Executive Summary
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International Accounting Standard 1 (revised), “Presentation of financial statements,” requires companies to report their performance in a statement of comprehensive income.
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The International Accounting Standards Board (IASB) and the US Financial Accounting Standards Board (FASB) have agreed to converge their financial reporting standards.
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As part of the convergence, the IASB and FASB are developing a new standard that is likely to affect the way in which performance is reported in the future.
Introduction
Financial statements prepared under International Financial Reporting Standards (IFRS) include a statement of comprehensive income which, together with associated notes, report a company’s performance for the accounting period. The International Accounting Standards Board (IASB), an independent body, sets the IFRS. The IASB took over responsibility for setting international accounting standards from the International Accounting Standards Committee (IASC), which issued International Accounting Standards (IAS). The IASB adopted the then existing IAS when it took over from the IASC, and the acronym IFRS is now used to include both IFRS and IAS, as well as the interpretations developed by the International Financial Reporting Interpretations Committee or the former Standing Interpretations Committee.
The presentation of a company’s financial performance under IFRS is dealt with in IAS 1 (revised) “Presentation of financial statements.” Revisions to the standard in 2007, which are in effect for accounting periods beginning on or after January 1, 2009, include the requirement for reporting entities to present a statement of comprehensive income.
The development of IFRS is shaped by an agreement reached between the IASB and the US Financial Accounting Standards Board (FASB) to make their existing financial reporting standards compatible and to coordinate work programs. The IASB and FASB are collaborating on a project entitled “Financial statement presentation,” which may lead to further changes in the way entities report performance.
This article describes the essential features of reporting performance under IAS 1 (revised), possible future changes to performance reporting standards, and non-IFRS performance measures.
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