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10 Slide Ideas for Financial Report Presentation

Last Updated on February 7, 2024 by Anastasia

Working on a company financial report, and want to make it different this time? Financial reviews full of data and analysis are typically difficult to be digested by non-financial audiences, and it can be challenging to communicate the meaning behind the figures. If you want to disclose your quarterly or annual numbers in a simple and understandable way to your key stakeholders, check our blog for examples and inspiration.

A financial report is a management tool used to communicate key financial information to both internal and external stakeholders by covering aspects of financial affairs with the help of KPIs, such as income statements, balance sheets, cash flow, or financial ratios analysis. See how to prepare structured and professional financial slides smoothly using PowerPoint tools.

All graphics examples presented below can be downloaded as an editable source. Explore the Financial Report and Performance Indicators Presentation for PowerPoint.

Get inspired by seven examples of how you can illustrate the components of your financial report and a quick instruction on how you can create a P&L Statement table using simple design tricks.

Visualize your key financial indicators

Such a general slide with a financial summary will help to analyze the big picture and ensure you’re on the same page with the audience.

You can list the common key indicators such as Global Net Revenue, Like for Like Growth, Cash Conversion Cycle, Profit Before Tax. A neutral background picture makes the slide more attractive and circles with highlights on the right help to stay focused on important numbers.

Show revenue and profit snapshot on one dashboard slide

This slide shows how you can summarize net sales and profitability evolution using gauges and a simple bar chart. The dashboard illustrates typical profitability measures: Net Sales, Operating Expenses, EBIDTA, and PBT as easy-to-read gauge charts. The profit growth over the years is shown as a clear bar chart.

Illustrate revenue highlights with clear charts

If you’d like to include additional data, for example, revenue highlights over time or regions, you can do it as on the slides above. The first one presents sales distribution breakdown by months and categories. The second slide example presents sales split by worldwide markets geographies on a world map as light background underlining the location of the markets.

Small elements, like pin icons, doughnut charts, and color-coding will help you add a professional look to your presentation.

Pro tip: To help non-financial people digest the data, keep your slides short, don’t stuff them with jargon words . Use illustrations, and make the most essential data points clearly visible.

Include balance sheet and cash flow tables

The very common problem is the unreadability of massive tables. The balance sheet and cash flow statement will be definitely complex, as you need to squeeze many numbers inside.

Notice how color-coding is used for various table sections, and illustrative symbols, which don’t steal attention from the content, rather nicely add up. A text box aside can be used for your comments or notes.

Compare key drivers of a revenue growth

To illustrate the comparison of several growth drivers, you can apply such stacked bars.

Notice how specific drivers (E-commerce, Emerging Markets, Organic Growth, New Product Lines) are illustrated by corresponding icon symbols, all in one consistent style.

Visualize revenue analysis for each quarter in your financial report

To present an analysis of sales revenue over the year, you can use such a bar chart. It’s slightly enhanced by adding quarter signs over the data chart.

This data chart illustrates revenue analysis split by quarters and channels. If you have some comments or notes you’d like to discuss, we advise putting the most essential point in bold.

Present your financial metrics and indicators as a dashboard grid

Want to go deeper and include the analysis of some ratios? A good idea is to firstly remind your audience what are those indicators and what exactly they show.

If you have more items to show on one slide, it’s good to organize them to some regular grid. Make sure all elements are aligned to make it look professional.

If you have more items to show on one slide, it’s good to organize them to some regular grid.

You can include general definitions and development of key financial ratios e.g. growth, profitability, liquidity, efficiency, solvency, and capital market ratios. On the slide example, you can see the capital market ratios KPI line chart which shows Dividend Yield and P/E Ratio change over the years.

Guide on how to redesign P&L Statement to a stylish table

Here’s a step-by-step guide on how you can create a P&L Statement table using simple shapes, icons, and a few tricks that will save you time.

1. Use simple PowerPoint shapes to create a stylish table design.

2. Adjust your source P&L table to be readable.

The trick is to have enough margin inside the table cell.

3. Enhance the table header

Add ribbon shapes as an additional header row to make the table look nicer.

4. Redesign the first column

You can add stylish arrows in a place of 1st table column.

5. Enrich your table with icons and a background picture.

See the whole instruction and other visual examples here: How to Create an Effective Company Financial Report Using PowerPoint.

Need to prepare a broader annual report and focus on business highlights? See how to create a comprehensive overview of activities using graphs, icons, infographic elements, and data-driven charts in this blog .

Resource: Financial Report and Performance Indicators Presentation

The graphics in this blog are a part of our financial report layouts collection. Our financial review deck incorporates 30 infographics slide templates for a financial summary overview, balance sheets with assets and liabilities, income statement, profit and loss reports, revenue and profit snapshot, cash flow statement, explain types of financial ratios, key growth drivers, or breakdown of your operational expenses.

You can reuse graphs and charts, and tailor them to your needs in order to make your slides clear and easy to understand. See the full deck here:

Financial Report and Performance Indicators PPT Presentation

Using concise, modern images will make your PowerPoint structured and consistent. To make your presentations even more appealing, consider also using this collection of professionally designed diagram layouts .

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Company's Financial Statements

Company's financial statements presentation, premium google slides theme and powerpoint template.

In the business world (where money is everything, or some say so), financial statements provide critical insight into a company's financial performance, position, and stability. In other words, it's like more than a balance sheet, and more than comparing profit and loss. Maybe you can help us be more specific by using our editable template. Its white color and its design makes everything clear and easy to understand. Thanks to the resources included, it's perfect for company executives, accounting professionals, and investors who need to study financial statements for decision-making purposes. And everything can be adapted to your own branding needs.

Features of this template

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IAS 1 Presentation of Financial Statements: Summary

IAS 1 Presentation of Financial Statements represents a basis of the whole IFRS reporting, as it sets overall requirements for the presentation of financial statements, guidelines for their structure and minimum requirements for their content.

Financial Statements

Purpose of the financial statements is 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.

The complete set of financial statements compliant with IFRS comprises 5 elements:

• a statement of financial position as at the end of the period
• a statement of comprehensive income for the period
• a statement of changes in equity for the period
• a statement of cash flows for the period
• notes containing a summary of significant accounting policies and other explanatory information.

If some accounting policy is applied retrospectively, or some retrospective restatements or reclassifications were made, then also a statement of financial position as at the beginning of the earliest comparative period shall be presented.

IAS 1 explains the general features of financial statements, such as fair presentation and compliance with IFRS , going concern, accrual basis of accounting, materiality and aggregation, offsetting, frequency of reporting, comparative information and consistency of presentation.

Structure and Content

IAS 1 requires identification of the financial statements and distinguishing them from other information in the same published document.

Every element of the financial statements shall contain the name of the reporting entity, the information whether the financial statements are of an individual or of a group, the date of the reporting entity and period covered, the presentation currency and the level of rounding (thousands, millions…).

IAS 1 lists the minimum content to be presented in the financial statements, except for the statement of cash flows (subject to IAS 7). So let’s look at it in a detail.

Statement of Financial Position

Before significant amendments of IAS 1, this statement was simply called “balance sheet”, however, it was renamed.

IAS 1 requires presentation of classified statement of financial position where current assets or liabilities are separated from non-current assets or liabilities. Basically, the asset or liability is current when it is expected to be recovered or settled within 12 months after the reporting period.

With regard to a minimum content, the following line items shall be presented:

Further subclassifications of the line items shall be disclosed either directly in the statement of financial position or in the notes, such as disaggregation of property, plant and equipment into classes, and similar. Also, certain information related to the share capital, reserves and a few others shall be included in the statement of financial position, the statement of changes in equity or in the notes.

IAS 1 does NOT prescribe the precise format of the statement of financial position. Instead, several formats are acceptable if they fulfill all requirements outlined above.

Statement of Comprehensive Income

The statement of comprehensive income has 2 basic elements:

• Profit or loss for the period : here, all items of income and expenses must be recognized.
• Other comprehensive income : items recognized directly to equity or reserves, such as changes in revaluation surplus, gains or losses from subsequent measurement of available-for-sale financial assets, etc.

As a minimum , the statement of comprehensive income must contain the following items:

As opposed to US GAAP , IAS 1 prohibits to report any transaction or item as extraordinary items.

Profit or loss for the period, as well as total comprehensive income shall be both presented in allocation:

• attributable to non-controlling interests and
• attributable to owners of the parent.

The entity might choose to classify expenses recognized in profit or loss for the period by their nature or by their function.

IAS 1 requires disclosure of certain items separately , either in the statement of comprehensive income, or in the notes. These items are as follows: write-downs of inventories and property, plant and equipment, their reversals, restructuring of activities and reversals of related provisions, disposals of property, plant and equipment, disposals of investments, discontinuing operations, litigation settlements and other reversals of provisions.

Statement of Changes in Equity

As a minimum , the statement of changes in equity must contain the following items:

• total comprehensive income for the period, showing separately amounts attributable to owners of the parent and to non-controlling interests
• the effect of retrospective application or restatement for each component of equity (if applicable)
• those resulting from profit or loss
• resulting from other comprehensive income
• resulting from transactions with owners (contributions, distributions and changes in ownership)

Also, IAS 1 prescribes to present amount of dividends recognized as distributions and the related amount per share on the face of the statement of changes in equity or in the notes.

Notes to the Financial Statements

The notes are meant to be the document accompanying numerical financial statements listed above. They should provide additional information not contained in the numbers, the basis of preparation of the financial statements and some additional information that might be relevant.

IAS 1 sets that the notes shall contain a statement of compliance with IFRS , summary of significant accounting policies applied, supporting information for the numbers presented in the financial statements and other disclosures.

You can read more about the notes and how to write them in this article .

IAS 1 is shortly summarized in the following video:

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43 Comments

Thank you for simplifying this standard . It is very helpful in my study and revision . looking forward to the other standards

A speed point machine, is it an asset that needs to be recorded in a business if they are using it?

Dear Silvia, Are prudence and conservatism concepts still applicable now under the new Conceptual Framework?

Hi I want to know can we prepare multiyear financials (i.e. 2 years to show I comparatives) as per the international auditing standards

SILIVAIA I really apprentice the presentation please can i have the ppt.?

Hi Asmera, no sorry, we only provide pdf to our subscribed students of the IFRS Kit.

Hi i have case that we debit the account Other comprehensive income (Re-measurement losses / Gain on defined benefit liability) by amount 12 Million and credit two account one of them is end of service expenses ( P&L item) by 7 Million and other account is provision of end of service by 6 Million Dr/ Other comprehensive income 12 Million Cr/ End of service expense ( P&L Item). Cr/ Provision of end of service ( Balance sheet item). my question :- 1- Other comprehensive account will be appear in balance sheet and income statement 2- and if it must appear in income statement shall we put total balance of this account 12 Million or just put 6 Million which is came from PL and ignore the 7 Million which came from provision of end of service as it is balance sheet item

This video has made my understanding of IAS 1 more clearly and understandable.I can confidently say I`am ready for the test.

I didn’t see any explanatiins for Cash Flow statement. This is also an element of Financial Statement as whole. Or would that mean it is no longer considered as part the whole reported Financial Statement?

You did not see it because it is not covered by IAS 1 (and, you are reading the article about IAS 1). You should check out IAS 7 .

Hello Silvia, Can you please help me to know as to what is the objective of creating Other Comprehensive Income and how to decide what all items should go to Other comprehensive income and Profit or loss account ?

Hi Diksha, I think this article can give you the answer . S.

hello siliva, help me with tax expense computation when u have provision, some balance due

In my opinion the documents that you share through social media is more attractive and brief to understand. I would like to follow you! Please, would you like to share brief notes and explanation on IFRS 9. By focusing MFI in detail!

Til now, I don’t understand what is the main consideration, if any, the IASB classifies a transaction as profit or loss while another as other comprehensive income. Is there any theoretical foundation or something behind the existence of other comprehensive income items?

Dear Siklus, I think this article might help . S.

Dear Sylvia, if a Company made a decision to decrease share capital (due to accumulated loss that existed on December 31, 2016) on January 17, should this be treated as an adjusting event?

Thank you very much for your help!

It depends on when the decision was made. If after 31 Dec 2016, then no, it’s non-adjusting event. S.

amazing presentation of statement of financial position but other comprehensive income should elaborate clearly. Over all presentation was very good . I also learn from that.thank you very much

Very lucid explanations. Thanks

The presentation is very knowledgeable. Is it possible for you to mail me the ppt. It would be of great help.

Hi Silvia, is it required by the standard to present the subscribed share capital with the outstanding balance of subscription receivables or a presentation of share capital would be fine?

comprehensive and material indeed

helped me tounderstand the IFRS

dear waseem…we record purchase cost as 110000.coz we did not avail the discout optiom given by the seller.

I have doubt in IAS 2. Lets say for a example, a manufacturer purchased raw material by giving 4 months pd cheque for 110,000. If they had paid by cash, price would be 100,000. What is treatment for this difference? Can we record this difference of 10,000 as finance charges?

Hey Silvia, I was about to subscribe. But I found that the name of my country (Bangladesh) is not in the list. Please let me know.

thank you for help

wow, made my studies simpler and to make sense…a superb summary indeed.

clearly and comprehensive IAS1 elaborated

Great site and well summarized IASs

very well summarized and it is very good for accounting students. thank you.

Verry good!IAS 1 !

very good indeed.impressed for days

great work………..

Great Vedio…

IT IS WELL ARRANGED OF STATEMENT.

Excellent summarized information of IAS-1

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Home Blog Financial Statement Templates For PowerPoint Presentations

Financial Statement Templates For PowerPoint Presentations

Making financial statements to create a formal record of the financial activities of your business or for household budgetary tasks can be easily done using Microsoft Excel or other professional accounting applications. However, when it comes to presenting these statements in the form of presentation slides, even the expert accountants may feel out of luck!

Financial Statement Presentation Templates for PowerPoint

One of the main reasons for the difficulty in making presentations for financial statements is due to the various details that need to be cramped into a single slide. Furthermore, making such a slide easy to grasp or attention grabbing is even more difficult. This is why we have compiled a list of some attractive financial statement templates to help you present financial statements like a Balance Sheet , Income Statement or Cash Flow Statement , with the help of convenient PowerPoint slides.

Financial PowerPoint Template

If you need a comprehensive finance presentation template with slides containing attractive, editable charts, clipart and suitable layouts for making finance related presentations, then this is just the template you need. You can not only use this template for making presentation slides with financial statements but also create other types of business and finance related presentations with the given sample slides.

Go to Download Financial PowerPoint Template

Income Statement PowerPoint Template

As the name suggests, this is the perfect template for making an income statement presentation. You can present revenue, expenses and profit & loss reports with the help of clear and attention grabbing slides, which have been designed by expert professionals to deliver a positive impact on your audience. The color combination and overall slide design is quite impressively laid out, with added placeholders for creating and displaying income statements in PowerPoint.

Go to Download Income Statement PowerPoint Template

Simple Balance Sheet PowerPoint Template

Suitable for making balance sheets , this template offers a wide range of attractive slide designs for making balance sheets, with the help of basic slide designs or eye-catching clipart. Whether you are looking for something simple for displaying a balance sheet in PowerPoint or need some nice clipart and graphics to prove your point before an audience, this template can help you get the job done.

Go to Download Simple Balance Sheet PowerPoint Template

Financial Projections & Key Metrics Template for PowerPoint

This is a more elaborate template for making different types of income statements, with key metrics. While the template has been designed with sample slides labeled for making a cash flow statement , you can easily edit these slides to reflect a different type of financial statement, such as an income statement or balance sheet.

Go to Download Financial Projections & Key Metrics Template for PowerPoint

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One Response to “Financial Statement Templates For PowerPoint Presentations”

I am in an Accounting 203 class in college. I am trying to find examples of how to show startup (not yet open for business) data on a PowerPoint.

Can you offer suggestions?

Jerome Cherry

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Example Presentation Of Financial Reports Powerpoint Presentation Slides

If you are looking to represent your financial statements, then use our example presentation of financial reports PowerPoint presentation slides. Incorporate this financial statement analysis presentation template to provide a detailed financial detail about your company to your business creditors, investors and analysts which will help them to know about the financial position of the business stability. This financial results PPT template will further result in taking the effective business decisions in accordance to your company’s prevailing position in the competitive market. Utilize this financial report of a company PowerPoint slide as a device which directs your administration to have a control on different business errands. Our financial statement example PowerPoint design is crafted by our group of professional experts for your business development. Thus, showcase your financial record with this interesting PPT layout. Place a bet on our Example Presentation Of Financial Reports Powerpoint Presentation Slides. They will come up trumps everytime.

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Introducing Example Presentation of Financial Reports PowerPoint Presentation Slides. Competently constructed and readily useable and downloadable PowerPoint template, amend able subject matter, PowerPoint images, types, font etc., Prompt content with flexible option to insert company logo, trademark or name, High resolution PPT templates conveying the related concept in an extensive manner, well served with all Google slides, projected on wide screen with high quality PPT graphics.

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Presenting financials to boards: A how-to guide.

​Presenting financials to a board may, on the face of it, seem like a fairly straightforward task. Actually, it’s not. That’s because you’re not just presenting financials, you’re telling a story. And good storytelling is hard to do.

I’ve learned that getting it right requires a combination of a strong narrative, unambiguous messaging, and clear visuals that effectively communicate the data. Knowing how to frame the story begins by understanding your audience. Because not all boards, and not all board members, are the same, doing the groundwork to understand the board, its members, and their priorities, is a critical first step.

In general, determining the kind of board depends on whether its members see their role as partners in the operational running of the business or as being more focused on broad oversight. This is often influenced by what type of investors are on the board. When a board is composed of private equity investors, it’s likely that they will be more active and engaged in company decision making. Private equity investors tend to have smaller portfolio companies and take an active role in operational matters and decision making to support the results they are seeking from each of their portfolio companies. These members typically want to see more detail in order to gain a deeper understanding of the financial data, options, and context for decision making.

In contrast, VC investors tend to make more investments, spreading their bets across a broader portfolio of companies. As such, as board members, they’re less focused on tactical decision making, and on the operational details impacting a company, and instead are more interested in key valuation metrics and trends.

After establishing whether a board wants details for decision making or more summary information to support oversight responsibility, take a closer look at the individual members and their preferences for information. I suggest arranging a 30-minute meeting with each member right from the start to set expectations and determine the priorities of each. What metrics are they looking for? How do they define company success? Boards add and replace members at various points, so this interview should be conducted each time a new member joins. How will the new member impact the dynamic of the entire board?

Understanding board members’ goals allows the executive team to be proactive, not reactive, in deciding which metrics to include and how much depth to display. 

Create a document to serve as a minimum viable product (MVP) — to borrow a term — to circulate before the first presentation. Ask for feedback on the MVP from each member and incorporate their thoughts into the final presentation. This template then becomes the working model going forward.

Think visually.

Having a solid mastery of the numbers underlying a report is essential, but that doesn’t mean that a board needs, or wants, all the details. Instead, convey a sense of confidence in the numbers and faith in their accuracy. Present a narrative that will grab their attention, without overwhelming with detail. A few visual presentation strategies include:

1. Avoid long lists of bullet points:  Filling every slide with bullets was my first instinct when I started preparing board decks, but I was quickly disabused of the practice. I now follow a general rule that a board slide shouldn’t contain any more than four bullet points. This can be challenging, but the audience is really only looking for key information. Most members spend just a few seconds looking at a slide, so a presentation has to make the most of their time.

2. Presenting information visually is a much more concise way to convey it:  Most of us finance types don’t have the visual or graphic design skills first cataloged by Edward Tufte in his seminal work “The Visual Display of Quantitative Information.”

We’ve been steeped in spreadsheets, pivot tables, and simple graphics, which are not what a board wants to see. I am always considering new ways of visualizing data and am on the lookout for great graphs that others have created. 

The ultimate goal is to paint a picture with the numbers. For example, one metric everyone likes to see is cash activity — displaying the dynamic nature of this metric makes it easier for board members to instantly understand the trends.

3. Remember that some board members may not have a thorough understanding of the industry:  Take a step back and think about how to best convey the important points. The words and images should tell a story about what the numbers mean. So, for example, don’t just show the LTV:CAC ratio. Interpret the number and share guidance around it. Where is it going? What action is needed to achieve the company’s goals?

Depending on the makeup of the board, this may require including detailed financials, but make sure they’re in an appendix at the end of the presentation. A screenshot of the cash balance sheet and income statement can always be referenced if necessary.

Determining benchmarks for success.

The chosen metrics will require agreed-upon benchmarks to put them into context. These benchmarks are typically determined by management since they have the best knowledge of the company. However, some board members may have a depth of experience in the industry sector to contribute information about benchmarks, and this is something that should be uncovered in the initial due diligence with them. Benchmarks can also be drawn from research into public information, such as competitors’ SEC filings. Investment bankers and equity research analysts are good resources. I suggest taking the time to cultivate relationships with them to help stay on top of industry trends.

For growing companies in relatively new industries, it’s probably most effective to look at the traditional indicators of growth, such as lifetime value, CAC, and customer payback period, as well as traditional financial metrics, like EBITDA and revenue per employee. It’s easy to compare these metrics against other companies under a similar umbrella, even if they’re not direct competitors.

From the board’s point of view, it comes down to being able to show how well a business is deploying capital and labor. Newer sectors can be more difficult to benchmark because there isn’t enough available data. But in those instances, the metrics that are traditionally observed by startups should be relevant. The indicators of success for a technology company don’t vary too much, no matter what industry their product targets.

The flow of information to the board.

Adapt content to fit the general cadence of the board meetings. For example, on a quarterly basis, prepare a more comprehensive and broad report to reach the whole audience, encompassing a three-month summary of activity and including all relevant metrics. For a monthly report, prepare a more simplified version, with a max of five or six pages, that can be easily tailored to each board member, and perhaps includes custom metrics that reflect each member’s specific interest. When I say customized, I am not suggesting presenting different metrics altogether. Instead, consider providing variations of the same dataset. Investors who are more interested in tracking the short-term progress of a company might appreciate a weekly report showing specific KPIs.

Looking to the future.

Technological advances have given us more access to data than we’ve ever had before, and I expect that to continue. My view is that, over time, even though research and data crunching will be automated, we’ll need the critical-thinking skills of finance experts to pull it all together.

Data and data analytics will play increasingly powerful roles. I view this wealth of information as an opportunity to create more customized data visualizations for boards in order to foster better business decisions and more successful companies. 

This is something that every board, irrespective of its composition, is ultimately focused on.

I’ve compiled a small library of graphic displays that I’ve found useful. Below are some examples.

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Chapter 3 Preparation of Financial Statements

Mar 16, 2019

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Chapter 3 Preparation of Financial Statements. Objectives. By the end of this chapter, you should be able to: understand the structure and content of published financial statements; explain the nature of the items within published financial statements;

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Chapter 3Preparation of Financial Statements

Objectives By the end of this chapter, you should be able to: • understand the structure and content of published financial statements; • explain the nature of the items within published financial statements; • prepare the main primary statements that are required in published financial statements (the statement of cash flows is covered in Chapter 5); • comment critically on the information included in published financial statements.

Preparing an income statement The steps are: • Prepare the trial balance • Identify year-end adjustments • Calculate year-end adjustments • Prepare an internal income statement.

Components of Financial Statements • Remember: The following accounts are included in: • The Balance sheet • Assets • Liabilities, and • Equity • The Income Statement • Revenue (income) • Expenses

The format of statements of income for publication IAS 1 allows a company to choose between two formats for detailing income and expenses. • Format 1: Vertical with costs analysed according to function, for example cost of sales, distribution costs and administration expenses; or • Format 2: Vertical with costs analysed according to nature, for example raw materials, employee benefits expenses, operating expenses and depreciation.

Classification of operating expenses and other income by function Classify operating expenses into one of four categories: • Cost of sales • Distribution and selling costs • Administrative expenses • Other operating income or expense.

Cost of sales May include: • Direct materials; direct labour; other external charges that comprise production costs from external sources. • Overheads: variable and fixed production overheads. • Depreciation and amortisation: depreciation of non-current assets used in production and impairment expense; • Adjustments: capitalisation of own work as a non-current asset.

Distribution costs Costs incurred after the production of the finished article and up to and including transfer of the goods to the customer. For example: • Warehousing costs such as rent, rates and wages • Promotion costs such as advertising • Selling costs such as sales staff salaries and commissions and cost of rent, etc. on showrooms • Transport costs, for example gross wages and pension contributions of transport staff, vehicle costs such as running costs, maintenance and depreciation.

Administrative expenses Costs of running the business that have not been classified as either cost of sales or distribution costs. For example: • Administration, for example salaries • Property costs, for example rent and rates • Bad debts • Professional fees – Eg. Audit fees, directors’ fees.

Other operating income or expense Derived from ordinary activities of the business that have not been included elsewhere. For example: • Income from intangible assets such as royalties • Income from employees such as from canteen repayments to use intangible assets like licences.

Statement of comprehensive income Figure 3.4 Statement of comprehensive income Figure 3.4 Statement of c

Statement of comprehensive income (Continued) Gains and losses that were previously recognised directly in equity and presented in the statement of changes in equity. Unrealised gains/losses that cannot be claimed as part of net profit from operations For example: From the revaluation of non-current assets and from other items relating to Financial Instruments and Employee Benefits.

Statement of comprehensive income (Continued) Figure 3.4 Statement of comprehensive income (Continued)

Information disclosed by way of note Accounting policies Details of certain items that have been charged in arriving at Operating Profit. For example: • Showing the makeup of individual liabilities and assets • Sensitive items such as auditors’ remuneration • Subject to judgement - depreciation • Exceptional items – unusually high/low, or occur infrequently.

Current tax Current tax is: • An estimated figure • Treated as an expense in the Statement of income • A current liability in the Balance Sheet • The actual tax expense for a year might be higher or lower than the company’s estimate which leads to under- or over-provisions being made. Under-provisions will be • Added to the following year’s estimated tax charged in the Statement of income. Over-provisions will reduce the following year’s tax charge

Deferred tax Capital allowances • Tax may be deferred when the percentage allowed by the tax authorities for depreciation differs from the rate charged as depreciation by the company Interest receivable – Income not chargeable to tax • For tax purposes, it is a Taxable temporary difference. • We look at accounting for tax next week

The statement of financial position(Balance Sheet) • IAS 1 specifies which items are to be included on the face of the statement of financial position, for example • Property, plant and equipment • Inventories • Trade and other payables. • It does not prescribe the order and presentation that is to be followed • In almost all cases it would be appropriate to split items into current and non-current.

Assets in Balance Sheet

Statement of changes in equity The statement of changes in equity will show the following items: • Total comprehensive income and expense for the period, showing separately the total amounts attributable to equity holders of the parent and to non controlling interests • b) For each component of equity, the effects of changes in accounting policies and corrections of errors recognised in accordance with IAS 8 • c) The amounts of transactions with equity holders in their capacity as equity holders, showing contributions by and distributions to equity holders separately.

Statement of changes in equity Figure 3.7 Statement of changes in equity for the year ended 31 December 20X1 After-tax profit from ordinary activities Other comprehensive income

Other items appearing in a statement of changes in equity Other items may include: • Prior period adjustments • Share issues • Transfers from revaluation reserve.

Illustration Figure 3.8 Statement of changes in equity for year ended 31 October 20X1

The accounting rules for asset valuation Property, plant and equipment • Either historical cost or market value depending upon accounting policy chosen from IAS 16 Financial assets • Certain classes of financial asset are required to be recognised at fair value Inventory • It is included at the lower of cost and net realisable value. Provisions • May be required to be discounted

Notes to Balance Sheet • Notes giving greater detail of the make-up of items that appear in the statement of financial position • Notes setting out accounting policies • Notes providing additional information to assist predicting future cash flows • Notes giving information of interest to other stakeholders.

Has prescribing the formats meant that identical transactions are reported identically? Differences still arise • How inventory is valued • The choice of depreciation policy • Management attitudes • The capability of the accounting system.

% difference in gross profit Figure 3.13 Effect of physical inventory flow assumptions on the percentage gross profit

What does an investor need in addition to the financial statements to make decisions? • More quantitative information in the accounts (discussed in Chapter 4) including: • Segmental analysis • The impact of changes on the operation, for example a breakdown of turnover, costs and profits for both new and discontinued operations • The existence of related parties. • More qualitative narrative information, including: • Mandatory disclosures • Chairman’s report • Management Commentary • Directors’ report • Best practice disclosures: Operating and Financial Review • Business Review in the Directors’ report.

Mandatory disclosures • The write-down of assets to realisable value or recoverable amount • The restructuring of activities of the enterprise, and the reversal of provisions for restructuring • Disposals of items of property, plant and equipment • Disposals of long-term investments.

Other Reports • Chairman’s report • Management commentary • Directors’ report • Operating & Financial Review (OFR)* • Key Performance Indicators* • Business review – social, environmental, sustainability • * Usually included in these other reports

What is meant by a fair view?IAS 1 requirements Select and apply accounting policies in accordance with IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors Present information, including accounting policies, in a manner that provides relevant, reliable, comparable and understandable information Provide additional disclosures when compliance with the specific requirements in IFRSs is not enough.

True and fair view – legal opinion • Accurate within acceptable limits • Differences over acceptable limits • Room for differences over method to adopt • Cost effectiveness • Sufficient in quantity and quality to satisfy reasonable expectations. • Complying with the accounting standards is not enough – must also consider whether the standard(s) is/are appropriate in the particular situation.

Fair override • Allowed if application of an IAS might be misleading • Explain why compliance with IASs would be misleading • Give sufficient information to calculate the adjustments required to comply with the standard.

Review questions 1. Explain why two companies carrying out identical trading transactions could produce different gross profit figures.

Review questions (Continued) 2. Classify the following items into cost of sales, distribution costs, administrative expenses, other operating income or item to be disclosed after trading profit: (a) Personnel department costs (b) Computer department costs (c) Cost accounting department costs (d) Financial accounting department costs (e) Bad debts (f ) Provisions for warranty claims (g) Interest on funds borrowed to finance an increase in working capital (h) Interest on funds borrowed to finance an increase in property plant and equipment.

Review questions (Continued) When preparing accounts under Format 1 for an Income statement, how would a bad debt that was materially larger than normal be disclosed? ‘Annual accounts have been put into such a straitjacket of overemphasis on uniform disclosure that there will be a growing pressure by national bodies to introduce changes unilaterally which will again lead to diversity in the quality of disclosure. This is both healthy and necessary.’ Discuss.

Review questions (Continued) • Explain the relevance to the user of accounts if expenses are classified as ‘administrative expenses’ rather than as ‘cost of sales’. • IAS 1 Presentation of Financial Statements requires ‘other comprehensive income’ items to be included in the statement of comprehensive income and it also requires a statement of changes in equity. Explain the need for publishing this information, and identify the items you would include in them.

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