The objective of the financial statement presentation project is to establish a global standard that will guide the organisation and presentation of information in the financial statements. The standard would directly affect how the management of an entity communicates financial statement information to the users of its financial statements, such as existing and potential equity investors, lenders and other creditors. The boards’ goal is to improve the usefulness of the information provided in an entity’s financial statements to help those users in their decision-making.

The IASB and the US FASB initiated the joint project on financial statement presentation to address users’ concerns that existing requirements permit too many alternative types of presentation, and that information in financial statements is highly aggregated and inconsistently presented, making it difficult to understand fully the relationship between an entity’s financial statements and its financial results.

The project’s main proposals are:

• cohesive financial statements that share a common structure, separately presenting operating, investing and financing activities as well as income tax and discontinued operations;
• disaggregation in each financial statement, considering its function, nature and measurement basis, with some disaggregation included in the notes
• more disaggregation of operating cash receipts and payments, and reconciliation of profit or loss from operating activities to cash flows from operating activities;
• analyses of changes in asset and liability line items (including net debt – IASB only);
• and disclosure of remeasurement information.

The proposals would improve the comparability and understandability of information presented in financial statements, by imposing some degree of standardisation in the way that information is presented in the financial statements, particularly regarding how information is classified, and the degree to which it is disaggregated.