Objective of Financial Statements

To provide information about the financial position,

performance and cash flows of the entity that is useful for
economic decision making by a broad range of users who
are not in a position to demand reports tailored to meet
their particular information needs.
Financial statements also show the results of the
stewardship of management and the accountability of
management for the resources entrusted to it.

Qualitative Characteristics
1. Understandability
2. Relevance
3. Materiality
4. Reliabiltiy
5. Substance over form
6. Prudence
7. Completeness
8. Comparability
9. Timeliness
10.Balance between benefit and cost

Elements of Financial Statements

Related to the measurement of financial position
1. Assets
2. Liabilities
3. Equity
Related to the measurement of performance
4. Income
5. Expense

Recognition of Elements
Recognition- is the process of incorporating in the
statement of financial position and statement of
comprehensive income an item that meets the definition
of an element and satisfies the following criteria:

a.
b.

It is probable that any future economic benefit

associated with the item will flow to or from the
entity.
The item has a cost or a value that can be measured
reliably.

Measurement of Elements
Measurement- is the process of determining the monetary
amount at which an entity measures asset, liability,
income and expense in its financial statements.
The PFRS for SME s and full PFRS share the same
provisions on the definition, recognition and measurement.
The only significant difference is the measurement of the
elements of financial statements.

PFRS for SMEs vs. Full PFRS

The common measurement bases are two only:

1.
2.

Historical cost
Fair Value
Under Conceptual Framework for Financial Reporting, the
measurement bases are
3. Historical cost
4. Current cost
5. Realizable value
6. Present value

1.
2.
3.
4.
5.
6.
7.
8.

General Feature of Financial

Statements-SMEs

Fair Presentation and compliance with PFRS for SMEs

Going Concern
Accrual Basis
Materiality and Aggregation
Offsetting
Frequency of reporting
Comparative Information
Consistency of Presentation

PAS 1 contains the same provisions on the general

features in the preparation of financial statements.

Complete Set of Financial

Statements
IFRS for SMEs

Complete set of FS includes:

Statement of Financial Position
Statement of Income
Statement of Cash Flows
Statement of Changes in
Equity
Statement of Comprehensive
Income
Notes to Financial Statements
Statement of income and retained
earnings may be presented in
place of Statement of changes in
equity and Statement of
comprehensive income

Full IFRS
Complete set of FS includes:
Statement of Financial
Position
Statement of Income
Statement of Cash Flows
Statement of Changes in
Equity
Statement of
Comprehensive income
Notes to Financial
Statements
A single statement of income
and retained earnings is not
permitted under full PFRS. A
statement of changes in

Information not required by PFRS for

SMEs
The PFRS for SMEs does not require the presentation of the
following:
a. Segment Reporting
b. Earnings per share
c. Interim financial reports
An SME making such disclosures shall describe the basis for
preparing and presenting the information.

Statement of Financial Position:

Minimum Information

Cash and cash equivalents

Trade and other
receivables
Financial assets
Inventories
Property, plant and
equipment
Investment property
Intangible assets
Biological assets carried at
cost less accumulated
depreciation
Biological Assets carried
at fair value through profit

Investment in associates
Investment in jointly
controlled entities
Trade and other payables
Financial liabilities
Liabilities/Assets for
current taxes
Deferred tax
liabilities/assets
Provisions
Non-controlling interest
Equity attributable to the
owners of the parent

Statement of Comprehensive IncomeMinimum Information

Revenue
Finance costs
Share of the profit or loss
of investment in associates
and jointly controlled
entity accounted for using
the equity method
Tax expense
A single amount
comprising the total of
post-tax effect of
discontinued operation
and post tax effect of
disposal of net assets
constituting discontinued
operation

Each item of other

comprehensive income
Share of the other
comprehensive income of
investment in associates
and jointly controlled
entity accounted for using
the equity method
Total comprehensive
income

Note: Disclose separately the profit or

loss and total

comprehensive income
attributable to:
Non-controlling interest
Owners of the parent