Section 3 - Financial Statement Presentation
Scope of this Section
This section explains the fair presentation of financial statements, what compliance with the IFRS
for SMEs requires and what a complete set of financial statements is.
A. Fair Presentation
Financial statements shall present fairly the financial position, financial performance and cash
flows of an entity. Fair presentation requires the faithful representation of the effects of
transactions, other events and conditions in accordance with the definitions and recognition criteria
for assets, liabilities, income and expenses.
B. Compliance with the IFRS for SMEs
An entity whose financial statements comply with the IFRS for SMEs shall make an explicit and
unreserved statement of such compliance in the notes. Financial statements shall not be described
as complying with the IFRS for SMEs unless they comply with all the requirements of this
Standard.
1) Going Concern
When preparing financial statements, the management of an entity using this Standard shall
make an assessment of the entity’s ability to continue as a going concern. An entity is a
going concern unless management either intends to liquidate the entity or to cease
operations, or has no realistic alternative but to do so. In assessing whether the going
concern assumption is appropriate, management takes into account all available
information about the future, which is at least, but is not limited to, twelve months from
the reporting date.
When management is aware, in making its assessment, of material uncertainties related to
events or conditions that cast significant doubt upon the entity’s ability to continue as a
going concern, the entity shall disclose those uncertainties. When an entity does not prepare
financial statements on a going concern basis, it shall disclose that fact, together with the
basis on which it prepared the financial statements and the reason why the entity is not
regarded as a going concern.
2) Frequency of Reporting
An entity shall present a complete set of financial statements at least annually. When the
end of an entity’s reporting period changes and the annual financial statements are
presented for a period longer or shorter than one year, the entity shall disclose the
following: (a) that fact; (b) the reason for using a longer or shorter period; and (c) the fact
that comparative amounts presented in the financial statements (including the related notes)
are not entirely comparable.
3) Consistency of Presentation
An entity shall retain the presentation and classification of items in the financial statements
from one period to the next unless:
(a) it is apparent, following a significant change in the nature of the entity’s operations or
a review of its financial statements, that another presentation or classification would be
more appropriate having regard to the criteria for the selection and application of
accounting policies in Section 10 Accounting Policies, Estimates and Errors; or
(b) this Standard requires a change in presentation.
When the presentation or classification of items in the financial statements is changed, an
entity shall reclassify comparative amounts unless the reclassification is impracticable.
When comparative amounts are reclassified, an entity shall disclose the following:
(a) the nature of the reclassification;
(b) the amount of each item or class of items that is reclassified; and
(c) the reason for the reclassification.
4) Comparative information
Except when this Standard permits or requires otherwise, an entity shall disclose
comparative information in respect of the previous comparable period for all amounts
presented in the current period’s financial statements. An entity shall include comparative
information for narrative and descriptive information when it is relevant to an
understanding of the current period’s financial statements.
5) Materiality and aggregation
An entity shall present separately each material class of similar items. An entity shall
present separately items of a dissimilar nature or function unless they are immaterial.
Omissions or misstatements of items are material if they could, individually or collectively,
influence the economic decisions of users made on the basis of the financial statements.
Materiality depends on the size and nature of the omission or misstatement judged in the
surrounding circumstances. The size or nature of the item, or a combination of both, could
be the determining factor.
C. Complete set of Financial Statements
A complete set of financial statements of an entity shall include all of the following:
(a) a statement of financial position as at the reporting date;
(b) either:
(i) a single statement of comprehensive income for the reporting period displaying all items
of income and expense recognized during the period including those items recognized in
determining profit or loss (which is a subtotal in the statement of comprehensive income)
and items of other comprehensive income.
(ii) a separate income statement and a separate statement of comprehensive income. If an
entity chooses to present both an income statement and a statement of comprehensive income,
the statement of comprehensive income begins with profit or loss and then displays the items
of other comprehensive income.
(c) a statement of changes in equity for the reporting period;
(d) a statement of cash flows for the reporting period; and
(e) notes, comprising a summary of significant accounting policies and other explanatory
information.
If the only changes to equity during the periods for which financial statements are presented arise
from profit or loss, payment of dividends, corrections of prior period errors, and changes in
accounting policy, the entity may present a single statement of income and retained earnings in
place of the statement of comprehensive income and statement of changes in equity.
In a complete set of financial statements, an entity shall present each financial statement with equal
prominence. An entity may use titles for the financial statements other than those used in this
Standard as long as they are not misleading.
Presentation of information not required by this Standard
This Standard does not address presentation of segment information, earnings per share, or interim
financial reports by a small or medium-sized entity. An entity making such disclosures shall
describe the basis for preparing and presenting the information.
Section 4 - Statement of Financial Position
Scope of this Section
This section sets out the information that is to be presented in a statement of financial position
and how to present it. The statement of financial position (sometimes called the balance sheet)
presents an entity’s assets, liabilities and equity as of a specific date—the end of the reporting
period.
A. Information to be Presented in the Statement of Financial Position
As a minimum, the statement of financial position shall include line items that present the
following amounts:
(a) cash and cash equivalents;
(b) trade and other receivables;
(c) financial assets (excluding amounts shown under (a), (b), (j) and (k));
(d) inventories;
(e) property, plant and equipment;
(f) investment property carried at fair value through profit or loss;
(g) intangible assets;
(h) biological assets carried at cost less accumulated depreciation and impairment;
(i) biological assets carried at fair value through profit or loss;
(j) investments in associates;
(k) investments in jointly controlled entities;
(l) trade and other payables;
(m) financial liabilities (excluding amounts shown under (l) and (p));
(n) liabilities and assets for current tax;
(o) deferred tax liabilities and deferred tax assets (these shall always be classified as non-
current);
(p) provisions;
(q) non-controlling interest, presented within equity separately from the
equity attributable to
the owners of the parent; and
(r) equity attributable to the owners of the parent.
An entity shall present additional line items, headings and subtotals in the statement of financial
position when such presentation is relevant to an understanding of the entity’s financial position.
B. Current/Non-Current Distinction
An entity shall present current and non-current assets, and current and non-current liabilities, as
separate classifications in its statement of financial position, except when a presentation based on
liquidity provides information that is reliable and more relevant. When that exception applies, all
assets and liabilities shall be presented in order of approximate liquidity (ascending or descending).
C. Current Assets
An entity shall classify an asset as current when:
(a) it expects to realize the asset, or intends to sell or consume it, in the entity’s normal operating
cycle;
(b) it holds the asset primarily for the purpose of trading;
(c) it expects to realize the asset within twelve months after the reporting
date; or
(d) the asset is cash or a cash equivalent, unless it is restricted from being exchanged or used to
settle a liability for at least twelve months after the reporting date.
An entity shall classify all other assets as non-current. When the entity’s normal operating cycle
is not clearly identifiable, its duration is assumed to be twelve months.
D. Current Liabilities
An entity shall classify a liability as current when:
(a) it expects to settle the liability in the entity’s normal operating cycle;
(b) it holds the liability primarily for the purpose of trading;
(c) the liability is due to be settled within twelve months after the reporting date; or
(d) the entity does not have an unconditional right to defer settlement of the liability for at least
twelve months after reporting date.
An entity shall classify all other liabilities as non-current.
Sequencing of Items and Format of Items in the Statement of Financial Position
This Standard does not prescribe the sequence or format in which items are to be presented.
It simply provides a list of items that are sufficiently different in nature or function to warrant
separate presentation in the statement of financial position. In addition:
(a) line items are included when the size, nature or function of an item or aggregation of similar
items is such that separate presentation is relevant to an understanding of the entity’s financial
position; and
(b) the descriptions used and the sequencing of items or aggregation of similar items may be
amended according to the nature of the entity and its transactions, to provide information that
is relevant to an understanding of the entity’s financial position.
