Pas 1 To Pas 7 (Cfas Notes)

Philippine Accounting Standard (PAS) 1 presentation of financial statements prescribes the basis for
the presentation of general purpose financial statement, the guidelines for their structures and the
minimum requirements for their content to ensure comparability.
Types of Comparability
 Intra-comparability (horizontal or inter-period) – refers to the comparability of financial

statement of the same entity but from one period to another.
 Inter-comparability (dimensional) – refers to the comparability of financial statements between
different entities.
Comparability requires consistency in the adoption and application of accounting policies and in the
presentation of financial statements.
PAS 1 applies to the preparation and presentation of general purpose financial statements. The
recognition, measurement and disclosure requirements for specific transactions and other events are
set out in other PFRSs.
The terminology used in PAS 1 is suitable for profit-oriented entities. If non-profit organizations apply
PAS 1, they may need to amend the line-items and financial statement descriptions.
 Financial statements – are the structure representation of an entity’s financial position and
result of its operation.
 General purpose financial statement - cater to most of the common needs of a wide range of
external users.
Purpose of Financial Statements
 Primary objective: 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.
 Secondary objective: to show the result of management’s stewardship over the entity’s
resources.
Complete set of financial statements
 Statement of financial position

 Statement of profit or loss and other comprehensive income
 Statement of changes in equity
 Statement of cash flows
 Notes (5a) Comparative information
 Additional statement of financial position (required only when certain instance occur)
General features of financial statements.

 Fair presentation – is faithfully representing, in the financial statements, the effects of
transactions and other events in accordance with the definitions and recognition criteria for
assets, liabilities, income, and expense set out in the Conceptual Framework.
- Compliance with the PFRSs is presumed to result in fairly presented financial statements.
- Fair presentation also requires the proper selection and application of accounting policies,
proper presentation of information, and provision of additional disclosures whenever
relevant to the understanding of the financial statements.
- Inappropriate accounting policies cannot be rectified by mere disclose.
- Compliance must be to all the requirement
- Relevant Regulatory framework – refers to the accounting principles and other financial
reporting requirements prescribed by a government regulatory body.
 Going concern – financial statement are normally prepared on a going concern basis unless the
entity has an intention to liquidate or has no other alternative but do to so.
- When preparing financial statements, management shall assess the entity’s ability to
continue as a going concern, taking into account all available information about the future
which is at least, but not limited to, 12 months from the reporting date.
- Has no realistic alternative but to do so.
 Accrual Basis of Accounting – all financial statements shall be prepared using the accrual basis
of accounting except for the statement of cash flows which is prepared using cash basis.
 Materiality and Aggregation – each material class of similar items is presented separately. A
class of similar items is called “line item”. Dissimilar items are presented separately unless they
are immaterial. Individual immaterial items are aggregated with other items.
 Offsetting – Assets and liabilities or income and expenses are presented separately and are not
offset, unless offsetting is required or permitted by a PFRS.
- Offsetting is permitted when it reflects the substance of the transaction.
- Measuring assets net of valuation allowance is not offsetting.
 Frequencies of reporting – financial statements are prepared at least annually. If an entity
changes its reporting period to a period longer or shorter than one year, it shall disclose the
following;
- The period covered by the financial statements
- The reason for using a longer or shorter period,
- The fact that amounts presented in the financial statements are not entirely comparable.
 Comparative Information – PAS 1 requires an entity to present comparative information in
respect of the preceding period for all amounts reported in the current period’s financial
statements, unless another PFRSs requires otherwise.
- As a minimum, entities present two of each the statement and related notes.
 Consistency of presentation – the presentation and classification of items in the financial
statements us retained from one period to the next unless a change in presentation;
- is required by a PFRS
- result in information that is reliable and more relevant.
Additional Statement of financial position

-A complete set of financial statement includes an Addition Statement of financial position when
certain instances occur.
- The entity applies an accounting policy retrospectively, makes a retrospective restatement of items
in its financial statements, or reclassifies items in is financial statement
- The instance in (a) has a material effect on the information in the statement of financial position at
the beginning of the preceding period.
Structure and content of financial statements

 Each of the financial statement shall be presented with equal prominence and shall be clearly
identified and distinguished from other information in the same published document.
 The following information shall be displayed prominently and repeatedly whenever relevant to
the understanding of the information presented.
- The name of the reporting entity
- Whether the statement are for the individual entity or for a group of entities
- The date of the end of the reporting period or the period covered by the financial
statements
- The presentation currency
- The level of rounding used.
Management’s Responsibility over Financial Statements

 Management – is responsible for an entity’s financial statement.
- The presentation and fair presentation of financial statements in accordance with PFRS
- Internal control over financial reporting
- Going concern assessment
- Oversight over the financial reporting process
- Review and approval of financial statements.
 The responsibilities are expressly stated in a document called “ Statement of Management’s
Responsibility for Financial Statements” – which is attached to the financial statements as a
cover letter. This document shall signed by the entity’s;
- Chairman of the Board ( or equivalent)
- Chief Executive Officer ( or equivalent)
- Chief Financial Officer ( or equivalent)

Pas 1 To Pas 7 (Cfas Notes)

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Pas 1 To Pas 7 (Cfas Notes)

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Philippine Accounting Standard (PAS) 1 presentation of financial statements prescribes the basis for

 Intra-comparability (horizontal or inter-period) – refers to the comparability of financial

Purpose of Financial Statements

Complete set of financial statements

 Statement of financial position

General features of financial statements.

Additional Statement of financial position

Structure and content of financial statements

Management’s Responsibility over Financial Statements

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