Financial statement presentation Joint project of the IASB ...

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Financial statement presentation Joint project of the IASB ...

  1. 1. Financial statement presentation <ul><li>Joint project of the IASB and FASB </li></ul>© 2008 IASC Foundation. 30 Cannon Street | London EC4M 6XH | UK. www.iasb.org September 2008 Kim Petrone - FASB Senior Project Manager Denise Gomez - IASB Project Manager
  2. 2. Why a project on presentation? <ul><li>Looking for a common approach (IFRS-USGAAP) </li></ul><ul><ul><li>convergence </li></ul></ul><ul><li>Clarify relationship between the financial statements </li></ul><ul><li>Items with different characteristics lumped together ( dissimilar items aggregated?) </li></ul>© 2008 IASC Foundation. 30 Cannon Street | London EC4M 6XH | UK. www.iasb.org
  3. 3. What are we doing about it? <ul><li>An IASB-FASB joint project </li></ul><ul><li>Not a comprehensive review on presentation </li></ul><ul><ul><li>Evolution, not a revolution </li></ul></ul><ul><li>Discussion paper with initial ideas for tailoring financial statements </li></ul><ul><li>Aim for completion by mid 2011 </li></ul>© 2008 IASC Foundation. 30 Cannon Street | London EC4M 6XH | UK. www.iasb.org
  4. 4. Where are we in the due process? © 2008 IASC Foundation. 30 Cannon Street | London EC4M 6XH | UK. www.iasb.org Q3 2008 2011 Discussion paper: FSP Exposure Draft Final standard Public consultation Public consultation Additional input from : Working group, analysts, preparers, local standard setters, regulators and other groups and field tests. 2010
  5. 5. Project objectives and benefits <ul><li>Establish a standard that will guide the organization and presentation of information in the financial statements </li></ul><ul><li>Provide an overall structure for financial statements that will: </li></ul><ul><ul><li>allow enough flexibility to communicate unique aspects of a business </li></ul></ul><ul><ul><ul><li>for preparers to better portray their business </li></ul></ul></ul><ul><ul><ul><li>for users to understand and “get the message” </li></ul></ul></ul>© 2008 IASC Foundation. 30 Cannon Street | London EC4M 6XH | UK. www.iasb.org
  6. 6. Project scope <ul><li>All business entities </li></ul><ul><li>All financial statements </li></ul><ul><li>Form, content, classification and display </li></ul><ul><li>Three phases to project: </li></ul><ul><ul><li>Complete set of financial statements </li></ul></ul><ul><ul><li>Fundamental presentation issues </li></ul></ul><ul><ul><li>Interim reporting </li></ul></ul>© 2008 IASC Foundation. 30 Cannon Street | London EC4M 6XH | UK. www.iasb.org
  7. 7. Project scope (continued) <ul><li>The project is not reconsidering : </li></ul><ul><li>Segment reporting </li></ul><ul><li>Earnings per share </li></ul><ul><li>Management commentary or MD&A </li></ul><ul><li>Recognition or measurement requirements provided in other standards </li></ul><ul><ul><li>analysis of OCI items </li></ul></ul>© 2008 IASC Foundation. 30 Cannon Street | London EC4M 6XH | UK. www.iasb.org
  8. 8. Main principles <ul><li>Financial statements should : </li></ul><ul><li>Portray a cohesive financial picture </li></ul><ul><li>Disaggregate information: </li></ul><ul><ul><li>into sections and categories </li></ul></ul><ul><ul><li>separate financing from business activities and segregate discontinued operations </li></ul></ul><ul><li>Present information about liquidity and financial flexibility </li></ul>© 2008 IASC Foundation. 30 Cannon Street | London EC4M 6XH | UK. www.iasb.org
  9. 9. Financial statement presentation © 2008 IASC Foundation. 30 Cannon Street | London EC4M 6XH | UK. www.iasb.org Statement of financial position Statement of comprehensive income Statement of cash flows <ul><li>Business </li></ul><ul><li>Operating assets and liabilities </li></ul><ul><li>Investing assets and liabilities </li></ul><ul><li>Business </li></ul><ul><li>Operating income </li></ul><ul><li>Investing income </li></ul><ul><li>Business </li></ul><ul><li>Operating cash flows </li></ul><ul><li>Investing flows </li></ul><ul><li>Financing </li></ul><ul><li>Financing assets </li></ul><ul><li>Financing liabilities </li></ul><ul><li>Financing </li></ul><ul><li>Financing income </li></ul><ul><li>Financing expenses </li></ul><ul><li>Financing </li></ul><ul><li>Financing assets </li></ul><ul><li>Financing liabilities </li></ul>Income taxes Income taxes Paid cash for income taxes Profit or loss Discontinued operations Discontinued operations Discontinued operations Other comprehensive income Equity Equity cash flows
  10. 10. Classification guidance <ul><li>Classification of A&L drives classification of changes in those items in: </li></ul><ul><ul><li>Statement of comprehensive income </li></ul></ul><ul><ul><li>Statement of cash flows </li></ul></ul><ul><li>Classification based on management’s approach of its business & financing activities </li></ul><ul><li>Each entity decides the order of sections and categories – same order for each statement </li></ul>© 2008 IASC Foundation. 30 Cannon Street | London EC4M 6XH | UK. www.iasb.org
  11. 11. Statement of financial position <ul><li>Classification of assets and liabilities in short-term and long-term subcategories unless a presentation based on liquidity provides more relevant information </li></ul><ul><ul><li>Not a current requirement in US GAAP </li></ul></ul><ul><ul><li>IAS 1 requires current / non-current distinction </li></ul></ul>© 2008 IASC Foundation. 30 Cannon Street | London EC4M 6XH | UK. www.iasb.org
  12. 12. Comprehensive income <ul><li>Single statement of comprehensive income </li></ul><ul><li>Disaggregation by function and further by nature of relevant items </li></ul><ul><li>Separate classification of OCI items with recycling </li></ul><ul><li>Profit or loss – relevant subtotal </li></ul><ul><li>Taxes should be allocated to: </li></ul><ul><ul><li>continuing operations </li></ul></ul><ul><ul><li>discontinued operations </li></ul></ul><ul><ul><li>OCI items. </li></ul></ul>© 2008 IASC Foundation. 30 Cannon Street | London EC4M 6XH | UK. www.iasb.org
  13. 13. Statement of cash flows <ul><li>Notion of cash equivalents would not be retained </li></ul><ul><li>Preference for direct method of reporting cash flows </li></ul><ul><ul><li>Cash payments and cash receipts for operating category </li></ul></ul><ul><ul><ul><li>Instead of reconciling profit or loss to operating cash flows (indirect method) </li></ul></ul></ul><ul><ul><li>Same for investing and financing cash flows </li></ul></ul>© 2008 IASC Foundation. 30 Cannon Street | London EC4M 6XH | UK. www.iasb.org
  14. 14. Reconciling the statements <ul><li>Considered: Full reconciliation of opening and closing balance sheet </li></ul><ul><ul><li>Show links with cash flows and comprehensive income </li></ul></ul><ul><ul><li>Can be very complex </li></ul></ul><ul><li>Proposed : More limited reconciliation of comprehensive income and cash flow showing disaggregation into: </li></ul><ul><ul><li>Cash flows, accruals and systematic allocations, and recurring/non recurring remeasurements (eg fair value changes) </li></ul></ul>© 2008 IASC Foundation. 30 Cannon Street | London EC4M 6XH | UK. www.iasb.org
  15. 15. Giving your feedback <ul><li>Comment on the DP </li></ul><ul><li>Do you agree that financial statements should be cohesive? </li></ul><ul><li>Do you agree with the proposed new structure? </li></ul><ul><li>Should a direct method be used to determine cash flows? </li></ul><ul><li>Does the reconciliation schedule provide useful information? </li></ul>© 2008 IASC Foundation. 30 Cannon Street | London EC4M 6XH | UK. www.iasb.org
  16. 16. Next steps <ul><li>Discussion paper / Preliminary views document expected Sept 2008 </li></ul><ul><li>Field test planned for 2nd half 2008 </li></ul>© 2008 IASC Foundation. 30 Cannon Street | London EC4M 6XH | UK. www.iasb.org
  17. 17. Contact information <ul><li>Kim Petrone - FASB Senior Project Manager [email_address] </li></ul><ul><li>Denise Gomez - IASB Project Manager [email_address] </li></ul><ul><li>For more information: www.fasb.org or www.iasb.org </li></ul>© 2008 IASC Foundation. 30 Cannon Street | London EC4M 6XH | UK. www.iasb.org
  18. 18. Questions or comments? © 2008 IASC Foundation. 30 Cannon Street | London EC4M 6XH | UK. www.iasb.org Expressions of individual views by members of the IASB and its staff are encouraged. The views expressed in this presentation are those of the presenter. Official positions of the IASB on accounting matters are determined only after extensive due process and deliberation.

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