IAS 1 Presentation of Financial Statements: A Practical Guide
IAS 1 sets the overall requirements for presenting financial statements under IFRS, covering required components, general features, and key considerations including current/non-current classification and the transition to IFRS 18.
IAS 1 is the cornerstone standard governing how IFRS financial statements are structured and presented. For finance professionals preparing or reviewing group accounts, understanding IAS 1 is not optional — it underpins every financial statement you will ever sign off on.
Components of a Complete Set of Financial Statements
A complete set under IAS 1 must include: a statement of financial position; a statement of profit or loss and other comprehensive income; a statement of changes in equity; a statement of cash flows (governed by IAS 7); notes including material accounting policies; and a comparative statement of financial position when prior period restatements occur.
General Features
Fair presentation: Financial statements must present fairly the financial position, performance and cash flows. IFRS compliance achieves this in virtually all circumstances.
Going concern: Management must assess whether the entity is a going concern. Material uncertainty must be disclosed — and this assessment has become increasingly scrutinised post-pandemic.
Accrual basis: All statements except cash flows use the accrual basis.
Materiality: Material items are presented separately; immaterial items may be aggregated. What counts as material requires judgement — IAS 1 does not give a percentage threshold.
No offsetting: Assets cannot be offset against liabilities, and income against expenses, unless required by another standard.
Statement of Financial Position
Current and non-current classification is required unless a liquidity presentation is more relevant (common in banking). Under recent IASB amendments, classification of liabilities as current or non-current is based on the entity's contractual rights at the reporting date — not management's expectations after that date. This is particularly significant for long-term debt with covenant conditions that could trigger early repayment.
Statement of Profit or Loss and OCI
Entities may present P&L and OCI in a single combined statement or two separate statements. OCI items must be split between those that will be reclassified to profit or loss and those that will not. Expenses may be classified by nature (materials, staff costs, depreciation) or by function (cost of sales, distribution, admin).
Transition to IFRS 18
IFRS 18 Presentation and Disclosure in Financial Statements will replace IAS 1 for annual periods beginning on or after 1 January 2027. It introduces a restructured income statement with mandatory categories and subtotals, and brings management-defined performance measures (MPMs) such as adjusted EBITDA into the scope of the audited financial statements. Finance teams should begin their impact assessment now — comparative periods will need to be restated.
Further Reading
Study with Learnsignal: Financial reporting CPD for qualified accountants. Browse CPD.
This page was last updated:
Learnsignal Education Team
Expert Tutor at Learnsignal
Qualified professional with years of experience in teaching and helping students achieve their accounting qualifications.
View all posts by Learnsignal Education Team
