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Presentation of Financial Statements (IAS 1/AASB 101)

This page contains resources to guide you through the financial reporting requirements for presentation of financial statements.

Articles

Corporate Reporting Insights

BDO's monthly newsletter, Corporate Reporting Insights, keeps you up to date with the latest Australian and global developments in corporate financial and sustainability reporting.

  • Your primary financial statements may look different in future (October 2023)
  • AASB approves changes to the classification requirements for liabilities as current or non-current (February 2023) *
  • New rules for classifying liabilities from 1 January 2024 (November 2022) *
  • Eight ways to make your financial statements say what they mean (March 2022)
  • More changes proposed for classifying liabilities as current or non-current  (December 2021)​ *
  • Latest IFRIC agenda decisions – Costs necessary to sell inventories & non-going concern financial statements​  (July 2021)​
  • How to account for reverse factoring/supply chain financing arrangements (April 2021)
  • Are your borrowings classified correctly as current or non-current liabilities?  (March 2021)
  • Expect to see a reduction in the amount of accounting policy disclosures​  (March 2021)
  • Amendments to classification of liabilities deferred by one year​​  (August 2020) *
  • Changes to IAS 1 – Classification of borrowings as current vs. non-current may change for some entities  (Feb 2020) *
  • IASB amends definition of 'material'  (Nov 2018)
  • Blind Freddy - Common errors in presentation of financial statements - Part 3  (June 2017)
  • Blind Freddy - Common errors in presentation of financial statements - Part 2  (May 2017)
  • Blind Freddy - Common errors in presentation of financial statements - Part 1​  (April 2017).

* These articles deal with amendments to AASB 101 that may, for annual periods beginning on or after 1 January 2024, affect whether entities classify their liabilities as current or non-current. The amendments are contained in amending standard AASB 2020-1  Amendments to Australian Accounting Standards – Classification of Liabilities as Current or Non-current  and AASB 2022-6 Amendments to Australian Accounting Standards - Non-current Liabilities with Covenants  (issued December 2022), which incorporates some but not all, of the proposals contained in   ED 316 (refer to IFRB 2021-13 for details of the ED 316 proposals).

BDO Global IFRS

BDO Global IFRS Resources

BDO Global IFRS Resources

The following publications have been produced by the BDO Global IFRS group:

► IFRS at a Glance

A high level overview of International Financial Reporting Standards (IFRSs), including International Accounting Standards and Interpretations.

► IFRS in Practice

Practical information about the application of key aspects of IFRS, including industry specific guidance.

  • Classification of Loans as current non-current

► IFR Bulletins

Focus on the latest developments in international financial reporting.

  • Primary financial statements – Briefing on the replacement to IAS 1 (IFRB 2023 09)
  • Classificati​on of liabilities as current or non-current: FAQs​  ​(IFRB 2021 06)
  • Going concern - IFRS Foundation publishes guidance on disclosures​  (IFRB 2021 03)
  • ​Effects of climate-related matters on financial statements  (IFRB 2020 14).

* These IFR Bulletins deal with amendments to AASB 101 that may, for annual periods beginning on or after 1 January 2024, affect whether entities classify their liabilities as current or non-current. The amendments are contained in amending standard AASB 2020-1  Amendments to Australian Accounting Standards – Classification of Liabilities as Current or Non-current  and AASB 2022-6 Amendments to Australian Accounting Standards - Non-current Liabilities with Covenants  (issued December 2022), which incorporates some but not all, of the proposals contained in   ED 316 (refer to IFRB 2021-13 for details of the ED 316 proposals).

IFRIC agenda decisions

IFRIC agenda decisions

IFRS Interpretations Committee (the Committee) agenda decisions are those issues that the Committee decided not to take onto its agenda. Although not authoritative guidance, in practice they are regarded as being highly persuasive, and all entities reporting under IFRS should be aware of these decisions because they could impact the way particular transactions and balances are accounted for. Agenda decisions on this topic include:

  • Presentation of financial statements when an entity is no longer a going concern​  (June 2021) and  eLearning​
  • Supply chain financing (reverse factoring) arrangements  (December 2020) and  eLearning  and  FAQ
  • Presentation of assets and liabilities related to uncertain tax treatments  (Sep 2019) and  eLearning  and  FAQ
  • Presentation of interest revenue for particular financial instruments  (March 2018) and  FAQ
  • Presentation of income and expenses arising on financial instruments with a negative yield  (January 2015) and  FAQ
  • Disclosure requirements relating to going concern assessment  (July 2014) and  FAQ
  • Presentation requirements  (May 2014) and  FAQ
  • Actuarial assumptins - discount rate - IAS 19​  (November 2013) and  FAQ
  • Presentation of payments on non-income taxes  (July 2012) and  FAQ
  • Current or non-current classification of a callable term loan  (November 2010) and  FAQ ​
  • Going concern disclosure  (July 2010) and  FAQ
  • Current or non-current asset classification – normal operating cycle  (June 2005) and  FAQ
  • Comparative information for prospectuses  (June 2005).

FAQs

Frequently Asked Questions

FREQUENTLY ASKED QUESTIONS (FAQs) provide insights on a variety of IFRS topics. These FAQs incorporate BDO Global’s expertise as well as IFRS Interpretations Committee agenda decisions. Access to all FAQs on this topic can be accessed here . FAQs relating to IFRS Interpretations Committee agenda decisions can be accessed via IFRIC AGENDA DECISIONS. Other FAQs are listed individually below.

  • Scope of IAS 1.69
  • Unit of account for applying IAS 1.69
  • Effect of covenants – compliance with covenants
  • Effect of covenants – waiver received subsequent to period end
  • Effect of covenants – waiver received prior to period end
  • Effect of covenants – covenants tested after period end
  • Effect of covenants – quarterly testing
  • Effect of covenants – quarterly testing with violation after period end
  • Conditional rollover rights
  • Rollover agreed to prior to period end with a different lender
  • Classification of contract liabilities
  • Classification of trade payables
  • Classification of convertible note – compound financial instrument with a European conversion option
  • Classification of convertible note – compound financial instrument with an American conversion option
  • Classification of convertible note – hybrid financial liability.

Online training

Online Training

Online training resources

Improve your knowledge of accounting standards by purchasing our online training resources on a variety of financial reporting topics. Resources available on this topic include:

  • A seminar – a pre-recorded two-hour webinar that provides a high-level overview of the accounting standard, as well as a question and answer case study booklet.
  • Help and resources
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Reports and publications

Browse our range of reports and publications including performance and financial statement audit reports, assurance review reports, information reports and annual reports.

View reports and publications

The aim of audit insights is to communicate lessons from our audit work to make it easier for people working within the Australian public sector to apply those lessons.

View ANAO Insights

Work program

The ANAO work program outlines potential and in-progress work across financial statement and performance audit.

View the work program

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The Australian National Audit Office (ANAO) is a specialist public sector practice providing a range of audit and assurance services to the Parliament and Commonwealth entities.

Financial statement audit information

Please direct enquiries through our contact page .

This page has information about financial statement audits. 

Introduction

The purpose of this page is to provide additional information to ANAO financial statement auditees. This information should be read in conjunction with the Audit Strategy Document, Interim Management Letter, Final Management Letter and Closing Letter.

Our audit approach

We conduct our audits of financial statements in accordance with the ANAO Auditing Standards, which incorporate the Australian Auditing Standards made by the Australian Auditing and Assurance Standards Board.

Commonwealth entity

In auditing Commonwealth entity financial statements, our overall objective is to obtain reasonable assurance about whether the annual financial statements as a whole are free from material misstatement, whether due to fraud or error, so that we can express an opinion on whether they are in accordance with the Public Governance, Performance and Accountability Act 2013 (PGPA Act), including:

  • complying with Australian Accounting Standards 1 and the Public Governance, Performance and Accountability (Financial Reporting) Rule 2015 ; and
  • presenting fairly the entity’s financial position as at year end and its financial performance and cash flows for the year.

Commonwealth company

In auditing Commonwealth company financial statements, our overall objective is to obtain reasonable assurance about whether the annual financial report as a whole is free from material misstatement, whether due to fraud or error, so that we can express an opinion on whether it has been prepared in accordance with the Corporations Act 2001 2 , including:

  • giving a true and fair view of the company’s financial position as at year end and its financial performance for the year; and
  • complying with the Australian Accounting Standards 3 and the Corporations Regulations 2001 4

Subsidiary company of corporate Commonwealth entity or a subsidiary company of a Commonwealth company

In auditing a company that is a subsidiary of a corporate Commonwealth entity or a subsidiary of a Commonwealth company financial statements, our overall objective is to obtain reasonable assurance about whether the annual financial report as a whole is free from material misstatement, whether due to fraud or error, so that we can express an opinion on whether it has been prepared in accordance with the Corporations Act 2001 , including:

  • complying with the Australian Accounting Standards 5 and the Corporations Regulations 2001 6

We do not seek absolute assurance because of inherent limitations arising from the nature of financial reporting, the nature of audit procedures, and the need for the audit to be conducted within a reasonable period of time and at a reasonable cost. We obtain reasonable assurance by applying our professional judgement to gathering audit evidence and assessing whether it is both sufficient and appropriate.

We direct our audit effort to areas most expected to contain risks of material misstatement, whether due to fraud or error, with correspondingly less effort directed at other areas.

We identify these areas by obtaining and updating our understanding of the auditee, the environment in which it operates, its objectives and strategies and internal control. This includes obtaining an understanding of the information systems and related business processes relevant to your financial reporting objectives (including the accounting system) and how the auditee has responded to any related financial reporting risks. Relevant ANAO performance audits or internal audit activity are considered as part of this process.

Risks may arise due to the nature of, or changes, in the auditee’s business environment and business and accounting processes, including information technology. Sources of risk include changes in the auditee’s functions or objectives, complexity, financial market volatility, global uncertainty, or changes in legislation or the financial reporting framework.

Internal controls are designed and implemented by management to address identified operating, compliance and financial reporting risks in order to achieve the auditee’s objectives. Our particular interest is in the strength of internal control affecting financial reporting in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of internal control.

We may gather the audit evidence we need by testing the operating effectiveness of internal control in addition to substantiating the amounts reported in the financial statements. We evaluate the evidence as the basis for forming and expressing our independent opinion on the financial statements.

Materiality

We apply materiality in establishing our overall audit strategy, assessing the risks of material misstatement, determining the nature, timing and extent of audit procedures and evaluating misstatements identified during the audit.

Information is material where, if omitted, misstated or not disclosed, it has the potential, individually or in aggregate, to influence the decisions of the users of the financial statements. We determine a dollar amount (overall materiality) for this purpose, against which we evaluate identified accumulated misstatements. However, there may also be qualitative factors that impact our evaluation of whether misstatements are material.

We audit individual line items and disclosures to an amount or amounts set at less than overall materiality to reduce to an appropriately low level the possibility that the aggregate of uncorrected and undetected misstatements exceeds materiality for the statements as a whole.

There are some items which in the circumstances of a particular entity may be material because of their nature, rather than because they are large in amount. We regard the following items as material by nature for:

Commonwealth entity audits:

  • note disclosures for annual and special appropriations and special accounts (where relevant);
  • authorisation of investments (where relevant); and
  • disclosure of senior and key management personnel remuneration required by the Public Governance, Performance and Accountability (Financial Reporting) Rule 2015 and the Australian Accounting Standards.

Commonwealth company audits:

  • disclosure of senior management personnel remuneration required by the Australian Accounting Standards.

We will request management to correct all misstatements that we communicate during the audit as a safeguard against accumulated undetected misstatements becoming material.

Consideration of fraud

The primary responsibility for the prevention and detection of fraud rests with both those charged with governance of the entity (TCWG) and management.

We are responsible for obtaining reasonable assurance that the financial statements taken as a whole are free from material misstatement, whether caused by fraud or error. Owing to the inherent limitations of an audit, there is an unavoidable risk that some material misstatements may not be detected, even though the audit is properly planned and performed in accordance with the ANAO Auditing Standards.

‘Fraud’ means an intentional act by one or more individuals among management, TCWG, employees, or third parties, involving the use of deception to obtain an unjust or illegal advantage. Two types of intentional misstatements are relevant to us — misstatements resulting from fraudulent financial reporting and misstatements resulting from misappropriation of assets.

We give particular attention during our audit to identifying fraud risk factors and assessing the risk of material misstatement that might result. Auditing standards require us to specifically address the risk of fraud from the possibility of management override of controls and in respect of revenue recognition.

It is important that you and the Audit Committee communicate to us any matters considered relevant to the audit, including the detection or suspicion of fraud.

Our reports

Commonwealth entities.

The Auditor-General is required to report on the financial statements of Commonwealth entities under section 43(1) of the Public Governance, Performance and Accountability Act 2013 (PGPA Act). As the external auditor, we provide an independent auditor’s report on the financial statements to the responsible Minister(s).

Commonwealth companies

The Auditor-General is required to report on the financial statements of Commonwealth companies under section 98(1) of the Public Governance, Performance and Accountability Act 2013 (PGPA Act). The ANAO provides an independent auditor’s report on the financial report to the members of the Commonwealth company.

Subsidiaries of corporate Commonwealth entities

The Auditor-General is required to report on the financial statements of subsidiaries of corporate Commonwealth entities under section 44 of the Public Governance, Performance and Accountability Act 2013 (PGPA Act). The ANAO provides an independent auditor’s report on the financial report to the members of the subsidiary company.

Subsidiaries of Commonwealth companies

The Auditor-General is required to report on the financial statements of subsidiaries of Commonwealth companies under section 99 of the Public Governance, Performance and Accountability Act 2013 (PGPA Act). The ANAO provides an independent auditor’s report on the financial report to the members of the subsidiary company.

The Auditor-General reports on audits of financial statements to the Parliament twice a year. The first of these reports, Interim Report of Key Financial Controls of Major Entities (Interim Report to Parliament) , reports on our coverage of key financial systems and controls in major entities. The second report, Audits of the Financial Statements of Australian Government Entities (Year End Report to Parliament) , reports on the results of the financial statements audits of all Australian Government entities. All significant or moderate audit findings are reported to the Parliament in these reports.

Audit communication

Legislative compliance

As part of obtaining an understanding of financial statements audit entities and their environment, we obtain a general understanding of the applicable legal and regulatory framework and how the entity is complying with that framework.

We then obtain evidence regarding compliance with the provisions of those laws and regulations which have a direct effect on the determination of material amounts and disclosures in the financial statements. This includes coverage of compliance with the Financial Reporting Rule relevant to financial reporting and Australian Accounting Standards and the appropriations framework.

We also perform audit procedures to help identify instances of non-compliance with other laws and regulations that may have a material effect on the financial statements.

Any compliance matters identified are reported in accordance with the ANAO reporting policy.

ANAO Reporting Policy

The Auditor-General reports on audits of financial statements to the Parliament twice a year. The first of these reports, Interim Report on Key Financial Controls of Major Entities , reports on our coverage of key financial systems and controls in major entities. The second report, Audits of the Financial Statements of Australian Government Entities , reports on the results of the financial statements audits of all Australian Government entities. All significant or moderate audit findings are reported to the Parliament in these reports.

Category A, B and L1 audit findings are reported individually to the Minister and the Parliament in both reports. The aggregated number of Category C findings in major agencies is also reported to the Parliament in the Audit Report Interim Report on Key Financial Controls of Major Entities.

The categories are listed in the following table.

Audit finding categories

Financial reporting developments

The following table lists the accounting standards that the ANAO considers most likely to impact on a majority of Commonwealth reporting entities. Please refer to your entity’s audit strategy document for all relevant developments. A full list of all current accounting standards can be found on the Australian Accounting Standards Board website .

Table: Accounting standards that the ANAO considers most likely to impact on a majority of Commonwealth reporting entities

Work of the ANAO

The ANAO supports the Auditor-General’s conduct of the full range of audits and related services under the Auditor-General Act 1997 . More information about the work of the ANAO .

View the latest financial statement audit reports , including the Interim Report to Parliament and the Year End Report to Parliament .

View the latest performance audit reports .

View the in-progress performance audits .

1  Where the entity is a Tier 2 entity, reference (a) would state: “complying with the Australian Accounting Standards – Simplified Disclosures and the Public Governance, Performance and Accountability (Financial Reporting) Rule 2015” .

2  Where the entity is a Commonwealth company and an ACNC charity, this sentence would be expanded to include Division 60 of the Australian Charities and Not-for-profits Commission Act 2012 .

3  Where the entity is a Tier 2 entity, reference (b) would state: “complying with the Australian Accounting Standards – Simplified Disclosures”.

4  Where the company prepares special purpose financial statements, reference (b) would state: “complying with the Australian Accounting Standards to the extent disclosed in the notes and the Corporations Regulations 2001”.

5  Where the entity is a Tier 2 entity, reference (b) would state: “complying with the Australian Accounting Standards – Simplified Disclosures”.

6  Where the subsidiary company prepares special purpose financial statements, reference (b) would state: “complying with the Australian Accounting Standards to the extent disclosed in the notes and the Corporations Regulations 2001”.

COMMENTS

  1. PDF Presentation of Financial Statements

    ACCOUNTING STANDARD AASB 101 PRESENTATION OF FINANCIAL STATEMENTS from paragraph OBJECTIVE 1 SCOPE 2 DEFINITIONS 7 FINANCIAL STATEMENTS Purpose of financial statements 9 Complete set of financial statements 10 General features

  2. PDF Presentation of Financial Statements

    AASB 101 PRESENTATION OF FINANCIAL STATEMENTS Paragraphs Objective 1 Application Aus1.1 - Aus1.8 Scope 3 - 6 Purpose of Financial Reports 7 Components of a Financial Report 8 - 10 Definitions 11 - 12 Overall Considerations Fair Presentation and Compliance with Australian Accounting Standards 13 - 22 Going Concern 23 - 24

  3. PDF Presentation of Financial Statements

    Australian Accounting Standard AASB 101 Presentation of Financial Statements is set out in paragraphs 1 - Aus138.6. All the paragraphs have equal authority. Paragraphs in bold type state the main principles. Terms defined in this Standard are in italicsthe first time they appear in the Standard.

  4. PDF Presentation of Financial Statements

    IPSAS 1 Presentation of Financial Statements (May 2000) is drawn primarily from IAS 1 Presentation of Financial Statements (revised 1997). The main differences between IPSAS 1 and AASB 101 are: (a) AASB 101 allows the presentation of either a statement showing all changes in net assets/equity, or a statement showing changes in net

  5. AASB 101

    AASB 101 is amended by the Erratum "Proportionate Consolidation" which was issued in July 2007 to insert additional references to proportionate consolidation into Standards and Interpretaions which were not added via AASB 2007-4. The Erratum can be found as supporting material to AASB 2007-4 (F2007L01669).

  6. PDF FACT SHEET AASB 101 Presentation of Financial Statements KEY REPORTING

    a statement of compliance with Australian Accounting Standards. a summary of signifi cant accounting policies applied, including: − the measurement basis (or bases) used in preparing the fi nancial statements, and − the other accounting policies used that are relevant to an understanding of the fi nancial statements.

  7. Presentation of Financial Statements (IAS 1/AASB 101)

    (March 2021) Expect to see a reduction in the amount of accounting policy disclosures (March 2021) Amendments to classification of liabilities deferred by one year (August 2020) * Changes to IAS 1 - Classification of borrowings as current vs. non-current may change for some entities (Feb 2020) * IASB amends definition of 'material' (Nov 2018)

  8. AASB 101

    AASB 101 Standards/Accounting & Auditing as made: This standard prescribes the basis for presentation of general purpose financial statements to ensure comparability both with the entity's financial statements of previous periods and with the financial statements of other entities.

  9. PDF AASB 101 presentation of financial statements

    AASB 101 Presentation of Financial Statements This standard sets out the overall requirements for the presentation of general purpose financial statements (financial statements), guidelines for their structure and minimum requirements for their content.

  10. AASB 101

    Presentation of Financial Statements This compiled Standard applies to annual periods beginning on or after 1 July 2021 but before 1 January 2023. Earlier application is permitted for annual periods beginning after 24 July 2014 but before 1 July 2021. It incorporates relevant amendments made up to and including 6 March 2020.

  11. AASB 101

    Latest version. F2005C00717 01 January 2007 - 30 December 2022. When applicable this Standard supersedes AASB 1001 Accounting Policies, AASB 1014 Set-Off and Extinguishment of Debt, AASB 1018 Statement of Financial Performance, AASB 1034 Financial Report Presentation and Disclosures, AASB 1040 Statement of Financial Position, AAS 6 Accounting ...

  12. IAS 1

    IAS 1 Pre­sen­ta­tion of Financial State­ments sets out the overall re­quire­ments for financial state­ments, including how they should be struc­tured, the minimum re­quire­ments for their content and over­rid­ing concepts such as going concern, the accrual basis of accounting and the current/non-cur­rent dis­tinc­tion.

  13. PDF Presentation of Financial Statements

    AASB 101-compiled 5 CONTENTS Australian Accounting Standard AASB 101 Presentation of Financial Statements (as amended) is set out in paragraphs 1 - 139L.All the paragraphs have equal authority. Paragraphs in bold type state the main principles. Terms defined in this Standard are in italics the first time they appear in the Standard.

  14. AASB 101

    AASB 101 - Presentation of Financial Statements - July 2015. - F2023C00436. In force - Latest Version. View Series. Registered. 16 May 2023. Start Date.

  15. AASB101 Full section

    Australian Accounting Standard AASB 101 Presentation of Financial Statements is set out in paragraphs 1 - Aus140 and Appendices A - B. All the paragraphs have equal authority. Paragraphs in bold type state the main principles. AASB 101 is to be read in the context of other Australian Accounting Standards, including AASB 1048 Interpretation ...

  16. Financial statement audit information

    This Standard amends AASB 101 Presentation of Financial Statements (AASB 101) to defer requirements for the presentation of liabilities in the statement of financial position as current or non-current that were added to AASB 101 in AASB 2020-1 Amendments to Australian Accounting Standards - Classification of Liabilities as Current or Non-current.

  17. Capital One to Acquire Discover

    Under the terms of the agreement, Discover shareholders will receive 1.0192 Capital One shares for each Discover share, representing a premium of 26.6% based on Discover's closing price of $110.49 on February 16, 2024 . Transaction is 100% stock consideration.

  18. PDF Presentation of Financial Statements IAS 1

    Presentation of Financial Statements In April 2001 the International Accounting Standards Board (Board) adopted IAS 1 Presentation of Financial Statements, which had originally been issued by the International Accounting Standards Committee in September 1997.