BAC 300 IFRS

BAC300 & BAC310 - IFRS 18 Presentation and Disclosure in Financial Statements

General Information

  • Institution: University of Pretoria

  • Faculty: Economic and Management Sciences

  • Course Title: IFRS 18 Presentation and Disclosure in Financial Statements

  • Lecturer: Dr. Lanise van der Burgh

  • Email: bac3@up.ac.za

  • Office: EMS2-57 (Department of Accounting)

  • Consultation: Please scan QR code to book an appointment

Study Material

  • Main Resource: Chapter 2 of Introduction to IFRS.

  • **Sections to Ignore:
    ➢ 3.7.1 – Change in accounting policy, retrospective restatements or reclassification [pg. 31]
    ➢ Classifying expenses by nature in 5.1.4 [pg. 38-39]
    ➢ Financial liabilities, breaches, period of grace, non-adjusting events, Example 2.3 in 5.3.1 [pg. 44-45]
    ➢ Management-defined performance measures and Example 2.6 [pg. 50-52]
    ➢ 5.5.3 Capital [pg. 53]
    ➢ Non-cash dividends [pg. 54]

  • Additional Resources: Class slides, specimen financial statements, BAC200 content (available on ClickUP).

Learning Objectives

  • Understand the objective and scope of IFRS 18.

  • Explain and apply key requirements for financial statements including:

    • Objective of financial statements.

    • Complete set of financial statements.

    • Roles of primary financial statements and accompanying notes.

    • Identification of financial statements.

    • Frequency and consistency of reporting.

    • Comparative information requirements.

  • Explain and apply principles of aggregation, disaggregation, and offsetting.

  • Present or disclose per IFRS 18 requirements:

    • Statement of profit or loss and other comprehensive income.

    • Statement of financial position.

    • Statement of changes in equity.

    • Notes to the financial statements.

Assessment Overview

  • Assessment will consist of:

    • Short theory questions.

    • Presentation of financial statements.

    • Disclosure in notes.

    • Practical application within class examples and homework questions.

Introduction and Background

  • IFRS 18 replaces IAS 1.

  • Mandated for annual reporting periods starting 1 January 2027.

Key Changes in IFRS 18

  • New defined categories in Statement of Profit or Loss and Other Comprehensive Income (SLOCI):

    • Operating, investing, financing.

  • New subtotals in Statement of Profit or Loss and Other Comprehensive Income (SPLOCI):

    • Operating profit, profit before financing and income taxes, profit for the year.

  • Enhanced information grouping principles: aggregation and disaggregation.

  • Disclosure of management performance metrics (MPMs).

  • Purpose: Improve usefulness and transparency of financial statement information for investors.

Objective of Financial Statements

  • Provide financial information about:

    • Entity's assets, liabilities, equity, income, and expenses.

  • Utility for users includes:

    • Assessing future net cash inflows.

    • Evaluating management's stewardship.

  • Only material information should be presented:

    • Materiality is context-dependent (nature or size of information).

Complete Set of Financial Statements

  • Must include:

    1. Statement of financial position.

    2. Statement(s) of financial performance.

    3. Statement of changes in equity.

    4. Statement of cash flows (as per IAS 7).

    5. Notes for the reporting period.

    6. Comparative information from the prior period.

  • Alternative titles can be used (e.g., balance sheet, net income).

Role of Primary Financial Statements

  • Provide structured summaries of:

    • Assets, liabilities, equity, income, expenses, and cash flows.

  • Facilitate:

    • Understandable overviews.

    • Comparisons between entities and reporting periods.

    • Identification of areas for further information in notes.

  • Present data aggregated for clarity.

Role of Notes

  • Provide clarification on line items in primary financial statements:

    • Disaggregation details, descriptions of characteristics, methods, assumptions, and judgments.

  • Supplement primary financial statements to meet financial statement objectives.

Identification of Financial Statements

  • Clear identification required in published document:

    • Headings or digital tagging.

  • Must disclose:

    • Reporting entity's name.

    • Whether the statements are for an individual entity or a group.

    • Reporting period end date.

    • Presentation currency and rounding used.

Frequency of Reporting

  • Complete financial statements must be presented at least annually.

    • Determined by either:

    • 52/53 weeks or 12 months.

Consistency of Presentation, Disclosure and Classification

  • Must maintain presentation and classification from reporting period to reporting period.

Comparative Information

  • Mandatory provision of prior period's information:

    • Numerical comparisons for all amounts.

    • Necessity of narrative/descriptive information in the current period's statements and notes.

Principles of Aggregation and Disaggregation

  • Aggregation: Combining items based on shared characteristics.

  • Disaggregation: Breaking down into smaller, distinct parts.

  • Entities must use judgment to apply aggregation/disaggregation principles.

  • Must ensure not to obscure material information.

Offsetting Principle

  • Assets and liabilities or income and expenses should not be offset unless specified by an IFRS Standard.

  • Offsetting may represent the substance of the transaction.

Statement of Financial Performance (SFP)

  • Can present:

    • Single statement of profit or loss and other comprehensive income.

    • Two separate statements (1. profit or loss, 2. comprehensive income).

  • Financial performance components must include both profit or loss and other comprehensive income.

  • Income/expenses are categorized into:

    1. Operating.

    2. Investing.

    3. Financing.

    4. Income taxes.

    5. Discontinued operations (not covered in BAC300/310).

Statement of Other Comprehensive Income (OCI)

  • Must classify into:

    • Items not reclassified to profit or loss.

    • Items that may be reclassified to profit or loss.

  • Relevant to BAC300/310:

    • Revaluation surplus per IAS 16.

    • Gains/losses on financial assets at fair value through OCI.

    • Items relating to hedging may be reclassified.

    • Translation of foreign operations.

Totals and Subtotals in Statement of Profit or Loss

  • Must present:

    • Operating profit.

    • Profit before financing and income taxes.

    • Profit for the year.

Statement of Financial Position (SFP)

  • Must include minimum disclosures for:

    • Current and non-current classifications for assets and liabilities.

  • Definitions:

    • Current assets: expected for recovery/settlement within 12 months, or in the entity's normal operating cycle.

    • Non-current assets: expected to recover/settle beyond 12 months.

    • Current liabilities: expected to settle in normal operations or within 12 months.

    • Non-current liabilities: settle beyond 12 months.

Statement of Changes in Equity

  • Must include:

    • Reconciliation between opening and closing equity components.

    • Separate presentation of profit/loss, OCI, transfers between reserves, and owner transactions.

Statement of Cash Flows

  • Presentation and disclosure rules are set by IAS 7, not IFRS 18.

Notes Disclosure Requirements

  • Must include:

    • Basis of preparation and specific accounting policies.

    • Required information by IFRS Accounting Standards not presented in primary statements.

    • Additional information necessary for understanding the statements.

  • Notes must be systematic, improving understandability and comparability, with cross-references to primary statements.

IFRS Comparisons

  • IFRS vs IFRS for SMEs vs GRAP:

    • IFRS 18 updates are not yet reflected in IFRS for SMEs or GRAP.

    • IPSASB actively revising IPSAS 1 to align with IFRS 18.

    • Differences exist in presentation and disclosure that are not assessed in BAC3.

Conclusion

At the end of this lecture, students should:

  • Understand and explain:

    • The objective of financial statements.

    • A complete set of financial statements.

    • The roles of primary financial statements and notes.

    • Identification of financial statements and frequency of reporting.

    • Consistency, comparative information, aggregation, and disaggregation principles.

  • Present and disclose the required statements as per IFRS 18.

Homework Assignments

  • CBT on IFRS 18:
    ➢ Available: Thursday, 12 February 2026, at 15:30.
    ➢ Deadline: Monday, 16 February 2026, at 08:00.
    ➢ Total: 20 marks; 30 minutes duration; 2 attempts allowed.
    ➢ Feedback available post-deadline.

  • Complete conceptual framework revision question by Friday, 13 February 2026, and submit as PDF.

  • Vote for BAC3 class representatives; link will be available in the “Weekly program.”