Fair Presentation

The financial statements shall present fairly the financial position, financial performance, and cash flow of an entity.


Fair presentation is defined as faithful representation of the effects of transactions and other events in accordance with the definitions and recognition criteria for assets, liabilities, income and expenses laid down in the Framework.

General Features of Financial Statements

The general features in the preparation and presentation of financial statements are:


1. Fair presentation
2. Going Concern
3. Accrual Basis
4. Materiality and aggregation
5. Offsetting
6. Frequency of reporting
7. Comparative information
8. Consistency of presentation

Objective of Financial Statements

The objective of general purpose financial statements is to provide information about the financial position, financial performance, and cash flows of an entity that is useful in a wide range of users in making economic decisions.


Financial statements also show the results of the management's stewardship of the resources entrusted to them. To meet this objective, financial statements provide information about the following:

1. Assets,
2. Liabilities,
3. Equity,
4. Income and expenses, including gains and losses,
5. Contributions by and distributions to owners in their capacity as owners,
6. Cash Flows

Such information, along with other information in the notes would assist users of financial statements in predicting the entity's cash flows and in particular their timing and certainty.

However, financial statements do not provide all the information that users may need to make economic decisions since they largely portray the financial effects of past events and do not necessarily provide non-financial statements.

Components of Financial Statements

A complete set of financial statements comprises the following components:

1. Statement of Financial Position (Balance Sheet)
2. Income Statement
3. Statement of Comprehensive Income
4. Statement of Changes in Equity
5. Statement of Cash Flows
6. Notes, comprising a summary if significant accounting policies and other explanatory information.

Many entities also present reports and statements such as environmental reports and value added statements, particularly in industries in which environmental factors are significant and when employees are regarded as an important user group.

However, such statements and reports are not components of financial statements and therefore outside of the scope of PFRS.

Financial Statements

Financial Statements are the means by which the information accumulated and processed in financial accounting is periodically communicated to the users. Stated differently, the financial statements are the end-product or the main output of the financial accounting process.

Financial statements are a structured financial representation of the financial position and financial performance of a business entity. 

Users and Uses of Financial Statements

IAS 1 describes the financial statements as structured representation of the financial position and financial performance of an entity.


Financial statements are directed toward the common information needs of the users. These financial statements are considered general purpose reports and are intended to meet the needs of the users who are not in a position to demand reports tailored to meet their particular information needs.


The Framework enumerates the common users of the financial statements. They are the investors, employees, lenders, suppliers, and other trade creditors, customers, government and their agencies, and the public.

1. Investors. Investors are the providers of the risk capital and they, along with their advisers, are interested in information which enables them to assess the risk inherent to, and the return provided by, their investments. Financial information will help present investors to determine whether they should hold, sell, or increase their investments. Potential investors, on the other hand, will be able to determine whether or not they should buy an investment.
2. Employees. Employees and their representative groups are interested in information about the stability and profitability of their employers. The information provided by the financial statements helps them assess their employer's ability to provide just remuneration, viable retirement benefits and possible employment opportunities.
3. Lenders. Suppliers and other trade creditors. Financial statements provide lenders, suppliers and other trade creditors financial information necessary in determining whether their loans, related interest and all amounts owing to them will be paid when due. Potential lenders and creditors are guided by the information provided by the financial statements whether or not they would extend credit or loan to the enterprise.