Minimum Disclosure Requirements in Financial Statements

IAS 1 requires an entity whose financial statements comply with IFRS to make an explicit and unqualified statement of such compliance in the notes. Financial statements can only be described as IFRS compliant if they meet all IFRS requirements (including International Financial Reporting Standards, International Accounting Standards, IFRIC interpretations and SIC interpretations). [IAS 1.16] An essential part of disclosure management is the preparation of annual and quarterly reports as well as additional reports on certain events. Disclosure management then includes the preparation and filing of Forms 10-K, 10-Q and 8-K. An entity shall also disclose in the notes information about material assumptions about the future and other material sources of estimation uncertainty at the end of the reporting period that pose a material risk of causing a material adjustment to the carrying amounts of assets and liabilities in the following financial period. [IAS 1.125] This information does not include the disclosure of budgets or forecasts. [IAS 1.130] This information, together with other information contained in the notes, assists users of the financial statements in forecasting the entity`s future cash flows and, in particular, their timing and certainty. IAS 1 requires management to assess an entity`s ability to continue as a going concern. If management has significant concerns about the going concern of the business, uncertainties should be disclosed.

If management concludes that the entity is discontinued, the financial statements should not be prepared on a going concern basis; in this case, IAS 1 requires a certain amount of information to be disclosed. [IAS 1.25] IAS 1 recognizes that, in extremely rare circumstances, management may conclude that compliance with an IFRS requirement would be so misleading as to be contrary to the objective of the financial statements set out in the conceptual framework. In such a case, an entity is required to depart from IFRS and to disclose in detail the nature, reasons and effects of the withdrawal. [IAS 1.19-21] The items to be included in the balance sheet are as follows: [IAS 1.54] The notes are presented systematically and reference is made from the front of the financial statements to the relevant notes. [IAS 1.113] Simply put, you need to provide the necessary information in the financial statements, as it is necessary information. But what makes them so important for accurate information to be mandatory? Much depends on the difference between private and public companies. While private companies are not required by law to disclose details of their finances and operations, public companies are required to disclose various types of information about their financial condition, business activities and results, executive compensation, and more. This information provides key internal and external stakeholders with accurate and up-to-date information on the financial operations of listed companies.

In general, disclosure management for small businesses is less intensive than disclosure requirements for corporations and large corporations. For large companies, this crucial information is especially important for lenders and investors. Inappropriate accounting policies shall not be corrected by information on the accounting policies applied, disclosures in notes or explanatory documents. [IAS 1.18] The purpose of general financial statements is to provide information about an entity`s financial position and results of operations that are useful to a wide range of users in making economic decisions. To achieve this objective, the financial statements contain information on: [IAS 1.9] reports presented outside the financial statements, including management financial statements, environmental reports and statements of value added, are outside the scope of IFRS. [IAS 1.14] A company provides information about its capital management objectives, policies and processes. [IAS 1.134] To address this, the disclosures include: [IAS 1.135] Our 2020 Condensed Interim Explanatory Information (PDF 2.5 MB) contains a description of the change in accounting policies for companies whose hedges are directly affected by the benchmark interest rate reform (IBOR reform). IAS 1 does not prescribe the balance sheet format. Assets can be represented in the short term, then in the long term or vice versa, and liabilities and equity can be presented in the current term, then in the long term, then in equity or vice versa. A presentation of net assets (assets minus liabilities) is permitted. The long-term funding approach used in the UK and elsewhere – fixed assets + current assets – current liabilities = long-term debt plus equity – is also acceptable. A complete set of financial statements includes: [IAS 1.10] General purpose financial statements are those intended for users who are unable to require financial statements tailored to their particular information needs.

[IAS 1.7] Here it should be noted that these forms are valid only for the United States. For companies that operate globally, you should review the mandatory disclosure requirements of these sites. For example, Canada and the EU have each set their own standards that require compliance. The presentation and classification of items in the financial statements should be maintained from period to period, unless a change is justified by a change in circumstances or by the requirement of a new IFRS. [IAS 1.45] The comprehensive revision of IAS 1 in 2007 introduced new terminology. As a result, amendments were made to all other existing IFRSs at that time and the new terminology was used in subsequent IFRSs, including amendments. IAS 1.8 states: “Although this Standard uses the terms `other comprehensive income`, `net income` and `comprehensive income`, an entity may use other terms to describe totals as long as their meaning is clear.