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• Applies to all entities required to lodge a financial report with ASIC and to all other reporting entities that are required to prepare general purpose financial reports.
 

• Terminology in the standard is suitable for for-profit entities. Not-for-profit entities, public sector and government applying this standard may need to make amendments to line items to suit their circumstances.

• The purpose of a financial report is to provide information about the financial position, financial performance and cash flows of an entity that is useful to users.
 

• A financial report contains:
  • A balance sheet
   
  
  • An income statement
   
  
  • A cash flow statement
   
  
  • A statement of changes in equity
   
  
  • Notes, including a summary of significant accounting policies and other explanatory notes.

• Definitions include impracticable, International Financial Reporting Standards and material.
 

• Australian specific definitions include annual reporting period, Australian equivalents to IFRSs, entity, general purpose financial report and special purpose financial report.

• A financial report must present fairly the financial position, financial performance and cash flows of an entity.
 

• An entity must disclose in the notes:
  • Whether the financial report has been prepared in accordance with Australian Accounting Standards
   
  
  • Whether the financial report is a general purpose financial report, or if applicable, a special purpose financial report.
• If an entity’s financial report complies with IFRSs, it must make an explicit and unreserved statement of compliance in the notes. (Not-for-profit entities do not need to provide this statement).
 

• Financial reports must be prepared on a going concern basis.
 

• In preparing a financial report, the accrual basis of accounting must be used, except for cash flow information.
 

• The presentation and classification of items in the financial report must be consistent from one period to the next, unless AASB 108 applies or an Australian Accounting Standard requires a change.
 

• Each material class of similar items must be presented separately in the financial report.
 

• Comparative information (including narrative information) must be disclosed in the financial report, except when an Australian Accounting Standard requires otherwise.

• Each component of the financial report must be clearly identified, with the following information displayed prominently:
  • Name of the entity
   
  
  • Whether the report covers the individual entity or a group
   
  
  • The reporting date or reporting period covered by the report
   
  
  • The presentation currency
   
  
  • Level of rounding used in presenting amounts.
 

• Financial reports must be presented at least annually.
 
 

• Balance sheet:
  • Must present current and non-current assets and current and non-current liabilities, except when a presentation based on liquidity provides more relevant and reliable information.
   
  
  • An asset is classified as current when any of the following are met:
    • It is expected to be realised or consumed in the entity’s normal operating cycle
     
    
    • It is held to be traded
     
    
    • It is expected to be realised within 12 months after the reporting date
     
    
    • It is cash or cash equivalent
  • A liability is classified as current when any of the following are met:
    • It is expected to be settled in the entity’s normal operating cycle
     
    
    • It is held to be traded
     
    
    • It is due to be settled within 12 months after the reporting date
     
    
    • The entity does not have an unconditional right to defer settlement of the liability for at least 12 months after the reporting date. Where a financial liability is due within 12 months after the reporting date and the entity does not have an unconditional right to defer its settlement for at least 12 months after the reporting date, the liability is classified as current, even where there is an agreement to refinance or reschedule payments completed before the financial report is issued. Similarly when a loan covenant has been breached, the liability is reclassified as current, even if the lender has agreed not to demand payment as a result of the breach.
  • As a minimum, the face of the balance sheet must include:
    1. Property, plant and equipment
     
    
    2. Investment property
     
    
    3. Intangible assets
     
    
    4. Financial assets (excluding e, h and i)
     
    
    5. Investments accounted for using the equity method
     
    
    6. Biological assets
     
    
    7. Inventories
     
    
    8. Trade and other receivables
     
    
    9. Cash and cash equivalents
     
    
    10. Trade and other payables
     
    
    11. Provisions
     
    
    12. Financial liabilities (excluding j and k)
     
    
    13. Current tax liabilities and assets
     
    
    14. Deferred tax liabilities and assets (classified as non-current)
     
    
    15. Minority interest (presented within equity)
     
    
    16. Issued capital and reserves attributable to equity holders of parent
     
    
    17. Assets classified as held for sale or included in disposal groups, and related liabilities (under AASB 5)
  • Additional line items, headings and subtotals are also presented if relevant to understanding an entity’s financial position.
   
  
  • Other balance sheet related disclosures to be disclosed either in the notes or on the face of the balance sheet include:
    • Further subclassifications of line items presented
     
    
    • For each class of share capital, information including number of shares authorised, issued and fully paid
     
    
    • A description of the nature and purpose of each reserve within equity.
 

• Income statement: 
  
  • All items of income and expense recognised in a period must be included in profit or loss unless an Australian Accounting Standard requires otherwise.
   
  
  • As a minimum, the face of the income statement must include:
    1. Revenue
     
    
    2. Finance costs
     
    
    3. Share of profit or loss from associates and joint ventures accounted for using the equity method 
       
    4. Tax expense
     
    
    5. Post-tax profit or loss of discontinued operations
     
    
    6. Profit or loss
     
    
    7. Allocations of profit or loss to minority interests and equity holders of the parent.
  • Additional line items, headings and subtotals are also presented if relevant to understanding an entity’s financial position.
   
  
  • Extraordinary items are prohibited.
   
  
  • When items of income or expense are material, their nature and amount must be disclosed.
   
  
  • Expenses must be presented classified either by nature or function, whichever is more reliable and relevant.
   
  
  • If expenses are classified by function, additional information is required about depreciation, amortisation and employee benefits expense.
   
  
  • Dividends to equity holders and related amount per share must be disclosed either on face of income statement or statement of changes in equity.
 

• Statement of changes in equity:
  • When the face of this statement only includes the following, the statement is titled ‘statement of recognised income and expense’:
    1. Profit or loss for the period
     
    
    2. Each item of income and expense for the period that is required to be recognised directly in equity and the total of such items
     
    
    3. Total income and expense for the period (ie sum of a) and b)), showing separately totals attributable to minority interests and equity holders of the parent
     
    
    4. For each component of equity, the effects of changes in accounting policies and corrections of errors recognised in accordance with AASB 108.
  • An entity shall also present, either on the face of the statement of changes in equity or in the notes:
  1. The amounts of transactions with equity holders, acting in their capacity as equity holders
   
  
  2. The balance of retained earnings at the start of the period, the changes during the period and balance at reporting date
   
  
  3. A reconciliation of the carrying amount of each class of contributed equity and each reserve at the start and end of the period, disclosing separately each change.
 

• Notes:
  • Includes information about the basis of preparation of the financial report and the specific accounting policies used (being the measurement bases used and other accounting policies used that are relevant in understanding the financial report)
   
  
  • Includes disclosures required by Australian Accounting Standards that is not presented on the face of the four statements, and any additional information that is relevant to understanding the four statements.
   
  
  • Must be presented systematically, and each item on the face of the four statements must be cross referenced to any related information in the notes.
   
  
  • Disclosure of judgements made in applying accounting policies and that have a significant effect on amounts recognised must be disclosed.
   
  
  • Disclosure of key assumptions concerning the future and other sources of estimation uncertainty used in determining carrying amounts of assets and liabilities. In respect of those assets and liabilities, their nature and carrying amount at reporting date must also be disclosed.
 

• Capital:
• Disclosure of quantitative and qualitative information that enables financial report users to evaluate an entity’s objectives, policies and processes for managing capital.
 

• Other disclosures include (these are Australian specific):
• Amount of dividends proposed or declared before the financial report was authorised for issue but not recognised, and the related amount per share
 

• The domicile and legal form of the entity, its country of incorporation and address of registered office
 

• Name of parent and ultimate parent of the group
 

• Various auditor related information
 

• Certain information about franking credits
 

• Certain information about capital commitments