IFRS Main Financial Statement Forms
Introduction to IFRS
International Financial Reporting Standards (IFRS) can be referred as principle-based standards, interpretations, and the framework espoused by the IASB (International Accounting Standards Board). The various standards that form an integral part of IFRS are known by the older name of International Accounting Standards.
Requirements of IFRS
The IFRS financial statement forms include the following:
- A Statement of Financial Position
- A Statement of Comprehensive Income that includes an income statement in addition to an individual statement of comprehensive income, which brings together Profit or Loss on the Income statement to total comprehensive income
- A Statement of Changes in Equity
- A Cash Flow Statement or Statement of Cash Flows
- Notes, comprising a summary of the significant accounting policies
Recognizing elements of financial statements
As per IFRS standards, an item is identified in the financial statements when:
- It is apparent future financial benefit will flow to or from a business entity.
- The resource can be reliably measured – or else the stable measuring unit assumption is applied under the conventional cost accounting model. This implies that it is presumed that the fiscal unit of account (i.e. the financial currency) is absolutely stable (implying zero inflation or deflation); it is simply presumed that there is no inflation or deflation ever, and that the items are stated at their original nominal conventional cost from any previous date – 1 month, 1 year, 10 or 100 or 200 or more years back; implying that the stable measuring unit assumption is applied to items like issued share capital, capital reserves, retained earnings, all other items in shareholders’ equity, all items in the statement of comprehensive income (excluding salaries, rentals, wages, etc., which are inflation-adjusted per annum), etc.
Objective of IFRS financial statement forms
As per IFRS, a financial statement form should present true and fair picture of the business affairs of an organization. Since these statements are used by different constituents of the regulators/society, they are required to present the true view of financial position of the organization.
Qualitative characteristics of Financial Statements as per IFRS
As per IFRS, the main characteristics required in its main financial statement forms include: