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Such standards should be based on the presumption that the stated principles are faithfully applied. Therefore standards should avoid unnecessary detailed prescription and not unduly restrict companies in presenting meaningful results that are in accordance with those principles.
Accounting standards should require compliance with their spirit rather than their letter so that preparers are required to disclose economic ‘substance’ rather than accounting or legal ‘form’.
Corporate reports should be prepared with the objective of providing a fundamental source of information for investors and creditors on which to base their decisions.
The cashflow should be capable of comparison and reconciliation with the profit and loss and balance sheet. The impact of acquisitions and disposals on these cashflows should also be clear.
The purpose should not be to determine the entity’s fair value. Further information regarding the values of individual assets and liabilities (including assumptions and sensitivities), should be provided in the notes.
The profit and loss and the accompanying notes should clearly differentiate and analyse relevant information, such as: operating performance from financing activities; recurring from non-recurring activities; value changes from trading activities.