Comparative Information

An undertaking disclosing comparative information shall present, as a minimum, two statements of financial position, two of each of the other statements, and related notes.

When an undertaking applies an accounting policy retrospectively or makes a retrospective restatement of items in its financial statements or when it reclassifies items in its financial statements, it shall present, as a minimum, three statements of financial position, two of each of the other statements, and related notes.

An undertaking presents statements of financial position as at:

(a) the end of the current period,

(b) the end of the previous period (which is the same as the beginning of the current period), and

(c) the beginning of the earliest comparative period.

Narrative information provided in the financial statements for the previous period may be relevant in the current period.


EXAMPLE- Comparative narrative information

Issue
Undertakings should include comparative information for narrative and descriptive information when it is relevant to an understanding of the current period’s financial statements.

When should management include comparative narrative information in the financial statements?

Background
An undertaking has an exclusive 3-year licence to operate the domestic mobile phone service; the government had granted the licence. The government sued the undertaking in 20X2, alleging that it has been providing service below the quality limits of the concession agreement. The government has indicated its intention to cancel the agreement that gives the undertaking the exclusivity to operate the service. The dispute is to be settled legally and at the balance date is yet to be resolved.

Solution
The undertaking should disclosure information about the dispute that is useful to the users of the financial statements. The information should not necessarily be limited to the events of the current period. The disclosure should focus on:

a) summary of the dispute;
b) the actual and potential financial effect; and
c) the likely outcome and the expected timing of a resolution.

The following is an example of an appropriate disclosure:

Note 10 Domestic mobile phone licence - dispute with government

In 20X1 the government granted the company a 3-year licence to operate the domestic mobile phone service. The company derives 25% of its revenue from domestic phone service.


The conditions of the licence included seven performance targets. The company is currently in dispute with the government over whether it has met a specific target.

The dispute has not impacted on the undertaking’s financial performance in 20X1
or 20X2. Withdrawal of the licence could potentially reduce the undertaking’s revenue in 20X3.

Management is confident however that it has met all performance targets, and the company’s legal advisers have confirmed this view.

Details of a legal dispute, the outcome of which was uncertain at the last end of the reporting period, and is yet to be resolved, are disclosed in the current period.

Users benefit from information that the uncertainty existed at the last end of the reporting period, and about the steps that have been taken during the period, to resolve the uncertainty.