financial statements presentation and disclosure ncaa case study

FINANCIAL STATEMENTS – PRESENTATION AND DISCLOSURE

IAS 1 – Financial statements presentation, IAS 8 – Accounting policies, changes in accounting Policies, estimates and Errors, IAS 24 – Related party disclosures and TFRS 1 – Directors’ report

2

INTRODUCTION This presentation aimed to assist participants in better

understanding what is general purpose financial statements, contents and standard governing its preparations.

We will start by looking financial statements prepared in accordance with IAS 1 – Presentation of Financial Statements including disclosure required by IAS 8 – Accounting policies and Errors and IAS 24 Related party disclosures

At end of IAS 1, we will look to another report published with financial statements – directors’ report which is governed by Tanzania Financial Accounting Standard 1 – Directors’ report issued by NBAA

VA Business Assurance Services [email protected] www.vabusiness.co.tz

3

How to read IFRS 2012

IFRS official pronouncements issued 1 January 2012 has two books – Part A and Part B.

Part A – is the stand alone IFRSs and IASs without accompanying documents such as basis of conclusion.

Part B – contain other accompanying documents including basis of conclusion. If you are having problem understanding a standard in Part A, then go to Part B to find what was basis of that standard

Any reference to IFRS or IAS in this presentation is referring to Part A.VA Business Assurance Services [email protected] www.vabusiness.co.tz

4

IAS 1 – Presentation of Financial StatementsThe objective of IAS 1 is to describe the basis for presentation of general purpose financial statements.

General purpose financial statements are financial reports prepared to meet need of different groups such as directors (decision making), TRA (tax assessment), Ministry of Tourism (Assess performance of tourism industry)etc

Definitions skippedVA Business Assurance Services [email protected] www.vabusiness.co.tz

5

Purpose of general purpose financial statements

We prepare financial statements to show:

Financial position (assets and liabilities)Financial performance (revenue –

expenses) andCash flows (inflow and out flow of cash)


6

Features of general purpose financial statementsFair presentation and complianceGoing concernAccrual basisMateriality and aggregationOffsettingFrequency of reportingComparativeConsistence


7

Complete set of financial statementsA statement of financial position;A statement of comprehensive

income;A statement of changes in equity;A statement of cash flows;Notes and other explanatory

information; A statement of financial position as

at the beginning of the earliest comparative period.

An entity may use titles for the statements other than those used.

Refer Page 17 of NCAA 2012 FS

Refer 16Refer

page18Page 19Page 20 - 49


8

Remember the followings If you have prior year adjustment or changes in

accounting policy – two years comparative shall be required

Titles do not matter – balance/statement of financial position

Single statement - Statement of profit or loss with other comprehensive income OR Statement of profit or loss AND Other comprehensive statements separately.

If NCAA financial statements comply with IFRSs, an explicit statement of compliance shall be made refer Page 20, Para 2.1

Frequency of reporting is normally 12 months. If financial statements’ reporting period is longer or shorter than 12 months, reason shall be disclosed

Comparative figures both number and narrative shall be disclosed.VA Business Assurance Services [email protected] www.vabusiness.co.tz

9

An Entity shall clearly identify each financial statement and the notes by showingThe name of reporting entityDistinction between an individual entity

and a group of entitiesThe date of the end of the reporting

period Or period covered by the set of financial statements or notes

The presentation currencyThe level of rounding used in presenting

amounts in the financial statements


10

An Entity shall clearly identify each financial statement and the notes by showing (Cont.)

NGORONGORO CONSERVATION AREA AUTHORITY (NCAA)1 STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE2 YEAR ENDED 30 JUNE 20123 2012 2011 Notes TZS4 TZS5 Revenue Tour income 8 57,801,798,518 48,416,421,388 Other income 9 718,586,149 626,604,328 1 Name of the entity 2 Name of financial statement 3 Reporting date or period covered by the financial statements 4 Presentation currency 55 Level or rounding (whole number)


11

Statement of financial position

As a minimum statement of financial position shall include

a) Property, plant and equipmentb) Investment propertyc) Intangible assetsd) Financial assets (excluding (e),(h) and (i)e) Investments accounted using equity methodf) Biological assetsg) Inventoriesh) Cash and cash equivalentsi) The total assets classified as held for sale


12

Statement of financial position (Continue.)

Trade and other payablesProvisionsFinancial liabilities (excluding shown under (k) and

(l) Tax liabilities and assets for current liabilities, as

per IAS 12Deferred tax liabilities and assets as per IAS 12Liabilities included in disposal group classified as

held for sale as per IFRS 5Issued capital and reserves attributed to owners of

the parentDeferred tax liabilities or assets should not be

classified as current liabilities or assetsVA Business Assurance Services [email protected] www.vabusiness.co.tz

13

Statement of profit or loss and other comprehensive incomeLine items Revenue; Finance costs; Share of the profit or loss of associates and joint ventures - equity

method Tax expense; Total amount comprising the total of:

◦ the post-tax profit or loss of discontinued operations

◦ the post-tax gain or loss on disposal - discontinued operation; Profit or loss after tax; Each component of other comprehensive income – by nature Share of the other comprehensive income of associates and joint

ventures -equity method Total comprehensive income.


14

Information to be presented in other comprehensive incomeInclude (refer page 16)changes in revaluation surplus on

property plant and equipment and intangible assets

gains and losses arising from translating the financial statements of a foreign operation

gains and losses on re-measuring available-for-sale financial assets or liabilities

the effective portion of gains and losses on hedging instruments in a cash flow hedge.


15

Statement of changes in equityI am referring you to page 18Total comprehensive income separately attributable to

owners of the parent and to non-controlling interests;Effects of retrospective application or retrospective

restatement recognized during the yearReconciliation opening and closing balances, separately

disclosing changes resulting from: profit or loss; each item of other comprehensive income; and transactions with owners in their capacity as

owners, showing contributions, distributions to owners and changes in ownership interests in subsidiaries that do not result in a loss of control


16

Statement of changes in equity - elaboration

Profit for the year 2,624,256,1631 4,927,753,778 Other Comprehensive Income: Items that may be reclassified subsequently to profit or loss:

Gain on fluctuation of foreign exchange rates 234,074,833 746,736,991 Increase in fair value of Government Trophies 47,737,405 93,152,482 Items that will not be reclassified to profit or loss 2 Gain on disposal of interest in joint venture 50,000,000 - Income tax relating to components of other comprehensive income 20 (99,543,672) - Total Comprehensive Income for the year 2,856,524,729 5,767,643,251

General Reserve

Revaluation Reserve Retained Income Total

TZS TZS TZS TZS

At 01 July 2011 50,000,000

3,803,946,130 10,434,288,090 14,288,234,220 Treasury Dividend (1,000,000,000)3 (1,000,000,000)

Profit for the year

- 2,856,524,7294 2,856,524,729 Transfer to retained earnings

(50,000,000) - 50,000,000 -

As at 30 June 2012 -

3,803,946,130 12,340,812,819

16,144,758,949

1 Should shown separate in SCE 2 Each item of other comprehensive income should be shown in statement of changes in equity 3 Transaction with owners 4Not correct


17

Cash flows statements Refer page 19 of NCAA FinancialsCovered under IAS 7 to be presented

separately


NOTES

•Continuation of IAS 1 – Financial statements presentation•IAS 8 – Accounting policies and correction of errors•IAS 24 – Related party disclosures

•Remember heading is NOTES and not NOTES TO….

19

The Notes shall

Present information about the basis of preparation of the financial statements and the specific accounting policies (Page 20 -28)

Disclosure information required by IFRSs not disclosed anywhere refer Notes 20 (IAS 12), Note 21 (IFRS5), Note 25 (IAS37, IAS 19), Note 24 (IAS 24), Note 33 (IAS 17)etc.

Provide information that is not presented elsewhere in the financial statements, but relevant for understanding of any of them –Notes 10, Note 12???, Note 13, Note 16????


20

Index to notes General information – Application of new and revised International Financial

Reporting Standards (IFRSs) Significant accounting policies Critical accounting judgements and key sources of

estimation uncertainty Revenue Segment information Investment income Other gains and losses Finance costs Income taxes relating to continuing operations Discontinued operations Assets classified as held for saleVA Business Assurance Services [email protected] www.vabusiness.co.tz

21

Index to notes (continue) Profit for the year from continuing operations Earnings per share Property, plant and equipment Investment property Goodwill Other intangible assets Subsidiaries Investments in associates Joint ventures Other financial assets Other assets Inventories Trade and other receivables Finance lease receivables Amounts due from (to) customers under construction contracts Issued capital Reserves Retained earnings and dividends Non-controlling interestsVA Business Assurance Services [email protected] www.vabusiness.co.tz

22

Index to notes (continue)


BorrowingsConvertible notesOther financial liabilities ProvisionsOther liabilitiesTrade and other payables Obligations under finance leasesRetirement benefit plans Financial instruments Deferred revenueShare-based payments Related party transactions Business combinations

Disposal of subsidiaryCash and cash equivalentsNon-cash transactionsOperating lease arrangementsCommitments for expenditureContingent liabilities and contingent assetsEvents after the reporting periodApproval of financial statements

23

Comparative InformationEnhancing the inter-period comparability of information allowing the assessment of trends in financial

information for predictive purposes. Details of a legal dispute whose outcome was uncertain

at the end of the immediately preceding reportingComparative narrative and descriptive information

relevant toAccounting policy applied retrospectively or

retrospective restatement of items or reclassifies items then present statements of financial position as at:

the end of the current period, the end of the previous period the beginning of the earliest comparative period


24

Accrual basis of accountingPrepare its financial statements, except for

cash flow information, using the accrual basis of accounting.

Recognizes items as assets, liabilities, equity, income and expenses when they satisfy the definitions and recognition criteria


25

JudgementsDisclosures an entity makes are:the nature of the assumption or other estimation

uncertainty;the sensitivity of carrying amounts to the methods,

assumptions and estimates underlying their calculation, including the reasons for the sensitivity;

the expected resolution of an uncertainty and the range of reasonably possible outcomes within the next financial year in respect of the carrying amounts of the assets and liabilities affected; and

an explanation of changes made to past assumptions concerning those assets and liabilities, if the uncertainty remains unresolved.

budget information or forecasts not requiredVA Business Assurance Services [email protected] www.vabusiness.co.tz

26

Other disclosures

disclose the amount of dividends proposed or declared before the financial statements were authorized for issue but not recognized as a distribution to owners during the period, and the related amount per share;

the amount of any cumulative preference dividends not recognized.

puttable financial instruments classified as equity instruments.


27

Information not required by IFRS

Financial review by management that describes and explains the main features of the entity’s financial performance and financial position, and the principal uncertainties it faces may include:

The main factors and influences determining financial performance, including changes in the environment in which the entity operates, the entity’s response to those changes and their effect, and the entity’s policy for investment to maintain and enhance financial performance, including its dividend policy;

The entity’s sources of funding and its targeted ratio of liabilities to equity;

The entity’s resources not recognised in the statement of financial position in accordance IFRSs.

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.



28

29

IAS 24 – Related party disclosures

This standard requires disclosure of Relation between a parent and its subsidiariesKey management personnel compensation in

total and each of the following categories:Short-term employee benefitsPost-employment benefitsOther long term benefitsTermination benefits; andShare-based payment

If any entity has related party transaction during the period, disclose relationship, information about transactions and outstanding balances


30

Government related entities

A reporting entity is exempt from related partly disclosures arising from

(a) Government who own the entity(b)Another entity that is related because of

the same Government – TANAPA, Tourist Board etc



31

TFRS 1- Directors report

•Directors report, •corporate governance and social responsibility reporting

Directors’ reporting is the require of national laws i.e. Companies Act for limited companies and Establishment Act for government entities.

33

Introduction Directors’ report is not a requirement of International

financial reporting standards hence it is not covered by any IFRS. However, directors’ report is required by Companies Act 2002 and all Establishment Act that created a Government Agency eg NCAA Act.

To guide on directors’ report, during its 146th meeting held on 15th October 2009, the NBAA Governing Board has approved the issuance of Tanzania Financial Reporting Standard (TFRS) No. 1- Directors’ Report

This standard replaces TFAS 12 on Directors’ Report that was issued by the Board on 1stJuly

2001. The standard becomes operative for financial statements covering accounting periods

beginning on or after 1st January 2010.Below is the detailed Accounting Standard on the Directors’ Report


34

Contents of directors’ reportOperating legal mandateCompany’s vision and missionPrincipal activitiesComposition of board members showing name,

position, age, profession, nationality, appointment/resignation date

Corporate governance structure statement, members of various committees of the board, to whom they report, number of meeting held

Capital structureManagement set up/organization structureShareholders number and name of who hold

directorshipVA Business Assurance Services [email protected] www.vabusiness.co.tz

35

Contents of directors’ report (Cont)

Solvency (going concern)Results and dividendDiscussion on performance in relation to last

year performanceEmployees welfareGender parity – number of employees

classified by genderRelated part transactionsPolitical and charitable donationsCorporate social responsibilitiesStatement of directors’ responsibilities


36

Other corporate reporting

Disclosures outside TFAS 1 allowed are those related to corporate governance reporting which include:

Statement on the organization’s contribution to large economic – projects with high employment creation, promotion of local suppliers (MKUKUTA), Climate Change Activities etc. Value Added Statement may assist to show value created

Disclosure of detailed environment policy which clearly state procedures for monitoring and evaluation

Disclose of hire policy which discourage discrimination on sex, tribe, age and promote employees safety

Disclosure of ant bribery policy


37

Other corporate reporting (Cont.)

Performance discussion could include KPIs reviewFive years financial statementsCharts and graphs


38

Thank you

Questions and Answers

Interactive session


financial statements presentation and disclosure ncaa case study

Economy & Finance