13.7: Presentation and Disclosure

The topics discussed in this chapter are encompassed by a number of different IFRSes. As a result, there are a significant number of different disclosure requirements regarding current liabilities, contingent liabilities, provisions, and guarantees. A guiding principle that companies should follow when disclosing current liabilities is that there should be sufficient information to allow the reader to identify the current requirement for cash. This means that sufficient detail needs to be provided about major types of current liabilities, including amounts owing to related parties and amounts secured by assets of the company. As well, there are further detailed disclosure requirements for contingencies, commitments, and guarantees.

IAS 1 (Presentation of Financial Statements) does not specify the order in which current liabilities should be presented or where on the balance sheet they should be presented. The standard allows for different formats of presentation as long as information disclosed is sufficient for the reader to understand the nature and function of the items, and their impact on the financial position of the company. As a result, an examination of several companies reporting under IFRS will reveal different orders of presentation and different levels of aggregation.

Consider the following two examples, adapted from the balance sheets of a multinational energy company, and an international chain of grocery stores and hypermarkets. The energy company presents its current liabilities as the first section in the liabilities and equity section of the balance sheet, while the grocery chain presents its current liabilities as the last section. The order of presentation within the classification is different for each company as well. The grocery chain presents bank debt, or short-term borrowings, first, while the energy company presents trade and other payables first. These two examples provide typical disclosures of current liabilities under IFRS, and demonstrate that a variety of formats are allowable, as long as sufficient and meaningful information is disclosed.

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