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Commission Regulation
(EC) No 1725/2003 of 29 September
2003 amended by Regulation (EC) No 2238/2004
and Regulation (EC) No 1910/2005
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Definitions
11. The following
terms are used in this Standard with the meanings specified:
Impracticable
Applying a requirement is impracticable when theentity cannot
apply it after making every reasonable effort to do so.
International
Financial Reporting Standards (IFRSs) are Standardsand
Interpretations adopted by the International
AccountingStandards Board (IASB). They comprise:
(a) International
Financial Reporting Standards;
(b) International
Accounting Standards; and
(c) Interpretations
originated by the International Financial Reporting
Interpretations Committee (IFRIC) or the former Standing
Interpretations Committee (SIC).
Material Omissions
or misstatements of items are material if they could,
individually or collectively, influence the economic decisions
of users taken on the basis of the financial statements.
Materiality depends on the size and nature of
the omission or misstatement judged in the
surrounding circumstances. The size or nature of the item,
or a combination of both, could be the determining factor.
Notes contain
information in addition to that presented in the balance
sheet, income statement, statement of changes in equity and
cash flow statement. Notes provide narrative
descriptions or disaggregations of items
disclosed in those statements and information
about items that do not qualify for recognition in those
statements.
12. Assessing
whether an omission or misstatement could influence economic
decisions of users, and so be material, requires consideration
of the characteristics of those users. The Framework for
the Preparation and Presentation of Financial Statements states
in paragraph 25 that “users are assumed to have a reasonable
knowledge of business and economic activities and accounting
and a willingness to study the information with reasonable
diligence.” Therefore, the assessment needs to take into
account how users with such attributes could reasonably be
expected to be influenced in making economic decisions.
Overall
Considerations
Fair Presentation
and Compliance with IFRSs
13. Financial
statements shall present fairly the financial position,
financial performance and cash flows of an entity. Fair
presentation requires the faithful representation of the
effects of transactions, other events and
conditions in accordance with the definitions
and recognition criteria for assets, liabilities, income and
expenses set out in the Framework. The
application of IFRSs, with additional disclosure
when necessary, is presumed to result in financial
statements that achieve a fair presentation.
14. An entity whose
financial statements comply with IFRSs shall make an
explicit and unreserved statement of such compliance in the
notes. Financial statements shall not be described as
complying with IFRSs unless they comply with all
the requirements of IFRSs.
15. In virtually all
circumstances, a fair presentation is achieved by compliance
with applicable IFRSs. A fair presentation also requires an
entity:
(a) to select and
apply accounting policies in accordance with IAS 8 Accounting
Policies, Changes in Accounting Estimates and Errors.
IAS 8 sets out a hierarchy of authoritative guidance that
management considers in the absence of a Standard or an
Interpretation that specifically applies to an item.
(b) to present
information, including accounting policies, in a manner that
provides relevant, reliable, comparable and understandable
information.
(c) to provide
additional disclosures when compliance with the specific
requirements in IFRSs is insufficient to enable users to
understand the impact of particular transactions, other events
and conditions on the entity’s financial position and
financial performance.
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