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Consultation
Forum On Proposed Changes To IAS 1
The ICAJ,
through its Accounting Standards, hosted
another in a series of consultation fora
on Wednesday, July 5 at the Hilton
Kingston Hotel to facilitate discussions
with practitioners and prepares and users
of financial statements from various
industries and sectors.
The
objective of the forum was to review and
discuss an Exposure Draft issued by the
International Accounting Standards Board (IASB)
on proposed amendments to IAS 1 -
Presentation of Financial Statements.
The
Exposure Draft to amend IAS 1 is aimed at
enhancing the usefulness of information
presented in the income statement and
includes a new model for reporting income
and expenses. The Exposure Draft results
from the first stage of the IASB's project
on performance reporting and, if
confirmed, would bring IAS 1 largely into
line with the equivalent U.S. standard,
FAS 130. The second stage is being
undertaken jointly with the Financial
Accounting Standards Board and includes a
reconsideration of the presentation and
display of information in the financial
statements. Under the proposed exposure
draft, an entity would present all income
and expenses separately from changes in
its equity that arise from transactions
with its owners. Entities would have a
choice of presenting income and expenses
in a single statement or in two
statements. An entity also would 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.
In
developing the Exposure Draft, the IASB
has proposed amendments that affect the
presentation of owner changes in equity
and the presentation of recognised income
and expenses. It does not propose to
change the recognition, measurement or
disclosure of specific transaction and
other events required by other Standards
and Interpretations. Sections of IAS 1
have also been reordered to make the
standard easier to read.
The
Exposure Draft is available for comment
until July 17, 2006. The comments, and
concerns raised during the forum will form
part of the Institute's submission to the
IASB for consideration as it prepares to
finalise amendments to the presentation of
Financial Statements. Some of the key
proposals considered are
- Change
in the titles of the financial
statements as follows:
(a) statement of financial position
(previously 'balance sheet');
(b) statement of recognised income and
expense;
(c) statement of changes in equity;
and
(d) statement of cash flows
(previously 'cash flow statement').
The Board, however, does not propose
to make the changes of nomenclature
mandatory.
- A
requirement to present a statement of
financial position as at the beginning
of the earliest period presented in
the financial statements. Therefore,
in addition to notes, an entity would
be required to present three
statements of financial position, and
two of each of the other statements
that form part of a complete set of
financial statements.
- A
requirement for entities to present
all changes in equity arising from
transactions with owners in their
capacity as owners (that is, 'owner
changes in equity') separately from
other changes in equity (that is,
'non-owner changes in equity' or 'recognised
income and expense'). Non-owner
changes in equity would be presented
in either (a) a single statement of
recognised income and expense, or (b)
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.
- A
requirement for disclosure of
reclassification adjustments relating
to each component of other recognised
income and expense and also for the
disclosure of income tax relating to
each component of other recognised
income and expense
- Earnings
per share to be the only per-share
measure presented on the face of the
statement of recognised income and
expense.
The ICAJ
will continue to host similar consultation
fora in the future to facilitate dialogue
with various stakeholders on issues
relating to the ongoing improvements being
undertaken by the IASB with regard to
international accounting standards.
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