IAS Financial Statements

Bibliography

Accounting Standard Updates by Jurisdiction. (n.d.). Retrieved July 24, 2008, from IAS PLus: http://www.iasplus.com/country/pakistan.htm

Board, A. S. (1992). FRS 3 Reporting Financial Performance. The Accounting Standards Board Limited.

Commission, E. (19th July,2002). Repot from the Commission to the Council & The Europeon Parliment- (EC) No 1606/2002. Brussels.

Deloitte - IAS 1 revised. (n.d.). Retrieved July 26, 2008, from IAS PLus: http://www.iasplus.com/iasplus/0709ias1revised.pdf

ICAEW. (n.d.). History & Overview. Retrieved July 26, 2008, from ICAEW: http://www.icaew.com/index.cfm/route/111357/icaew_ga/en/Home/About_us/Governance_and_structure/history_and_overview

PARLIAMENT, R. F. (19 July 2002). Regulation (EC) No 1606/2002 of 19 July 2002 on the application of international accounting standards.

PricewaterhouseCoopers. (October, 2003). Making the Change to International Financial.

Song, J. B. The Adoption of IFRS in the EU. National Center for Research on Europe.

U.A.E Government, U. (n.d.). Financial Services. Retrieved July 23, 2008, from Federal e-Government Portal: http://www.uae.gov.ae/Government/finance.htm

3: Narration & Comparison of the Standards

4.1 Presentation of Financial Statement

IAS

IAS 1(Presentation of Financial Statements) sets out the guidelines for presentation of financial statements. The objectivity is to allow transparency and comparability. The comparability scoped is widened by two aspects of the standard, firstly with the mandatory production of comparative statements outlining previous year's statements. Secondly, a set pattern of information disclosure which enables the users to compare across different entities using IAS. Furthermore it sets out the overall framework and responsibilities for the presentation of financial statements; it provides guidelines for their structure and content of the financial statements.

IAS 1 was issued in August 1997, and superseded the IAS 1 issued in 1975 (Disclosure of Accounting Policies), IAS 5 (Information to Be Disclosed in Financial Statements, 1976), and IAS 13 (Presentation of Current Assets and Current Liabilities, 1979). (Deloitte - IAS 1 revised)

On 6 September 2007, the International Accounting Standards Board issued a revised IAS 1. The revisions to the Standard are minor and consist of non-substantive wording changes for consistency within the Standard and with other Standards. (Deloitte - IAS 1 revised)

The revised Standard is effective for annual periods beginning on or after 1 January 2009, with early application permitted.

The standard states that the financial statements should provide the user with information about the financial position, financial performance, and cash flows of an entity, allowing him to formulate economic decisions, therefore the financial statements should provide information on entity's: [IAS 1.7]

Assets.

Liabilities.

Equity.

Income and expenses, including gains and losses.

Other changes in equity.

Cash flows.

With respect to compliance with IFRS, the standard points out that an entity whose financial statements comply with IFRSs should make an explicit statement of such compliance in the notes. [IAS 1.14]

The other salient guidelines which the standard stresses on include the following:

(ii) Going Concern

The standard presumes that the entity will continue its operation in the next year and where the management have concerns otherwise, they should disclose such concerns in the notes [IAS 1.23]

(iii) Consistency of Presentation

The presentation and classification of items in the financial statements shall be retained from one period to the next unless a change is justified either by a change in circumstances or a requirement of a new IFRS. [IAS 1.27]

(iv) Materiality and Aggregation

Each material class of similar items must be presented separately in the financial statements. Dissimilar items may be aggregated only if the are individually immaterial. [IAS 1.29]

(v) Offsetting> Assets and liabilities, and income and expenses, may not be offset unless required or permitted by a Standard or an Interpretation. [IAS 1.32]

UK GAAP

No independent standard exists in UK GAAP which specifically outlines the presentation of financial statements. FRS 3 (Reporting Financial Performance) is seen as equivalent to IAS 1, but unlike IAS 1, it's not a standalone standard addressing a specific concern, FRS 3 also incorporates Segment Reporting (IAS 14), Earning per Share (IAS 33) and Discontinued Operations (IAS 35, now replaced by IFRS 5).

The scope of FRS 3 is to identify to the user a range of important components of performance, to aid the user in understanding the performance achieved by an entity in a period and help them form a basis for their appraisal of future cash flow and benefits. (Accounting Standards Board, 1992).

However, the standard does include the guideline of presentation of comparative statement & reporting on historic cost, both which are also present in IAS 1.

4.2 Inventories (stock)

IAS 2(Inventories) prescribes the accounting treatment for inventories. It provides guidance for determining the cost of inventories and for subsequently recognising an expense, including any write-down to net realisable value. It also provides guidance on the cost formulas that are used to assign costs to inventories.

The standard classifies Inventories as non assets held for sale (finished goods), assets in the production process for sale in the ordinary course of business (work in process), and raw materials and supplies that are consumed in [IAS 2.6].

IAS 2 clearly identifies items which do not fall under its scope and are covered by other IAS: [IAS 2.2]

work in progress arising as a result of construction contracts (IAS 11, Construction Contracts

financial instruments (IAS 39, Financial Instruments)

assets (biological) related to agricultural activity (IAS 41, Agriculture).

Also, while the following are within the scope of the standard, IAS 2 does not apply to the measurement of inventories held by: [IAS 2.3]

producers of agricultural and forest products, agricultural produce after harvest, and minerals and mineral products, to the extent that they are measured at net realisable value (above or below cost) in accordance with well-established practices in those industries. When such inventories are measured at net realisable value, changes in that value are recognised in profit or loss in the period of the change.

commodity brokers and dealers who measure their inventories at fair value less costs to sell. When such inventories are measured at fair value less costs to sell, changes in fair value less costs to sell are recognised in profit or loss in the period of the change.

IAS 2 required that inventories are stated at the lower of cost and net realisable value [IAS 2.9]. The inventories are

We provide a professional essay writing service that thousands of our customers use as an effective way of improving their grades, improving their research and saving them lots of time.