Disclosure and presentation

Presentation: Issued Financial Instruments 
IG9. 
This Standard sets out the requirements for the presentation of financial 
instruments. Financial instruments can be classified as being financial 
assets, financial liabilities or equity instruments. These terms are defined in 
paragraph 9 of the Standard. Additional discussion clarifying these defined 
terms and what constitutes a financial instrument is located in commentary 
paragraphs 10–21. Examples of financial instruments covered by the 
Standard are included in Illustrative Examples, paragraphs IE3–IE16. 
Classification 
IG10. 
The Standard requires that the issuer of a financial instrument classify the 
instrument, or its component parts, as a financial liability or as net 
assets/equity (paragraph 22). Commentary in paragraphs 23–28 provides 
users with guidance in distinguishing the nature of the instrument to 
facilitate consistency in classification across users. The Illustrative 
Examples, paragraphs IE18–IE21, provides examples of instruments which 
should be classified as liabilities or as net assets/equity. 
IG11. 
It is likely that few public sector entities will issue compound financial 
instruments (paragraph 30). The Standard requires that where such 
instruments are issued, the financial liability and net assets/equity 
components should be separately classified and disclosed (paragraph 29). 
Commentary paragraphs 31–33 and Illustrative Examples, paragraphs IE22 
Classify instruments, or component parts, as: 
(a) Financial liabilities; or 
(b) Net assets/equity
(para 22 & 29) 
Issued Financial Instruments
 
Equity Instruments 
Financial Liabilities 
Report any interest, 
dividends, gains and 
losses in the statement 
of financial 
performance (para 36) 
Report any 
distributions to 
holders directly to net 
assets/equity
(para 36)
 
Offset against a financial 
asset where: 
(a) A legally enforceable 
right to set off the 
recognized amounts 
exists; and 
(b) There is an intention to 
settle on a net basis or to 
realize the asset and settle 
the liability 
simultaneously (para 39)

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FINANCIAL INSTRUMENTS: DISCLOSURE AND PRESENTATION 
IPSAS 15 IMPLEMENTATION GUIDANCE 
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and IE23, discuss various instances where separate classification is 
necessary. Paragraphs 34 and 35 set out two methods by which preparers 
could assign a carrying amount to the various components, and Illustrative 
Examples, paragraph IE24 illustrates an example of how to assign values to 
the elements. 
Interest, Dividends, Losses and Gains 
IG12. 
The Standard sets out when such items should be classified as revenue or 
expense, or as a direct debit to net assets/equity (paragraph 36). Further 
guidance and clarifying comments made regarding these classifications is 
located within paragraphs 37 and 38. 
Offsetting 
IG13. 
The Standard prescribes when an entity should offset a financial asset and a 
financial liability in the statement of financial position (paragraph 39). 
Subsequent commentary includes an explanation of the difference between 
offsetting instruments and ceasing to recognize an instrument (paragraph 
41), a discussion of the conditions necessary before an offset is allowable 
(paragraphs 42–45), and provides examples of situations where offsetting 
would not be allowable (paragraphs 46 and 47). Paragraph 40 provides an 
example of where instruments should be offset, noting that in other 
circumstances, separate presentation consistent with the instrument’s 
characteristics as an asset or liability is appropriate. Illustrative Examples, 
paragraph IE25, notes that “synthetic instruments” with financial asset and 
financial liability components should not be offset unless they meet the 
criteria for offsetting detailed in paragraph 39. 
IG14. 
Further discussion pertaining to offsetting and disclosures warranted in 
those instances is located within paragraphs 77, 78 and 94 of the Standard.

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FINANCIAL INSTRUMENTS: DISCLOSURE AND PRESENTATION 
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