statements by
providing additional useful information about:
• the assets, liabilities, equity, income, expenses,
changes in equity and cash flows of the entity; and
• how efficiently and effectively the entity’s
management and governing board have discharged
their responsibilities to use the entity’s resources
Disclosure
Scope
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• Types of information
• Forward-looking information
© IFRS Foundation. 30 Cannon Street | London EC4M 6XH | UK. www.ifrs.org
Scope of the notes to the financial statements
Type of information (scope)
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Examples
•
•
Information about subsidiaries, associates, parent, etc.
Business model
Amounts recognised in the
primary financial statements
•
•
Disaggregation of line items in primary financials
Relationship between line items
Unrecognised assets or liabilities
•
Description of unrecognised assets or liabilities and
why they have not been recognised
Risks
•
•
Types of financial risk
How the entity has managed those risks
Methods, assumptions and
judgements
•
•
Accounting policies
Alternative measurements
Reporting entity
Disclosure
© IFRS Foundation. 30 Cannon Street | London EC4M 6XH | UK. www.ifrs.org
Materiality
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• Existing Conceptual Framework has a materiality concept
• The IASB’s preliminary view is that that concept of materiality
is clearly described in the existing Conceptual Framework
– not adding to or amending that description
• Another project on the IASB’s agenda looking at how the
concept of materiality is applied
Form of disclosure and presentation requirements
Disclosure objectives
• Each Standard should have a clear disclosure objective
• Enables entities to determine whether the specified information is material for that entity
Electronic format
• When developing requirements IASB may need to consider the impact of technology, eg:
• Flexibility in order and level of aggregation
• Consistent use of terminology, total and subtotals
Communication principles
• Disclosure as a form of communication
• See next slide
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Communication principles
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• Seek to promote the disclosure of entity-specific useful information
• Result in disclosures that are clear, balanced and understandable
• Enable an entity to organise disclosures to highlight important
information
• Linked to understand the relationship in the financial statements
• Not result in duplication of the same information
• Seek to optimise comparability without compromising the
usefulness
Disclosure Initiative
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• Disclosure project in parallel with Conceptual Framework
project. Projects inform each other – some overlap
Materiality
Conceptual
Framework
Objective of notes
to FS
Communication
principles
Form of disclosure
requirements
Disclosure
Initiative
Questions
© IFRS Foundation. 30 Cannon Street | London EC4M 6XH | UK. www.ifrs.org
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More information
• Discussion Paper
http://go.ifrs.org/DP-Conceptual-Framework-July-2013
– Comments to be received by 14 January 2014
• Snapshot
http://go.ifrs.org/Snapshot-DP-Conceptual-Framework-2013
• Existing Conceptual Framework
http://eifrs.ifrs.org/eifrs/bnstandards/en/2013/conceptualframework.pdf
• Conceptual Framework website
http://go.ifrs.org/Conceptual-Framework
© IFRS Foundation. 30 Cannon Street | London EC4M 6XH | UK. www.ifrs.org
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Other webcasts
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Date
Topic
Tuesday 3 September 2013
Definitions of assets and liabilities and recognition criteria
Friday 13 September 2013
Profit or loss and other comprehensive income (OCI)
Friday 27 September 2013
Definition of equity and distinction between liability and
equity elements
Measurement
Wednesday 2 October 2013
Thursday 10 October 2013
Tuesday 22 October 2013
Monday 25 November 2013
© IFRS Foundation. 30 Cannon Street | London EC4M 6XH | UK. www.ifrs.org
Guidance on liability definition—obligations conditional on
entity’s future actions
Objective and Qualitative Characteristics
Presentation and disclosure