Conceptual Framework for Financial Reporting

Presentation and disclosure objectives and principles
To facilitate effective communication of information in financial statements,
when developing presentation and disclosure requirements in Standards a
balance is needed between:
(a)
giving entities the flexibility to provide relevant information that
faithfully represents the entity’s assets, liabilities, equity, income and
expenses; and
(b)
requiring information that is comparable, both from period to period
for a reporting entity and in a single reporting period across entities.
Including presentation and disclosure objectives in Standards supports
effective communication in financial statements because such objectives help
entities to identify useful information and to decide how to communicate that
information in the most effective manner.
Effective communication in financial statements is also supported by
considering the following principles:
(a)
entity-specific information is more useful than standardised
descriptions, sometimes referred to as ‘boilerplate’; and
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Conceptual Framework
© IFRS Foundation
A85

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(b)
duplication of information in different parts of the financial
statements is usually unnecessary and can make financial statements
less understandable.
Classification
Classification is the sorting of assets, liabilities, equity, income or expenses on
the basis of shared characteristics for presentation and disclosure purposes.
Such characteristics include—but are not limited to—the nature of the item,
its role (or function) within the business activities conducted by the entity,
and how it is measured.
Classifying dissimilar assets, liabilities, equity, income or expenses together
can obscure relevant information, reduce understandability and comparability
and may not provide a faithful representation of what it purports to represent.