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