By Karine Benzacar, CMA
A discussion paper released by international accounting regulators is proposing to change the
look and feel of financial statements. The new financial statement presentation is a proposal by a
joint committee of the key regulators involved in the international standards — the U.S. Federal Accounting
Standards Board (FASB) and the International Accounting Standards Board (IASB). After years of deliberation since
2002, the committee released a preliminary 168-page discussion paper in October 2008 identifying changes to
financial statement presentation.
The two regulatory boards are proposing a new look and feel to the statements, consistent with their objective of
improving financial reporting and providing better information to the users of financial statements.
The financial statements will have new names: an income statement will now be called a “Statement of Comprehensive
Income” and a balance sheet will be called a “Statement of Financial Position.” The required statement of retained
earnings will be replaced by a “Statement of Changes in Shareholder’s Equity” (Exhibit 1). There is also a new
statement reconciling net income to cash flow which must be included in the financial statement notes.
The new names though, are just the beginning. In order to achieve the objective of cohesiveness between the statements, the format of the statements will change. All statements are to be subdivided into the same general categories — a business section (subdivided further into operating and investing components), a financing section, income taxes, discontinued operations, and equity (Exhibit 2). These classifications are similar to how today’s cash flow
statement is divided.