HKAS 1 Revised: Implementation draws nearer  

Although HKAS 1 "Presentation of Financial Statements" (revised 2007) does not become effective until reporting periods beginning on or after 1 January 2009, preparers of accounts should be thinking now about the changes that it will bring. The new requirements are retrospective so entities adopting them in 2009 will need comparative information for 2008.

Perhaps the most important change is the requirement to present all items of income and expense recognised in the period in either a single "statement of comprehensive income" or in two separate statements (an "income statement" and a "statement of comprehensive income"). "Comprehensive income" includes normal profits and losses along with other gains and losses that are reported outside profit or loss in accordance with HKFRS. These items of other comprehensive income include revaluation surpluses, actuarial gains and losses and changes in the fair value of available-for-sale financial assets. These items, previously charged or credited to equity, will in future be reported separately from owner transactions such as dividends and changes in share capital.

The new requirements will focus attention on comprehensive income as a performance indicator in addition to the more traditional net income sub-total, and could result in a change in the way analysts read the financial statements.

The amended version of the standard also makes changes to the titles of the primary financial statements, with the term

	"statement of financial position" replacing "balance sheet"; ¡@
	"statement of cash flows" replacing "cash flow statement"; and ¡@
	"statement of comprehensive income" replacing "statement of recognised income and expenditure" as explained above.

While these changes in title have attracted considerable attention, their use is not mandatory. Instead preparers may be wise to focus on a change that has attracted less attention but could have a major impact - the need to make additional comparative disclosures in particular circumstances.

HKAS 1 as amended in 2007 introduces a requirement to present an additional balance sheet (or statement of financial position) as at the beginning of the earliest comparative period in a set of financial statements when the entity retrospectively applies an accounting policy or makes a retrospective restatement, or when it reclassifies items in its financial statements.

Should you find that you need to prepare a third balance sheet, 2009 will suddenly seem not so far away!