IPSAS 1 requires a complete set of financial statements to comprise seven elements: a statement of financial position, a statement of financial performance, a statement of changes in net assets/equity, a cash flow statement, a comparison of budget and actual amounts (where an approved budget is made publicly available), notes, and comparative information for the preceding period.

What Is the Objective of IPSAS 1?

The Standard states that "the objective of this Standard is to prescribe the manner in which general purpose financial statements should be presented to ensure comparability both with the entity's financial statements of previous periods and with the financial statements of other entities." The Standard does not address recognition or measurement of specific transactions; it sets the overall framework for presentation.

Who Must Apply the Standard?

The Standard states that "this Standard shall be applied to all general purpose financial statements prepared and presented under the accrual basis of accounting in accordance with IPSAS." This means the scope of IPSAS 1 is limited to entities preparing their financial statements on the accrual basis, whether consolidated or separate, while entities still reporting on the cash basis are not covered by this Standard itself but by the separate IPSAS document for the cash basis.

What Are the Components of a Complete Set of Financial Statements?

The Standard clearly sets out seven components, stating that "a complete set of financial statements comprises: (a) A statement of financial position; (b) A statement of financial performance; (c) A statement of changes in net assets/equity; (d) A cash flow statement." It adds that "when the entity makes publicly available its approved budget, a comparison of budget and actual amounts either as a separate additional financial statement or as a budget column in the financial statements" is also required. The set further includes "notes, comprising a summary of significant accounting policies and other explanatory notes; and comparative information in respect of the preceding period."

Do the Names of These Statements Vary Between Jurisdictions?

Yes; the Standard clarifies that "the statement of financial position may also be referred to as a balance sheet or statement of assets and liabilities. The statement of financial performance may also be referred to as a statement of revenues and expenses, an income statement, an operating statement, or a profit and loss statement." In other words, a different name used by a given jurisdiction does not by itself mean the statement's content falls outside the Standard's requirements, as long as the same required elements are present.

What Are the Fair Presentation and Compliance-Statement Requirements?

The Standard states that "financial statements shall present fairly the financial position, financial performance, and cash flows of an entity. Fair presentation requires the faithful representation of the effects of transactions, other events, and conditions in accordance with the definitions and recognition criteria for assets, liabilities, revenue, and expenses set out in IPSAS." It adds that "an entity whose financial statements comply with IPSAS shall make an explicit and unreserved statement of such compliance in the notes. Financial statements shall not be described as complying with IPSAS unless they comply with all the requirements of IPSAS." The Standard also confirms that "inappropriate accounting policies are not rectified either by disclosure of the accounting policies used, or by notes or explanatory material," meaning disclosure alone cannot substitute for applying the correct accounting policy in the first place.

Legal References

For questions about your specific situation, you can ask the Public Sector Accounting Helper on Helpers, or consult a licensed chartered accountant.