description of fair presentation

Accounting Policies – Fair Presentation and Faithful Representation for IFRS

What does fair presentation mean.

Financial statements are described as showing a ‘true and fair view’ when they are free from material misstatements and faithfully represent the financial performance and position of an entity.

In some countries, this is an essential part of financial reporting.

Under International Financial Reporting Standards, financial statements are required to present fairly the financial position, financial performance and cash flows of the entity.

This issue is not dealt with directly by the Framework.

However, if an entity complies with International Financial Reporting Standards, and if its financial information is both relevant and faithfully represented, then the financial statements ‘should convey what is generally understood as a true and fair view of such information’.

Under IAS 1, ‘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 set out in the IASB Framework.

What does faithful representation mean?

Faithful representation means more than that the amounts in the financial statements should be materially correct.

The information should present clearly the transactions and other events that it is intended to represent.

Also, the financial information must account for transactions and other events in a way that reflects their true substance and economic reality, their commercial impact, rather than their strict legal form.

If there is a difference between substance and legal form, the financial information should represent the economic substance.

An example of this is when a company enters into a finance lease, the substance of the transaction requires the entity to record an asset in its financial statements and a corresponding liability for the lease payments due.

Faithful representation also requires the presentation of financial information in a way that is not misleading to users, and that important information is not concealed or obscured as this may be misleading.

Fair presentation and compliance with IFRSs

“Fair presentation” is presumed when the International Financial Reporting Standards are applied with necessary disclosures.

Under IAS 1:

• When the financial statements of an entity fully comply with International Financial Reporting Standards, this should be disclosed.
• Financial statements should not be described as compliant with IFRSs unless they comply with all of the International Financial Reporting Standards.

So IAS 1 assumes financial statements are presented fairly when they comply with accounting standards.

However, it is important to remember the spirit and nature of the accounting standard, and not its strict definition when preparing financial statements.

This is especially true for complex transactions which may not be covered by an accounting standard.

In these cases, the substance of the transaction should take precedence over the strict legal form of the transaction.

Under IAS 1, fair presentation also requires an entity:

• to select and apply accounting policies in accordance with IAS 8 Accounting policies, changes in accounting estimates and errors. IAS 8 sets out guidance for management on how to account for a transaction if no accounting standard is applicable
• to present information in a manner that provides relevant, reliable, comparable and understandable information
• to provide additional disclosures where these are necessary to enable users to understand the financial position and performance of the entity, even where additional disclosure is not required by the accounting standards.

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Fair presentation

IAS 1 says that the statements must present fairly the financial position, financial performance and cash flows of the entity. It specifies that it is presumed that this will be achieved by compliance with IFRS. However, it does allow that ‘in extremely rare circumstances’ an entity may decide that compliance would not result in a fair presentation, and in such circumstances it may depart from individual standards. If it does this, it must explain why and show the effect on the financial statements.

It adds a proviso that this is available to the extent that the relevant regulatory framework, normally national law, allows or does not prohibit such a departure. For example, the EU company law directives specify that if following GAAP does not give ‘a true and fair view’ an entity should in the first instance disclose extra information, and only if that is not thought workable, not follow the standard concerned. (The UK Accounting Standards Board obtained a legal opinion that producing statements that fairly present under IFRS is equivalent to providing a true and fair view.)

the statements must present fairly the financial position, financial performance and cash flows of the entity

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IAS 1 Presentation of Financial Statements: Summary

IAS 1 Presentation of Financial Statements represents a basis of the whole IFRS reporting, as it sets overall requirements for the presentation of financial statements, guidelines for their structure and minimum requirements for their content.

Financial Statements

Purpose of the financial statements is to provide information about the financial position, financial performance and cash flows of an entity that is useful to a wide range of users in making economic decisions.

The complete set of financial statements compliant with IFRS comprises 5 elements:

• a statement of financial position as at the end of the period
• a statement of comprehensive income for the period
• a statement of changes in equity for the period
• a statement of cash flows for the period
• notes containing a summary of significant accounting policies and other explanatory information.

If some accounting policy is applied retrospectively, or some retrospective restatements or reclassifications were made, then also a statement of financial position as at the beginning of the earliest comparative period shall be presented.

IAS 1 explains the general features of financial statements, such as fair presentation and compliance with IFRS , going concern, accrual basis of accounting, materiality and aggregation, offsetting, frequency of reporting, comparative information and consistency of presentation.

Structure and Content

IAS 1 requires identification of the financial statements and distinguishing them from other information in the same published document.

Every element of the financial statements shall contain the name of the reporting entity, the information whether the financial statements are of an individual or of a group, the date of the reporting entity and period covered, the presentation currency and the level of rounding (thousands, millions…).

IAS 1 lists the minimum content to be presented in the financial statements, except for the statement of cash flows (subject to IAS 7). So let’s look at it in a detail.

Statement of Financial Position

Before significant amendments of IAS 1, this statement was simply called “balance sheet”, however, it was renamed.

IAS 1 requires presentation of classified statement of financial position where current assets or liabilities are separated from non-current assets or liabilities. Basically, the asset or liability is current when it is expected to be recovered or settled within 12 months after the reporting period.

With regard to a minimum content, the following line items shall be presented:

Further subclassifications of the line items shall be disclosed either directly in the statement of financial position or in the notes, such as disaggregation of property, plant and equipment into classes, and similar. Also, certain information related to the share capital, reserves and a few others shall be included in the statement of financial position, the statement of changes in equity or in the notes.

IAS 1 does NOT prescribe the precise format of the statement of financial position. Instead, several formats are acceptable if they fulfill all requirements outlined above.

Statement of Comprehensive Income

The statement of comprehensive income has 2 basic elements:

• Profit or loss for the period : here, all items of income and expenses must be recognized.
• Other comprehensive income : items recognized directly to equity or reserves, such as changes in revaluation surplus, gains or losses from subsequent measurement of available-for-sale financial assets, etc.

As a minimum , the statement of comprehensive income must contain the following items:

As opposed to US GAAP , IAS 1 prohibits to report any transaction or item as extraordinary items.

Profit or loss for the period, as well as total comprehensive income shall be both presented in allocation:

• attributable to non-controlling interests and
• attributable to owners of the parent.

The entity might choose to classify expenses recognized in profit or loss for the period by their nature or by their function.

IAS 1 requires disclosure of certain items separately , either in the statement of comprehensive income, or in the notes. These items are as follows: write-downs of inventories and property, plant and equipment, their reversals, restructuring of activities and reversals of related provisions, disposals of property, plant and equipment, disposals of investments, discontinuing operations, litigation settlements and other reversals of provisions.

Statement of Changes in Equity

As a minimum , the statement of changes in equity must contain the following items:

• total comprehensive income for the period, showing separately amounts attributable to owners of the parent and to non-controlling interests
• the effect of retrospective application or restatement for each component of equity (if applicable)
• those resulting from profit or loss
• resulting from other comprehensive income
• resulting from transactions with owners (contributions, distributions and changes in ownership)

Also, IAS 1 prescribes to present amount of dividends recognized as distributions and the related amount per share on the face of the statement of changes in equity or in the notes.

Notes to the Financial Statements

The notes are meant to be the document accompanying numerical financial statements listed above. They should provide additional information not contained in the numbers, the basis of preparation of the financial statements and some additional information that might be relevant.

IAS 1 sets that the notes shall contain a statement of compliance with IFRS , summary of significant accounting policies applied, supporting information for the numbers presented in the financial statements and other disclosures.

You can read more about the notes and how to write them in this article .

IAS 1 is shortly summarized in the following video:

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43 Comments

Thank you for simplifying this standard . It is very helpful in my study and revision . looking forward to the other standards

A speed point machine, is it an asset that needs to be recorded in a business if they are using it?

Dear Silvia, Are prudence and conservatism concepts still applicable now under the new Conceptual Framework?

Hi I want to know can we prepare multiyear financials (i.e. 2 years to show I comparatives) as per the international auditing standards

SILIVAIA I really apprentice the presentation please can i have the ppt.?

Hi Asmera, no sorry, we only provide pdf to our subscribed students of the IFRS Kit.

Hi i have case that we debit the account Other comprehensive income (Re-measurement losses / Gain on defined benefit liability) by amount 12 Million and credit two account one of them is end of service expenses ( P&L item) by 7 Million and other account is provision of end of service by 6 Million Dr/ Other comprehensive income 12 Million Cr/ End of service expense ( P&L Item). Cr/ Provision of end of service ( Balance sheet item). my question :- 1- Other comprehensive account will be appear in balance sheet and income statement 2- and if it must appear in income statement shall we put total balance of this account 12 Million or just put 6 Million which is came from PL and ignore the 7 Million which came from provision of end of service as it is balance sheet item

This video has made my understanding of IAS 1 more clearly and understandable.I can confidently say I`am ready for the test.

I didn’t see any explanatiins for Cash Flow statement. This is also an element of Financial Statement as whole. Or would that mean it is no longer considered as part the whole reported Financial Statement?

You did not see it because it is not covered by IAS 1 (and, you are reading the article about IAS 1). You should check out IAS 7 .

Hello Silvia, Can you please help me to know as to what is the objective of creating Other Comprehensive Income and how to decide what all items should go to Other comprehensive income and Profit or loss account ?

Hi Diksha, I think this article can give you the answer . S.

hello siliva, help me with tax expense computation when u have provision, some balance due

In my opinion the documents that you share through social media is more attractive and brief to understand. I would like to follow you! Please, would you like to share brief notes and explanation on IFRS 9. By focusing MFI in detail!

Til now, I don’t understand what is the main consideration, if any, the IASB classifies a transaction as profit or loss while another as other comprehensive income. Is there any theoretical foundation or something behind the existence of other comprehensive income items?

Dear Siklus, I think this article might help . S.

Dear Sylvia, if a Company made a decision to decrease share capital (due to accumulated loss that existed on December 31, 2016) on January 17, should this be treated as an adjusting event?

Thank you very much for your help!

It depends on when the decision was made. If after 31 Dec 2016, then no, it’s non-adjusting event. S.

amazing presentation of statement of financial position but other comprehensive income should elaborate clearly. Over all presentation was very good . I also learn from that.thank you very much

Very lucid explanations. Thanks

The presentation is very knowledgeable. Is it possible for you to mail me the ppt. It would be of great help.

Hi Silvia, is it required by the standard to present the subscribed share capital with the outstanding balance of subscription receivables or a presentation of share capital would be fine?

comprehensive and material indeed

helped me tounderstand the IFRS

dear waseem…we record purchase cost as 110000.coz we did not avail the discout optiom given by the seller.

I have doubt in IAS 2. Lets say for a example, a manufacturer purchased raw material by giving 4 months pd cheque for 110,000. If they had paid by cash, price would be 100,000. What is treatment for this difference? Can we record this difference of 10,000 as finance charges?

Hey Silvia, I was about to subscribe. But I found that the name of my country (Bangladesh) is not in the list. Please let me know.

thank you for help

wow, made my studies simpler and to make sense…a superb summary indeed.

clearly and comprehensive IAS1 elaborated

Great site and well summarized IASs

very well summarized and it is very good for accounting students. thank you.

Verry good!IAS 1 !

very good indeed.impressed for days

great work………..

Great Vedio…

IT IS WELL ARRANGED OF STATEMENT.

Excellent summarized information of IAS-1

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Fair Presentation

An accounting standards’ requirement that an entity’s financial statements should be presented in a fair way to all relevant users of these statements. In other words, it is premised on the requirement that these statements should not be misleading. Under the principle of fair presentation, financial statements must fairly present the financial position, financial performance and cash flows of the entity. Fair presentation requires the faithful (unbiased) representation of the monetary effects of transactions, other events and circumstances in accordance with the applicable concepts and recognition criteria for assets , liabilities , income and expenses .

Fair presentation is the US and International Accounting Standards (IAS) equivalent of the British requirement that financial statements provide a true and fair view (which entails that statements/ accounts have been truly prepared and fairly presented in accordance with applicable accounting standards and framework . It also implies that the financial statements are free from material misstatements and faithfully represent the financial position and performance of an entity, subject-matter of an audit process.).

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IAS 1 Presentation of Financial Statements

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IAS 1 sets out overall requirements for the presentation of financial statements, guidelines for their structure and minimum requirements for their content. It requires an entity to present a complete set of financial statements at least annually, with comparative amounts for the preceding year (including comparative amounts in the notes). A complete set of financial statements comprises:

• a statement of financial position as at the end of the period;
• a statement of profit and loss and other comprehensive income for the period.  Other comprehensive income is those items of income and expense that are not recognised in profit or loss in accordance with IFRS Standards.  IAS 1 allows an entity to present a single combined statement of profit and loss and other comprehensive income or two separate statements;
• a statement of changes in equity for the period;
• a statement of cash flows for the period;
• notes, comprising a summary of significant accounting policies and other explanatory information; and
• a statement of financial position as at the beginning of the preceding comparative period when an entity applies an accounting policy retrospectively or makes a retrospective restatement of items in its financial statements, or when it reclassifies items in its financial statements.

An entity whose financial statements comply with IFRS Standards must make an explicit and unreserved statement of such compliance in the notes. An entity must not describe financial statements as complying with IFRS Standards unless they comply with all the requirements of the Standards. The application of IFRS Standards, with additional disclosure when necessary, is presumed to result in financial statements that achieve a fair presentation. IAS 1 also deals with going concern issues, offsetting and changes in presentation or classification.

Standard history

In April 2001 the International Accounting Standards Board (IASB) adopted IAS 1 Presentation of Financial Statements , which had originally been issued by the International Accounting Standards Committee in September 1997. IAS 1 Presentation of Financial Statements replaced IAS 1 Disclosure of Accounting Policies (issued in 1975), IAS 5 Information to be Disclosed in Financial Statements (originally approved in 1977) and IAS 13 Presentation of Current Assets and Current Liabilities (approved in 1979).

In December 2003 the IASB issued a revised IAS 1 as part of its initial agenda of technical projects. The IASB issued an amended IAS 1 in September 2007, which included an amendment to the presentation of owner changes in equity and comprehensive income and a change in terminology in the titles of financial statements. In June 2011 the IASB amended IAS 1 to improve how items of other income comprehensive income should be presented.

In December 2014 IAS 1 was amended by Disclosure Initiative (Amendments to IAS 1), which addressed concerns expressed about some of the existing presentation and disclosure requirements in IAS 1 and ensured that entities are able to use judgement when applying those requirements. In addition, the amendments clarified the requirements in paragraph 82A of IAS 1.

In October 2018 the IASB issued Definition of Material (Amendments to IAS 1 and IAS 8). This amendment clarified the definition of material and how it should be applied by (a) including in the definition guidance that until now has featured elsewhere in IFRS Standards; (b) improving the explanations accompanying the definition; and (c) ensuring that the definition of material is consistent across all IFRS Standards.

In February 2021 the IASB issued Disclosure of Accounting Policies which amended IAS 1 and IFRS Practice Statement 2 Making Materiality Judgements . The amendment amended IAS 1 to replace the requirement for entities to disclose their significant accounting policies with the requirement to disclose their material accounting policy information.

In October 2022, the IASB issued  Non-current Liabilities with Covenants . The amendments improved the information an entity provides when its right to defer settlement of a liability for at least twelve months is subject to compliance with covenants. The amendments also responded to stakeholders’ concerns about the classification of such a liability as current or non-current.

Other Standards have made minor consequential amendments to IAS 1. They include Improvement to IFRSs (issued April 2009), Improvement to IFRSs (issued May 2010), IFRS 10 Consolidated Financial Statements (issued May 2011), IFRS 12 Disclosures of Interests in Other Entities (issued May 2011), IFRS 13 Fair Value Measurement (issued May 2011), IAS 19 Employee Benefits (issued June 2011), Annual Improvements to IFRSs 2009–2011 Cycle (issued May 2012), IFRS 9 Financial Instruments (Hedge Accounting and amendments to IFRS 9, IFRS 7 and IAS 39) (issued November 2013), IFRS 15 Revenue from Contracts with Customers (issued May 2014), Agriculture: Bearer Plants (Amendments to IAS 16 and IAS 41) (issued June 2014), IFRS 9 Financial Instruments (issued July 2014), IFRS 16 Leases (issued January 2016), Disclosure Initiative (Amendments to IAS 7) (issued January 2016), IFRS 17 Insurance Contracts (issued May 2017), Amendments to References to the Conceptual Framework in IFRS Standards (issued March 2018) and Amendments to IFRS 17 (issued June 2020).

Related active projects

IFRS Accounting Taxonomy Update—Primary Financial Statements

Related completed projects

Clarification of the Requirements for Comparative Information (Amendments to IAS 1)

Classification of Liabilities as Current or Non-current (Amendments to IAS 1)

Definition of Accounting Estimates (Amendments to IAS 8)

Disclosure Initiative (Amendments to IAS 1)

Disclosure Initiative (Amendments to IAS 7)

Disclosure Initiative—Accounting Policies

Disclosure Initiative—Definition of Material (Amendments to IAS 1 and IAS 8)

Disclosure Initiative—Principles of Disclosure

Disclosure Initiative—Targeted Standards-level Review of Disclosures

IFRS Accounting Taxonomy Update—Amendments to IAS 1, IAS 8 and IFRS Practice Statement 2

IFRS Accounting Taxonomy Update—Amendments to IFRS 16 and IAS 1

Joint Financial Statement Presentation (Replacement of IAS 1)

Non-current Liabilities with Covenants (Amendments to IAS 1)

Presentation of Items of Other Comprehensive Income (Amendments to IAS 1)

Presentation of Liabilities or Assets Related to Uncertain Tax Treatments (IAS 1)

Presentation of interest revenue for particular financial instruments (IFRS 9 and IAS 1)

Puttable Financial Instruments and Obligations Arising on Liquidation (Amendments to IAS 32 and IAS 1)

Revised IAS 1 Presentation of Financial Statements: Phase A

Supply Chain Financing Arrangements—Reverse Factoring

Related IFRS Standards

Related ifric interpretations.

IFRIC 1 Changes in Existing Decommissioning, Restoration and Similar Liabilities

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IAS 1 Presentation of Financial Statements

Learn the key accounting principles to be applied to financial statements, including fair presentation and compliance with IFRS Standards.

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Financial statements (AASB101_07-15_COMPmar20_07-21)

Financial statements, purpose of financial statements.

Financial statements are a structured representation of the financial position and financial performance of an entity. The objective of financial statements is to provide information about the financial position, financial performance and cash flows of an entity that is useful to a wide range of users in making economic decisions. Financial statements also show the results of the management’s stewardship of the resources entrusted to it. To meet this objective, financial statements provide information about an entity’s:

(a)             assets;

(b)             liabilities;

(c)             equity;

(d)             income and expenses, including gains and losses;

(e)             contributions by and distributions to owners in their capacity as owners; and

(f)             cash flows.

This information, along with other information in the notes, assists users of financial statements in predicting the entity’s future cash flows and, in particular, their timing and certainty.

Complete set of financial statements

A complete set of financial statements comprises:

(a)             a statement of financial position as at the end of the period;

(b)             a statement of profit or loss and other comprehensive income for the period;

(c)             a statement of changes in equity for the period;

(d)             a statement of cash flows for the period;

(e)             notes, comprising significant accounting policies and other explanatory information;

(ea)             comparative information in respect of the preceding period as specified in paragraphs 38 and 38A ; and

(f)             a statement of financial position as at the beginning of the preceding period when an entity applies an accounting policy retrospectively or makes a retrospective restatement of items in its financial statements, or when it reclassifies items in its financial statements in accordance with paragraphs 40A–40D .

An entity may use titles for the statements other than those used in this Standard. For example, an entity may use the title ‘statement of comprehensive income’ instead of ‘statement of profit or loss and other comprehensive income’.

An entity may present a single statement of profit or loss and other comprehensive income, with profit or loss and other comprehensive income presented in two sections. The sections shall be presented together, with the profit or loss section presented first followed directly by the other comprehensive income section. An entity may present the profit or loss section in a separate statement of profit or loss. If so, the separate statement of profit or loss shall immediately precede the statement presenting comprehensive income, which shall begin with profit or loss.

An entity shall present with equal prominence all of the financial statements in a complete set of financial statements.

Many entities present, outside the financial statements, a financial review by management that describes and explains the main features of the entity’s financial performance and financial position, and the principal uncertainties it faces. Such a report may include a review of:

(a)             the main factors and influences determining financial performance, including changes in the environment in which the entity operates, the entity’s response to those changes and their effect, and the entity’s policy for investment to maintain and enhance financial performance, including its dividend policy;

(b)             the entity’s sources of funding and its targeted ratio of liabilities to equity; and

(c)             the entity’s resources not recognised in the statement of financial position in accordance with Australian Accounting Standards.

Many entities also present, outside the financial statements, reports and statements such as environmental reports and value added statements, particularly in industries in which environmental factors are significant and when employees are regarded as an important user group. Reports and statements presented outside financial statements are outside the scope of Australian Accounting Standards.

General features

Fair presentation and compliance with standards.

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 set out in the Conceptual Framework for Financial Reporting ( Conceptual Framework ). The application of Australian Accounting Standards, with additional disclosure when necessary, is presumed to result in financial statements that achieve a fair presentation.

Notwithstanding paragraph 15 , in respect of AusCF entities, 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 set out in the Framework . [AusCF2]  The application of Australian Accounting Standards, with additional disclosure when necessary, is presumed to result in financial statements that achieve a fair presentation.

An entity whose financial statements comply with IFRSs shall make an explicit and unreserved statement of such compliance in the notes. An entity shall not describe financial statements as complying with IFRSs unless they comply with all the requirements of IFRSs.

Paragraphs AusCF15–AusCF24 contain references to the objective of financial statements set out in the Framework for the Preparation and Presentation of Financial Statements (as identified in AASB 1048 ). In December 2013 the AASB amended the Framework , and thereby replaced the objective of financial statements with the objective of general purpose financial reporting: see Chapter 1 of the Framework .

[Deleted by the AASB]

Not-for-profit entities need not comply with the paragraph 16 requirement to make an explicit and unreserved statement of compliance with IFRSs.

In virtually all circumstances, an entity achieves a fair presentation by compliance with applicable Australian Accounting Standards. A fair presentation also requires an entity:

(a)             to select and apply accounting policies in accordance with AASB 108 Accounting Policies, Changes in Accounting Estimates and Errors . AASB 108 sets out a hierarchy of authoritative guidance that management considers in the absence of an Australian Accounting Standard that specifically applies to an item.

(b)             to present information, including accounting policies, in a manner that provides relevant, reliable, comparable and understandable information.

(c)             to provide additional disclosures when compliance with the specific requirements in Australian Accounting Standards is insufficient to enable users to understand the impact of particular transactions, other events and conditions on the entity’s financial position and financial performance.

An entity cannot rectify inappropriate accounting policies either by disclosure of the accounting policies used or by notes or explanatory material.

In the extremely rare circumstances in which management concludes that compliance with a requirement in an Australian Accounting Standard would be so misleading that it would conflict with the objective of financial statements set out in the Conceptual Framework , the entity shall depart from that requirement in the manner set out in paragraph 20 if the relevant regulatory framework requires, or otherwise does not prohibit, such a departure.

Notwithstanding paragraph 19 , in respect of AusCF entities, in the extremely rare circumstances in which management concludes that compliance with a requirement in an Australian Accounting Standard would be so misleading that it would conflict with the objective of financial statements set out in the Framework , the entity shall depart from that requirement in the manner set out in paragraph AusCF20 if the relevant regulatory framework requires, or otherwise does not prohibit, such a departure.

In relation to paragraph 19 , the following shall not depart from a requirement in an Australian Accounting Standard:

(a)             entities required to prepare financial reports under Part 2M.3 of the Corporations Act;

(b)             private and public sector not-for-profit entities; and

(c)             entities applying Australian Accounting Standards – Simplified Disclosures.

When an entity departs from a requirement of an Australian Accounting Standard in accordance with paragraph 19 , it shall disclose:

(a)             that management has concluded that the financial statements present fairly the entity’s financial position, financial performance and cash flows;

(b)             that it has complied with applicable Australian Accounting Standards, except that it has departed from a particular requirement to achieve a fair presentation;

(c)             the title of the Australian Accounting Standard from which the entity has departed, the nature of the departure, including the treatment that the Australian Accounting Standard would require, the reason why that treatment would be so misleading in the circumstances that it would conflict with the objective of financial statements set out in the Conceptual Framework , and the treatment adopted; and

(d)             for each period presented, the financial effect of the departure on each item in the financial statements that would have been reported in complying with the requirement.

Notwithstanding paragraph 20 , in respect of AusCF entities, when an entity departs from a requirement of an Australian Accounting Standard in accordance with paragraph AusCF19 , it shall disclose:

(c)             the title of the Australian Accounting Standard from which the entity has departed, the nature of the departure, including the treatment that the Australian Accounting Standard would require, the reason why that treatment would be so misleading in the circumstances that it would conflict with the objective of financial statements set out in the Framework , and the treatment adopted; and

When an entity has departed from a requirement of an Australian Accounting Standard in a prior period, and that departure affects the amounts recognised in the financial statements for the current period, it shall make the disclosures set out in paragraph 20(c) and (d) .

Paragraph 21 applies, for example, when an entity departed in a prior period from a requirement in an Australian Accounting Standard for the measurement of assets or liabilities and that departure affects the measurement of changes in assets and liabilities recognised in the current period’s financial statements.

In the extremely rare circumstances in which management concludes that compliance with a requirement in an Australian Accounting Standard would be so misleading that it would conflict with the objective of financial statements set out in the Conceptual Framework , but the relevant regulatory framework prohibits departure from the requirement, the entity shall, to the maximum extent possible, reduce the perceived misleading aspects of compliance by disclosing:

(a)             the title of the Australian Accounting Standard in question, the nature of the requirement, and the reason why management has concluded that complying with that requirement is so misleading in the circumstances that it conflicts with the objective of financial statements set out in the Conceptual Framework ; and

(b)             for each period presented, the adjustments to each item in the financial statements that management has concluded would be necessary to achieve a fair presentation.

Notwithstanding paragraph 23 , in respect of AusCF entities, in the extremely rare circumstances in which management concludes that compliance with a requirement in an Australian Accounting Standard would be so misleading that it would conflict with the objective of financial statements set out in the Framework , but the relevant regulatory framework prohibits departure from the requirement, the entity shall, to the maximum extent possible, reduce the perceived misleading aspects of compliance by disclosing:

(a)             the title of the Australian Accounting Standard in question, the nature of the requirement, and the reason why management has concluded that complying with that requirement is so misleading in the circumstances that it conflicts with the objective of financial statements set out in the Framework ; and

For the purpose of paragraphs 19–23 , an item of information would conflict with the objective of financial statements when it does not represent faithfully the transactions, other events and conditions that it either purports to represent or could reasonably be expected to represent and, consequently, it would be likely to influence economic decisions made by users of financial statements.   When assessing whether complying with a specific requirement in an Australian Accounting Standard would be so misleading that it would conflict with the objective of financial statements set out in the Conceptual Framework , management considers:

(a)             why the objective of financial statements is not achieved in the particular circumstances; and

(b)             how the entity’s circumstances differ from those of other entities that comply with the requirement.   If other entities in similar circumstances comply with the requirement, there is a rebuttable presumption that the entity’s compliance with the requirement would not be so misleading that it would conflict with the objective of financial statements set out in the Conceptual Framework .

Notwithstanding paragraph 24 , in respect of AusCF entities, for the purpose of paragraphs AusCF19–AusCF23 , an item of information would conflict with the objective of financial statements when it does not represent faithfully the transactions, other events and conditions that it either purports to represent or could reasonably be expected to represent and, consequently, it would be likely to influence economic decisions made by users of financial statements. When assessing whether complying with a specific requirement in an Australian Accounting Standard would be so misleading that it would conflict with the objective of financial statements set out in the Framework , management considers:

(b)             how the entity’s circumstances differ from those of other entities that comply with the requirement.   If other entities in similar circumstances comply with the requirement, there is a rebuttable presumption that the entity’s compliance with the requirement would not be so misleading that it would conflict with the objective of financial statements set out in the Framework .

Going concern

When preparing financial statements, management shall make an assessment of an entity’s ability to continue as a going concern. An entity shall prepare financial statements on a going concern basis unless management either intends to liquidate the entity or to cease trading, or has no realistic alternative but to do so. When management is aware, in making its assessment, of material uncertainties related to events or conditions that may 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.

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 end of the reporting period. The degree of consideration depends on the facts in each case. When an entity has a history of profitable operations and ready access to financial resources, the entity may reach a conclusion that the going concern basis of accounting is appropriate without detailed analysis. In other cases, management may need to consider a wide range of factors relating to current and expected profitability, debt repayment schedules and potential sources of replacement financing before it can satisfy itself that the going concern basis is appropriate.

Accrual basis of accounting

An entity shall prepare its financial statements, except for cash flow information, using the accrual basis of accounting.

When the accrual basis of accounting is used, an entity recognises items as assets, liabilities, equity, income and expenses (the elements of financial statements) when they satisfy the definitions and recognition criteria for those elements in the Conceptual Framework .

Notwithstanding paragraph 28 , in respect of AusCF entities, when the accrual basis of accounting is used, an entity recognises items as assets, liabilities, equity, income and expenses (the elements of financial statements) when they satisfy the definitions and recognition criteria for those elements in the Framework . [AusCF3]

The Framework for the Preparation and Presentation of Financial Statements was amended by the AASB in December 2013.

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.

Financial statements result from processing large numbers of transactions or other events that are aggregated into classes according to their nature or function. The final stage in the process of aggregation and classification is the presentation of condensed and classified data, which form line items in the financial statements. If a line item is not individually material, it is aggregated with other items either in those statements or in the notes. An item that is not sufficiently material to warrant separate presentation in those statements may warrant separate presentation in the notes.

When applying this and other Australian Accounting Standards an entity shall decide, taking into consideration all relevant facts and circumstances, how it aggregates information in the financial statements, which include the notes. An entity shall not reduce the understandability of its financial statements by obscuring material information with immaterial information or by aggregating material items that have different natures or functions.

Some Australian Accounting Standards specify information that is required to be included in the financial statements, which include the notes. An entity need not provide a specific disclosure required by an Australian Accounting Standard if the information resulting from that disclosure is not material. This is the case even if the Australian Accounting Standard contains a list of specific requirements or describes them as minimum requirements. An entity shall also consider whether to provide additional disclosures when compliance with the specific requirements in Australian Accounting Standards is insufficient to enable users of financial statements to understand the impact of particular transactions, other events and conditions on the entity’s financial position and financial performance.

An entity shall not offset assets and liabilities or income and expenses, unless required or permitted by an Australian Accounting Standard.

An entity reports separately both assets and liabilities, and income and expenses. Offsetting in the statement(s) of profit or loss and other comprehensive income or financial position, except when offsetting reflects the substance of the transaction or other event, detracts from the ability of users both to understand the transactions, other events and conditions that have occurred and to assess the entity’s future cash flows. Measuring assets net of valuation allowances—for example, obsolescence allowances on inventories and doubtful debts allowances on receivables—is not offsetting.

AASB 15 Revenue from Contracts with Customers requires an entity to measure revenue from contracts with customers at the amount of consideration to which the entity expects to be entitled in exchange for transferring promised goods or services. For example, the amount of revenue recognised reflects any trade discounts and volume rebates the entity allows. An entity undertakes, in the course of its ordinary activities, other transactions that do not generate revenue but are incidental to the main revenue-generating activities. An entity presents the results of such transactions, when this presentation reflects the substance of the transaction or other event, by netting any income with related expenses arising on the same transaction. For example:

(a)             an entity presents gains and losses on the disposal of non-current assets, including investments and operating assets, by deducting from the amount of consideration on disposal the carrying amount of the asset and related selling expenses; and

(b)             an entity may net expenditure related to a provision that is recognised in accordance with AASB 137 Provisions, Contingent Liabilities and Contingent Assets and reimbursed under a contractual arrangement with a third party (for example, a supplier’s warranty agreement) against the related reimbursement.

In addition, an entity presents on a net basis gains and losses arising from a group of similar transactions, for example, foreign exchange gains and losses or gains and losses arising on financial instruments held for trading. However, an entity presents such gains and losses separately if they are material.

Frequency of reporting

An entity shall present a complete set of financial statements (including comparative information) at least annually. When an entity changes the end of its reporting period and presents financial statements for a period longer or shorter than one year, an entity shall disclose, in addition to the period covered by the financial statements:

(a)             the reason for using a longer or shorter period, and

(b)             the fact that amounts presented in the financial statements are not entirely comparable.

Normally, an entity consistently prepares financial statements for a one-year period. However, for practical reasons, some entities prefer to report, for example, for a 52-week period. This Standard does not preclude this practice.

Comparative information

Except when Australian Accounting Standards permit or require otherwise, an entity shall present comparative information in respect of the preceding period for all amounts reported in the current period’s financial statements. An entity shall include comparative information for narrative and descriptive information if it is relevant to understanding the current period’s financial statements.

An entity shall present, as a minimum, two statements of financial position, two statements of profit or loss and other comprehensive income, two separate statements of profit or loss (if presented), two statements of cash flows and two statements of changes in equity, and related notes.

In some cases, narrative information provided in the financial statements for the preceding period(s) continues to be relevant in the current period. For example, an entity discloses in the current period details of a legal dispute, the outcome of which was uncertain at the end of the preceding period and is yet to be resolved. Users may benefit from the disclosure of information that the uncertainty existed at the end of the preceding period and from the disclosure of information about the steps that have been taken during the period to resolve the uncertainty.

An entity may present comparative information in addition to the minimum comparative financial statements required by Australian Accounting Standards, as long as that information is prepared in accordance with Australian Accounting Standards. This comparative information may consist of one or more statements referred to in paragraph 10 , but need not comprise a complete set of financial statements. When this is the case, the entity shall present related note information for those additional statements.

For example, an entity may present a third statement of profit or loss and other comprehensive income (thereby presenting the current period, the preceding period and one additional comparative period). However, the entity is not required to present a third statement of financial position, a third statement of cash flows or a third statement of changes in equity (ie an additional financial statement comparative). The entity is required to present, in the notes to the financial statements, the comparative information related to that additional statement of profit or loss and other comprehensive income.

An entity shall present a third statement of financial position as at the beginning of the preceding period in addition to the minimum comparative financial statements required in paragraph 38A if:

(a)             it applies an accounting policy retrospectively, makes a retrospective restatement of items in its financial statements or reclassifies items in its financial statements; and

(b)             the retrospective application, retrospective restatement or the reclassification has a material effect on the information in the statement of financial position at the beginning of the preceding period.

In the circumstances described in paragraph 40A , an entity shall present three statements of financial position as at:

(a)             the end of the current period;

(b)             the end of the preceding period; and

(c)             the beginning of the preceding period.

When an entity is required to present an additional statement of financial position in accordance with paragraph 40A , it must disclose the information required by paragraphs 41–44 and AASB 108 . However, it need not present the related notes to the opening statement of financial position as at the beginning of the preceding period.

The date of that opening statement of financial position shall be as at the beginning of the preceding period regardless of whether an entity’s financial statements present comparative information for earlier periods (as permitted in paragraph 38C ).

If an entity changes the presentation or classification of items in its financial statements, it shall reclassify comparative amounts unless reclassification is impracticable. When an entity reclassifies comparative amounts, it shall disclose (including as at the beginning of the preceding period):

(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.

When it is impracticable to reclassify comparative amounts, an entity shall disclose:

(a)             the reason for not reclassifying the amounts, and

(b)             the nature of the adjustments that would have been made if the amounts had been reclassified.

Enhancing the inter-period comparability of information assists users in making economic decisions, especially by allowing the assessment of trends in financial information for predictive purposes. In some circumstances, it is impracticable to reclassify comparative information for a particular prior period to achieve comparability with the current period. For example, an entity may not have collected data in the prior period(s) in a way that allows reclassification, and it may be impracticable to recreate the information.

AASB 108 sets out the adjustments to comparative information required when an entity changes an accounting policy or corrects an error.

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 AASB 108 ; or

(b)             an Australian Accounting Standard requires a change in presentation.

For example, a significant acquisition or disposal, or a review of the presentation of the financial statements, might suggest that the financial statements need to be presented differently. An entity changes the presentation of its financial statements only if the changed presentation provides information that is reliable and more relevant to users of the financial statements and the revised structure is likely to continue, so that comparability is not impaired. When making such changes in presentation, an entity reclassifies its comparative information in accordance with paragraphs 41 and 42 .

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The requirement that financial statements should not be misleading. ‘Fair presentation’ is the US and International Accounting Standards equivalent of the British requirement that financial statements give a true and fair view.

From:   fair presentation   in  A Dictionary of Finance and Banking »

Subjects: Social sciences — Economics

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What is the difference between a Fair presentation framework and a Compliance framework?

Financial statements are prepared to fulfill information needs of its users. In order to cater the needs at best a certain financial reporting framework is used considering the jurisdiction in which the entity and/or its users exist. For example two of the popular financial reporting framework are IFRSs and US GAAPs. However, talking about the nature of reporting frameworks, we can have to types of framework:

• Fair presentation framework (also known as conceptual framework)
• Compliance framework (also known as rule-based framework)

Fair presentation framework is such a framework that requires compliance with the provisions of framework but in addition that it acknowledges that:

• in achieving fair presentation management might have to make such additional disclosures that are not specifically required by the framework; and
• in extremely rare circumstances it might be necessary to depart from the requirements of the framework to achieve fair presentation of the entity’s financial position and performance in the financial statements

Compliance framework, as the name suggests, requires compliance with the provisions of the framework i.e. strict obedience of instructions is required and the ones preparing financial statements have no choice but to follow the requirements of framework. Compliance framework does not allow any room or flexibility as given under fair presentation framework.

In simple words, although fair presentation framework requires compliance but it still allows for the alternatives that can achieve better presentation of financial statements resulting in more relevant and reliable financial statements even if management has to make additions or go against the requirements of framework. Whereas, in compliance framework no such leverage is given and under this framework complete compliance is required under any condition.

While preparing financial statements those who are responsible to prepare financial statements needs to inform users regarding the financial reporting framework used and also in case of any departure, if fair presentation framework is used, disclosures shall be made with such prominence as required so that users can understand and also provide the reasons why departure was necessary and how the alternative treatment adopted by the management resulted in more relevant and reliable financial statements.

In audit engagements, auditor has to consider the framework used to prepare financial statements as it has bearing on the audit engagement down to the level of audit report.

it has not complied with what it needs to be complied. That is what happens

what happen if the entity complied with fair presentation framework but not comply with compliance framework?

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Virginia 4-H Contest Guide - Science Fair Presentation & Display

Authors as published.

Prepared by Kathleen Jamison, 4-H Curriculum and Learning Specialist; Katie Lafon, State 4-H Events Coordinator; Kaci Daniel, Extension Agent, 4-H; Kelly Mallory, Extension Agent, 4-H; Bethany Eigel, Extension Agent, 4-H; Celia Brockway, Extension Agent, 4-H; Mandy Simons, Extension Agent, 4-H; Robbie Morrison, Extension Agent, 4-H; Kathy Alstat, Extension Agent, 4-H; Cathy Howland, Extension Agent, 4-H; Stacey Swain, 4-H Youth Educator

Description of Contest

The Science Fair Presentation& Display Contest provides youth with the opportunity to communicate scientific experiment by using the scientific method.

Levels of Competition

Unit (county), District, State

Age categories are as follows, using September 30th of the 4-H year as the determining date.

Juniors (ages 9-11)      Intermediates (ages 12-13)       Seniors (ages 14-18)

Awards to be Earned

The Danish awards system will be used at all levels of competition. Blue ribbons will be awarded to competitors earning 90-100 points; red ribbons will be awarded to competitors earning 75-89 points; white ribbons will be awarded to competitors earning 74 points or less.

Certain Extension districts award a purple ribbon to the highest scoring youth in the category. Districts determine the awarding of these ribbons, but they are generally reserved for blue ribbon winners only. At the state contest, the highest scoring youth will be awarded a project medal. Youth who win the state project medal are ineligible to compete in that category in future years.

Rules for this Contest

Originality  – The youth presenting the demonstration must have been actively involved in the science experiment demonstrated. However, it is acceptable for one youth to present a research project that involved a team effort. There is no restriction on presenting work that was prepared as a school project or other formal activity. If the original project was a group effort, the youth presenting the work must prepare his or her display specifically for this event.

Title  – The title may state the independent and dependent variables. Example: “The Effect of Salt Concentration on the Boiling Point of Water” or may be worded to capture the observers’ interest:”Does Salty Pasta Cook Faster

Size  – The display must be capable of sifting (freestanding) on a 3 ft x 3 ft space on a tabletop. Visual aids and props are allowed, provided they do not obscure the view of the display and relevant to the display. No live animals, or potential dangerous chemicals or substance are allowed.

Time : The science fair presentation will follow the same time limits as other presentations: Juniors (9-11 Yrs) 2-5 minutes, Intermediates (12-13 Yrs) 5-8 minutes, Seniors (14-19) 8-15 minutes. Each youth will be allowed up to three minutes to set up their display before presenting.

Judging Criterion

Content  – The display must “tell the whole story” by itself and will count for 40 out of a total of 100 points toward the final competition score.

Statement of Problem (Question)  – The essential research must be communicated through the problem state- ment. On a display board, a statement followed by the experimental hypothesis often achieves this. Example: “Is the temperature at which a salt/water solution boils higher than the temperature at which pure water boils?”

Hypothesis  – Example: “The more salt added the higher the temperature at which the mixture boils.

Materials  – Materials may be listed or stated in a paragraph format. Example: “Materials required for this experiment were distilled water, table salt, a sauce pan, a measuring cup, a teaspoon measure, a thermometer capable of measuring in the range of 200 to 250 Fahrenheit in one degree increments, and a stove.”

Method  – The procedure (materials methods) should be communicated either as a list or in narrative/paragraph form.

Step 1: Measure one cup of distilled water into a saucepan. (Control) Step 2: Place the saucepan on the stove and bring the water to a boil.

Step 3: Once the water is rapidly boiling, measure and record the temperature to the nearest degree Fahrenheit. Step 4: Discard the liquid and rinse the saucepan in tap water.

Step 5: Repeat steps 1-4 two times for a total of three trials.

Step 6: Repeat steps 1 through 5 except for each repetition add the appropriate amount of salt to the saucepan along with the distilled water (1, 2, 3, 4, and 5 teaspoons of salt)”

Example: “One cup of distilled water was measured into a saucepan. For each trial a measured amount of table salt, varying from hone to five teaspoons (in one-teaspoon increments) was added and the mixture was stirred and brought to a rapid boil on the stove. Once boiling, the temperature was recorded to the nearest degree Fahren- heit. The boiling salt-water mixture was discarded and the saucepan rinsed with tap water. This procedure was repeated three times for each amount of salt.”

Creativity Inventiveness  – The presenter should convey how their experiment is innovative, original or a new approach to the question.

Results : Sufficient graphs and data tables must be presented to communicate the findings and to show how the data supports or denies the experimental hypothesis. Brief sentences summarizing the data may accompany the graphs and tables.

Acknowledgements/Bibliography  – The presenter must acknowledge any outside assistance he or she received in performing the experiment, list resources and site any additional research used.

Conclusion : The major research findings are summarized here. This may be done in list or paragraph form. Possible future research studies may be suggested. Example: “The data clearly show that the saltier the water, the higher the boiling point. Based on this finding it would be interesting to see if pasta will cook more rapidly in salted water than in unsalted water.”

Score Sheet for this Contest

VCE Publication 380-128 “4-H Science Fair Project/Presentation and Display Score Sheet” Available: pubs.ext.vt.edu/380/380-128/380-128.html

Virginia Cooperative Extension materials are available for public use, reprint, or citation without further permission, provided the use includes credit to the author and to Virginia Cooperative Extension, Virginia Tech, and Virginia State University.

Virginia Cooperative Extension is a partnership of Virginia Tech, Virginia State University, the U.S. Department of Agriculture, and local governments. Its programs and employment are open to all, regardless of age, color, disability, sex (including pregnancy), gender, gender identity, gender expression, national origin, political affiliation, race, religion, sexual orientation, genetic information, military status, or any other basis protected by law

Publication Date

June 18, 2020

Available As

• Virginia 4-H Contest Guide - Science Fair Presentation & Display (PDF)

Other resources in:

• 4-H Competition and Scoring Aids
• 4-H Family Sciences
• Science, Technology, Engineering and Math

Other resources by:

• Kathleen Jamison
• Katie Lafon
• Kaci Kaci Daniel
• Kelly Mallory
• Bethany Eigel
• Celia Brockway
• Mandy Simons
• Robbie Morrison
• Kathy Alstate
• Cathy Howland
• Stacey Swain

Other resources from:

• 4-H Youth Development