Question

The objective of IAS 1 Presentation of Financial Statements is to prescribe the basis for presentation of general purpose financial statements, in order to ensure comparability both with the enterprise’s own financial statements of previous periods and with the financial statements of other enterprises. Discuss how far the objectives of IAS 1 are relevant in today’s environment. (Approx 1300 words). Support your answer with examples.

Answer 1

We have witnessed two fundamental developments in recent years:

• On the one hand, actual financial statements are becoming more and more detailed, as stipulated by standard-setters. Requirements for non-financial reporting are also increasing.
• On the other hand, stakeholders are generally more interested in our forecast.

In other words, while implementation of new and existing standards in great detail is occupying most of our capacity, public interest is increasingly focused on forward-looking statements.

Non-financial aspects will play an important role in the continued development of reporting. Familiar examples of this are the CSR Directive and the EU Action Plan on Financing Sustainable Growth. The BMW Group is firmly committed to sustainability along the entire value chain.

Transparency in reporting has always been a core value for us. In 2014 we were one of the first companies that had its entire sustainability report audited.

Particularly with non-financial reporting, the informative value varies greatly from one industry to the next. The individual characteristics of each company and their complex value chains must be taken into account here, as well as industry and sector-specific requirements.

When it comes to comparability and implementation within companies, we do not believe “one size fits all” is the right approach. Adequate flexibility is vital for coherent, stringent and appropriately-structured reporting.

Companies with their sights on the future will be willing to share this in their reporting.