Summary of “Financial Statements”

(a.) PSAK 1 -- Presentation of Financial Statements

(b.) PSAK 2 – Cash Flow Statement

(a.) Presentation of the Financial Statements

Objective: The basic motive for the general-purpose financial statements is to compare the
data in the financial statements with the data of the previous periods and/or the other
companies’ financial data.

Stipulation of the financial statements:

1.) Requirements for the presentation of the financial statements

2.) The structure of the report

3.) The minimum requirements of the content

Scope of the financial statements:

An entity applied this standard in preparing and presenting its financial statements in
accordance with the financial accounting standards.

Unfortunately, this statement does not apply to the preparation and presentation of the
financial statements of Islamic entities.

Financial reports show the results of management's accountability for the use of the resources
entrusted to them.

The financial statements present this information, namely: (1.) Asset; (2.) Liability; (3.)
Equity; (4.) Income and Expenses, including gains and losses; (5.) Contributions from and
distributed to owners in the capacity of owners; and, lastly, (6.) Cash Flows.

A complete report of the financial statements has this information:

a.) Statement of financial position (ending balance sheet)

b.) Comprehensive income statement during the period

c.) Cashflow statement for the period

d.) Notes of the financial statements, which consist of the summary of accounting policies
and other information.

e.) Statement of Financial Position at the beginning of the comparative period which is
presented when the entity applies accounting policies retrospectively or makes restatements
of financial statement items or when an entity reclassifies items in the financial statements.

The General Characteristics of the financial statements:

- Fair presentation and adherence to SAK

- Business continuity
- Accrual Basis
- Material and Aggregation
- Offsetting Not allowed unless required or permitted by PSAK
- Reporting frequency -> Annually
- Comparative information -> previous period
- Consistent presentation -> presentation and classification

PSAK 1

This is a typical presentation of the financial statements.

Current Asset

- Expect the asset to be realized, to be sold, or used, during normal operation.

- Assets intended for sale
- Will be realized in 12 months
 - Cash or cash equivalents, except assets that are limited in terms of their exchange,
exchange, or use of use for settling the liability at least 12 months after the reporting
period.

Other assets that do not meet at least one of the above requirements will be classified as non-
current assets.

Current Liabilities

- The liabilities will be settled in the normal operating cycle

- Liabilities intended to be traded
- Due in the next 12 months; or
- Liabilities that don’t have the unconditional right to delay settlement for at least 12
months after the reporting period.

Other liabilities that do not meet at least one of the above requirements will be classified as
long-term liabilities.

Liabilities

- Violation of the debt agreement resulting in the creditor requesting an accelerated

payment, then the liability presented as a short-term liability, even though creditors
allow a delay of payment for 12 months after reporting date, but the approval was
obtained after the reporting date.
- Refinanced financial liabilities that will mature within 12 months after the reporting
period are classified as a short-term liability if the entity does not have rights
unconditionally to refinance.

Comprehensive Income Statement

The presentation of the income statement includes the element of comprehensive income.
Profit is allocated to minority and majority shareholders.

The minimum line items are Revenue, Financial expense, tax expense, compressive income,
etc.

Comprehensive income: Changes in assets or liabilities do not affect profit in the period of
loss

- Fixed asset revaluation difference

 - Changes in investment value available for sales
- Impact of financial statement translation

Statement of Changes in Equity

- This statement shows the total comprehensive income for a period attributable to the
owners of the parent entity and non-controlling parties.
- Retrospective changes for each component of the equity
- Reconciliation between beginning and end of period balances arising from profit,
comprehensive income items, and transactions with owners
- The amount of dividends attributable to owners and the value of dividends per share
are disclosed in the notes to the financial statements

Notes to the financial statements

- Presenting the base for preparing both the financial statements and the accounting
policies
- Disclosing information required by SAL that is not presented in other parts of the
financial statements
- Other information to understand the financial statements
- The presentation of the notes to the financial statements is carried out systematically

Other disclosures:
- The amount of dividend declared or announced before the completion of settlement
financial statements.
- Unrecognized preferred dividend amount.
- Domicile and legal form, country of establishment, office address, and main office
location
- Information regarding the nature of operations and main activities
- The name of the parent entity and the last entity name of the parent entity in the group
- For entities that have a limited life, information about the age of the entity
(b.) Cash Flow Statement

Information on an entity's cash flows is useful as a basis for assessing the entity's ability to
generate cash and cash equivalents and assessing the entity's cash needs for using these cash
flows.

The statement of cash flows describes the historical changes in cash and cash equivalents
classified into operating, investing, and financing activities during a period. It is important to
note, however, that a transaction could be classified as more than one of the activities such as
the repayment of loans and interest which is classified as both financing and operating
activities.

The benefits of this statement

- Provide information that enables users to evaluate changes in the entity's net assets,
financial structure (liquidity and solvency), and ability to influence the amount and
timing of cash flows to adjust to changing circumstances and opportunities
- Improve the comparability of reporting the operating performance of various
- entities
- Assesses an entity's ability to generate cash and cash equivalents and enables users to
develop models to assess and compare the present value of the future cash flows of
various entities.

Operating Cashflows

Operating activities are the entity's main income-generating activities and other activities that
are not investing and financing activities. The Key indicators determine whether operations
can generate cash to repay loans and maintain the entity's operating capability, pay dividends
and make investments.

2 Methods to derive Operating cashflow:

a.) Direct Method -> disclose the gross receipts and expenditures

b.) Indirect Method -> profit is adjusted by correcting non-cash transactions, deferrals or
accruals, and elements of income/expenses related to investing and financing activities.
The indirect method

Investing Cashflow

Investing activities are the acquisition and disposal of assets as well as other investments that
do not include cash equivalents.

This type of cash flow reflects expenditures for resources intended to generate cash in future
periods.

Financing Cashflow

Financing activities are activities that result in changes in the amount and composition of the
entity's capital and loan contributions.

This type of cash flow predicts claims on future cash flows by the entity's capital providers.

In reporting cash flows from investing and financing activities, the major groups of gross
cash receipts and gross cash disbursements are reported, except for those that may be
reported net.

Reported Net
 - Payments and cash disbursements for customer interest if they reflect customer
activities more than operating activities (current account payments, customer funds
managed by associates)
- Receipts and disbursements for items with fast turnover, large amounts, and short
term in nature (customer credit transactions, investment buying, and selling, short
term loans)

Financial institutions with net cash flow

• Cash receipts and payments in connection with deposits

• Placement and withdrawal of deposits with other financial institutions

• Provision and repayment of advances and loans to clients

Other sources of cash receipts and disbursements are:

1. Foreign currency transactions

2. Interest & Dividend

3. Income tax

4. Investments in associations, subsidiaries, and other businesses

Other terms

1. Non-cash investment and financing transactions are disclosed elsewhere in the

financial statements to provide all relevant information regarding investing and
financing activities.
2. Entity An entity shall disclose the components of cash and cash equivalents and
present a reconciliation of these amounts in the SAR with the same items presented in
the statement of financial position.
3. The entity shall disclose the significant amount of cash and cash equivalents that are
not used by the business group (restriction restrictions) along with management's
opinions.