The standards, which have been set in the bold type should be read in the context of the background material and implementation guidance in this Standard, and in the context of the Foreword to Financial Reporting Standards. Financial Reporting Standards are not intended to apply to immaterial items.
The objective of this Standard is to prescribe the basis for presentation of general purpose financial statements in order to ensure comparability with both the enterprise's own financial statements of previous periods and with the financial statements of other enterprises. To achieve this objective, this Standard sets out the overall considerations for the presentation of financial statements, guidelines for their structure and minimum requirements for the content of financial statements. The recognition, measurement and disclosure of specific transactions and events is dealt with in other Financial Reporting Standards.
This Standard should be applied to the presentation of all general purpose financial statements prepared and presented in accordance with Financial Reporting Standards.
This Standard supersedes MASB Approved Accounting Standard IAS 1, Disclosure of Accounting Policies, MASB Approved Accounting Standard IAS 5, Information to be Disclosed in Financial Statements and MASB Approved Accounting Standard IAS 13, Presentation of Current Assets and Current Liabilities, issued initially by the Malaysian professional accounting bodies.
General purpose financial statements are those intended to meet the needs of users who are not in a position to demand report tailored to meet their specific information needs. General purpose financial statements include those that are presented separately or within another public document such as an annual report or a prospectus. This Standard does not apply to condensed interim financial information. This Standard applies equally to the financial statements of an individual enterprise and to consolidated financial statements for a group of enterprises.
This Standard applies to all types of enterprises. Additional requirements for some specialised or regulated industries, consistent with the requirements of this Standard, may be prescribed by the relevant regulatory bodies. For example, banks and similar financial institutions must also apply the requirements set out in BNM/GP8 - Guidelines on the Specimen Financial Statements for the Banking Industry.
This Standard uses terminology that is suitable for an enterprise with a profit objective. Public sector business enterprises may, therefore, apply the requirements of this Standard. Non-profit, government and other public sector enterprises seeking to apply this Standard may need to amend the descriptions used for certain line items in the financial statements and for the financial statements themselves. Such enterprises may also present additional components of the financial statements.
This Standard is not intended to apply to the recognition, measurement and disclosure of transactions and events conducted on the basis of Islamic principles. These matters will be the subject of later standards to be issued by the MASB.
Financial statements are a structured financial representation of the financial position of and the transactions undertaken by an enterprise. The objective of general purpose financial statements is to provide information about the financial position, performance and cash flows of an enterprise that is useful to a wide range of users in making economic decisions. Financial statements also show the results of management's stewardship of the resources entrusted to it. To meet this objective, financial statements provide information about an enterprise's:
income and expenses, including gains and losses; and
This information, along with other information in the notes to financial statements, assists users in predicting the enterprise's future cash flows and, in particular, the timing and certainty of the generation of cash and cash equivalents. The structure of financial reporting requirements and the place of this Standard in that structure are illustrated in Appendix 2.
The board of directors or the equivalent governing body of an enterprise is responsible for the preparation and presentation of its financial statements.
A complete set of financial statements includes the following components:
- balance sheet;
- income statement;
- a statement showing either:
- all changes in equity; or
- changes in equity other than those arising from capital transactions with owners and distribution to owners;
- cash flow statement; and
- accounting policies and explanatory notes.
Enterprises are encouraged to present, outside the financial statements, a financial review by management which describes and explains the main features of the enterprise's financial performance and financial position, and the principal uncertainties it faces. Such a report may include a review of:
the main factors and influences determining performance, including changes in the environment in which the enterprise operates, the enterprise's response to those changes and their effect, and the enterprise's policy for investment to maintain and enhance performance, including its dividend policy;
the enterprise's sources of funding, the policy on gearing and its risk management policies; and
the strengths and resources of the enterprise whose value is not reflected in the balance sheet under Financial Reporting Standards.
- Many enterprises present, outside the financial statements, additional statements such as environmental reports and value added statements, particularly in industries where environmental factors are significant and where employees are considered to be an important user group. Enterprises are encouraged to present such additional statements if management believes they will assist users in making economic decisions.