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

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 info@vabusiness.co.tz www.vabusiness.co.tz 2

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 info@vabusiness.co.tz www.vabusiness.co.tz 3

IAS 1 – Presentation of Financial
Statements
The 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 skipped

Purpose of general purpose financial
statements
We prepare financial statements to show:
 Financial position (assets and liabilities)
 Financial performance (revenue – expenses)
and
 Cash flows (inflow and out flow of cash)

Features of general purpose financial
statements
 Fair presentation and compliance
 Going concern
 Accrual basis
 Materiality and aggregation
 Offsetting
 Frequency of reporting
 Comparative
 Consistence

Complete set of financial
statements
 A 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 16
 Refer page18
 Page 19
 Page 20 - 49

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.

An Entity shall clearly identify each
financial statement and the notes by
showing
 The name of reporting entity
 Distinction between an individual entity and a
group of entities
 The date of the end of the reporting period Or
period covered by the set of financial
statements or notes
 The presentation currency
 The level of rounding used in presenting
amounts in the financial statements

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)

Statement of financial position
As a minimum statement of financial position
shall include
a) Property, plant and equipment
b) Investment property
c) Intangible assets
d) Financial assets (excluding (e),(h) and (i)
e) Investments accounted using equity method
f) Biological assets
g) Inventories
h) Cash and cash equivalents
i) The total assets classified as held for sale

Statement of financial position
(Continue.)
 Trade and other payables
 Provisions
 Financial liabilities (excluding shown under (k)
and (l)
 Tax liabilities and assets for current liabilities, as
per IAS 12
 Deferred tax liabilities and assets as per IAS 12
 Liabilities included in disposal group classified as
held for sale as per IFRS 5
 Issued capital and reserves attributed to owners of
the parent
 Deferred tax liabilities or assets should not be
classified as current liabilities or assets

Statement of profit or loss and other
comprehensive income
Line 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.

Information to be presented in other
comprehensive income
Include (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.

Statement of changes in equity
I am referring you to page 18
 Total comprehensive income separately attributable to owners
of the parent and to non-controlling interests;
 Effects of retrospective application or retrospective
restatement recognized during the year
 Reconciliation 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

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
4
Not correct

Cash flows statements
 Refer page 19 of NCAA Financials
 Covered 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….

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????

Index to notes
 General information – Page 20
 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 sale

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 interests

Index to notes (continue)
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Borrowings
Convertible notes
Other financial liabilities
Provisions
Other liabilities
Trade and other payables
Obligations under finance leases
Retirement benefit plans
Financial instruments
Deferred revenue
Share-based payments
Related party transactions
Business combinations
Disposal of subsidiary
Cash and cash equivalents
Non-cash transactions
Operating lease arrangements
Commitments for expenditure
Contingent liabilities and
contingent assets
Events after the reporting
period
Approval of financial
statements
22

Comparative Information
 Enhancing 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 reporting
 Comparative narrative and descriptive information relevant to
 Accounting 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

Accrual basis of accounting
 Prepare 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

Judgements
Disclosures 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 required

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.

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.

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IAS 24 – Related party disclosures
This standard requires disclosure of
Relation between a parent and its subsidiaries
Key management personnel compensation in total
and each of the following categories:
Short-term employee benefits
Post-employment benefits
Other long term benefits
Termination benefits; and
Share-based payment
If any entity has related party transaction during
the period, disclose relationship, information
about transactions and outstanding balances

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

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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.

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

Contents of directors’ report
 Operating legal mandate
 Company’s vision and mission
 Principal activities
 Composition 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 structure
 Management set up/organization structure
 Shareholders number and name of who hold
directorship

Contents of directors’ report (Cont)
 Solvency (going concern)
 Results and dividend
 Discussion on performance in relation to last year
performance
 Employees welfare
 Gender parity – number of employees classified by
gender
 Related part transactions
 Political and charitable donations
 Corporate social responsibilities
 Statement of directors’ responsibilities

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

Other corporate reporting (Cont.)
Performance discussion could include
 KPIs review
 Five years financial statements
 Charts and graphs

Thank you
 Questions and Answers
 Interactive session

Financial statements presentation and disclosure NCAA Case study

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