Published Financial Statements

The Companies and Allied Matters (CAMA) Act Cap C20 LFN 2004 specify the form and manner in which
certain items have to be prepared and disclosed in the published accounts of companies. The published
accounts also have to be prepared in accordance with the International Financial Reporting Standards (IFRS)
issued by the International Accounting Standards Board (IASB). Published accounts also have to be prepared
in conformity with the disclosure requirements of the council of stock exchange for listed or quoted
companies.
Section 334 of CAMA states that:
(a) In the case of every company, the directors shall in respect of each year of the company prepare financial
statements for the year.
(b) The financial statements required shall include:
i. Statement of accounting policies
ii. The Balance sheet as at the last day of the company’s financial year
iii. A profit and loss account or in the case of a company not trading for profit, an income and
expenditure account for the year.
iv. Notes to the accounts.
v. The auditors’ report
vi. The directors report
vii. The Audit committee’s report
viii. Cash flow statement
ix. A value added statement for the year
x. A five year financial summary; and
xi. In the case of a holding company, the group financial statement
(c) The financial statement of a private company need not include the matters stated in paragraphs (i), (vii),
(viii), and (ix) in subsection (b) above.

International Accounting Standards (IAS) 1: Presentation of Financial

Statements
A complete set of financial statements comprise:
(a) Statement of financial position
(b) Statement of profit or loss and other comprehensive income
(c) Statement of changes in equity
(d) Statement of cash flows
(e) Notes, comprising a summary of significant accounting policies and other explanatory information

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Statement of Financial Position
A statement of financial position is a statement of the assets, liabilities and capital of a business as at a stated
date.
Format
XYZ
Statement of financial position as at 31st December 20XX
N N
Assets
Non-current Assets:
Property plant and equipment x
Investments x
Intangibles x x
Current Assets:
Inventories x
Trade receivables
Cash and cash equivalents x x
Total Assets x
Equity and Liabilities
Capital and reserves:
Share capital x
Retained earnings x
Other components of equity x x
Total Equity x

Non Current Liabilities:

Long term borrowings x
Deferred tax x x
Current liabilities:
Trade and other payables x
Short-term borrowings x
Current tax payable x
Short-term provisions x x
Total equity and Liabilities x
Note that IAS 1 requires an asset or liability to be classified as current if:
 It will be settled within 12 months of the reporting date or

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 It is part of the entity’s normal operating cycle
Within the equity section of the Statement of financial position, other component of equity includes:
 Revaluation reserve
 General reserve

Statement of Changes in Equity

Statement of changes in equity provides a summary of all changes in equity arising from transactions with
owners in their capacity as owners. This includes the effect of share issues and dividend.
Format
XYZ LTD
Statement of changes in equity for the year ended 31st December 20xx
Share capital Share Retained Revaluation Total
Premium Earnings Reserve
N N N N N
st
Balance at 1 January 20xx x x x x x
Changes in accounting policy - - x - x
Restated balance x x x x x
Dividends - - (x) - (x)
Issue of share capital x x - - x
Total comprehensive income - - x x x
Transfer to retained earnings - - x (x) -
st
Balance at 31 December 20x2 x x x x x

Statement of profit or loss and other comprehensive income

IAS 1 (revised) requires all items of income and expense in a period to be shown in a statement of profit or
losss and other comprehensive income
- Total comprehensive income is the realized profit or loss for the period, plus other comprehensive income
- Other comprehensive income is income and expenses that are not recognized in profit or loss (i.e they are
recorded in reserve rather than as an element of the realized profit for the period). Other comprehensive
income includes any change in the revaluation of non- current assets (IAS 16) and fair value through
other comprehensive income financial assets (IFRS 9).
Presentation of other comprehensive income
The amendments to IAS1 revised change how items of Other comprehensive income (OCI) are presented in
the financial statements. They do not change which item should be presented in OCI. In practice, items of
OCI must be classified into two groups as follows:
 Items that might be reclassified to profit or loss in subsequent accounting periods
- Foreign exchange gains and losses arising on translation of a foreign operation (IAS 21)
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 - Etc
 Items that will not be reclassified to profit or loss in subsequent accounting periods
- Change in revaluation surplus (IAS 16 and 38)
- Remeasurement of equity instruments designed to be classified as fair value through other
comprehensive income (IFRS 9)
IAS 1 requires that a statement of profit or loss and other comprehensive income can be presented in the
following ways
Either as:
(1) A statement of profit or loss and other comprehensive income showing total comprehensive income; or
(2) A statement of profit or loss showing the realized profit or loss for the period plus a statement showing
other comprehensive income.
Format
A recommended format is as follows:
XYZ
Statement of profit or loss and other comprehensive income for the year ended 31st December 20xx
N
Revenue x
Cost of sales (x)
Gross profit x
Distribution cost (x)
Administrative expenses (x)
Profit from operations x
Finance costs (x)
Investment income x
Profit before tax x
Income tax expense (x)
Profit for the year x
Other comprehensive income
Gain/loss on revaluation (IAS 16) x
Gain or loss on fair value through other comprehensive income financial assets (IFRS 9) x
Total comprehensive income for the year x
Alternative presentation
Statement of profit or loss plus statement of comprehensive income
A recommended format for the statement of profit or loss is as follows:
XYZ
Statement of profit or loss for the year ended 31st December 20xx

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Revenue x
Cost of sales (x)
Gross profit x
Distribution cost (x)
Administrative expenses (x)
Profit from operations x
Finance costs (x)
Investment income x
Profit before tax x
Income tax expense (x)
Profit for the year x
A recommended format for the presentation of other comprehensive income is:
XYZ
Other comprehensive income for the year ended 31st December 20xx
N
Profit for the year x
Other comprehensive income
Gain/loss on property revaluation x
Gain/loss on fair value through other comprehensive income financial assets (x)
Total comprehensive income for the year x

Note that the above format has been prepared using the classification of expense by function. IAS 1 requires
that expenses be classified in profit or loss based on either their nature or function within the entity.
Example of classification using the nature of expense method is as follows:
N
Revenue x
Other income x
Changes in inventories of finished goods and work in progress x
Raw materials and consumables used x
Employee benefits expense x
Depreciation and amortization expense x
Other expenses x
Total expenses (x)
Profit before tax x
Income tax expense (x)
Profit for the year x

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Notes to the financial statements
Contents of notes
The notes to the financial statements will amplify the information given in the statement of financial position,
statement of comprehensive income and statement of changes in equity. We have already noted above the
information which the IAS allows to be shown by note rather than in the statements. To some extent, then, the
contents of the notes will be determined by the level of detail shown on the face of the statements.
Structure
The notes to the financial statements should perform the following functions.
(a) Provide information about the basis on which the financial statements were prepared and which specific
accounting policies were chosen and applied to significant transactions/events
(b) Disclose any information, not shown elsewhere in the financial statements, which is required by IFRSs
(c) Show any additional information that is relevant to understanding which is not shown elsewhere in the
financial statements
Notes to the financial statements will amplify the information shown therein by giving the following.
(a) More detailed analysis or breakdowns of figures in the statements
(b) Narrative information explaining figures in the statements
(c) Additional information, e.g. contingent liabilities and commitments
IAS 1 suggests a certain order for notes to the financial statements. This will assist users when comparing the
statements of different entities.
(a) Statement of compliance with IFRSs
(b) Statement of the measurement basis (bases) and accounting policies applied
(c) Supporting information for items presented in each financial statement in the same order as each line item
and each financial statement is presented
(d) Other disclosures, e.g.:
(i) Contingent liabilities, commitments and other financial disclosures
(ii) Non-financial disclosures
The order of specific items may have to be varied occasionally, but a systematic structure is still required.

Presentation of accounting policies

The accounting policies section should describe the following.
(a) The measurement basis (or bases) used in preparing the financial statements
(b) The other accounting policies used, as required for a proper understanding of the financial statements
This information may be shown in the notes or sometimes as a separate component of the financial
statements.
The information on measurement bases used is obviously fundamental to an understanding of the financial
statements. Where more than one basis is used, it should be stated to which assets or liabilities each basis has
been applied.

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Other disclosures
An entity must disclose in the notes:
(a) The amount of dividends proposed or declared before the financial statements were authorised for issue
but not recognised as a distribution to owners during the period, and the amount per share
(b) The amount of any cumulative preference dividends not recognised

IAS 1 ends by listing some specific disclosures which will always be required if they are not shown elsewhere
in the financial statements.
(a) The domicile and legal form of the entity, its country of incorporation and the address of the registered
office (or, if different, principal place of business)
(b) A description of the nature of the entity's operations and its principal activities.
(c) The name of the parent entity and the ultimate parent entity of the group.