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Game-changer proposal for how information is presented in financial reports

By Institute of Directors
30 Jul 2020
pile of books

To achieve better transparency in financial reporting the International Accounting Standards Board (IASB) is proposing changes to the presentation of information in financial statements.

The proposals set out general presentation and disclosure requirements, such as new defined subtotals in the income statement and requiring companies to disclose information about management performance measures (non-GAAP measures) in the notes.

The summary below is from information provided by the XRB summarising the expected effects on financial statements. The proposals are expected to affect all companies applying IFRS standards. 

Statement of profit or loss

  • New subtotals for most companies. Companies such as banks and investment companies would be less affected
  • Companies that already present the proposed new subtotals, such as 'operating profit', may need to change how they calculate them
  • New presentation of an investing category and new line items for most companies, such as line items for integral and non-integral associates and joint ventues and for expenses from financing activities.
  • Some companies may need to change how the aggregate and label income and expenses, such as operating expenses.

Statement of cash flows

  • Change of the starting point of the indirect method for reporting operating cash flows for most companies.
  • Change in classification of interest received and paid for many companies. Change in classification of dividends received for some companies.
  • Change in the subtotal of 'cash flows from operating activioties' as a result of reclassifying interest and dividend cash flows for many companies.

Balance sheet

  • New line for goodwill
  • New line items for integral and non-integral associates and joint ventures
  • Some companies may need to change how they aggregate and label assets, liabilities and equity.


  • More note disclosures about the nature of operating expenses for many companies that present operating expenses by function in the statement of profit and loss.
  • New disclosures about unusual items for many companies. Companies that already provide such information may need to change how they identify unusual items and what they disclose about them.
  • More disclosure about management performance measures for most companies
  • Change in the location of disclosures about such measures for some companies: in a single note, rather than only outside the financial statements. Some companies may not use any such measures and would not be affected.
  • Many companies are expected to change how they disaggregate information in the notes.

Also watch this five minute video where IASB Chair, Hans Hoogervorst, explains how the proposals will be a game-changer in the comparability and usefulness of financial statements.

For more details on how to provide feedback on the IASB’s exposure draft, ED/2019/7 General Presentation and Disclosures (the ED) see the XRB website.

Comments are due to the NZASB by 7 August 2020 and to the IASB by 30 September 2020. 

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