Notes to the Financial Statements

A. Structure of the Notes

1. The notes to the financial statements should

   1. Present information regarding the basis of preparation of the financial statements and the specific accounting policies selected and applied for significant transactions and events;

   2. Disclose information required by IAS which is not presented elsewhere in the financial statements; and

   3. Provide additional information which is not presented on the face of the financial statements but which is necessary for a fair presentation.

   (IAS 1, Para 91)

2. The notes to the financial statements should be presented in a systematic manner. Each item on the face of the balance sheet, income statement and cash flow statement should be cross-referenced to any related information in the notes to the financial statements.

   (IAS 1, Para 92)

3. The following order of presentation of the notes is normally adopted which assists users of financial statements in understanding them and comparing them with those of other enterprises:

   1. Statement of compliance with IAS;

   2. Statement of the measurement basis/bases and accounting policies applied;

   3. Supporting information for items presented on the face of each financial statement in the order in which each line item and each financial statement is presented; and

   4. Other disclosures, including

      1. Contingencies and commitments and other financial disclosures; and

      2. Nonfinancial disclosures.

   (IAS 1, Para 94)

B. Accounting Policies

1. The accounting policies section of the notes to the financial statements should describe the following:

   1. The measurement basis/bases used in preparing the financial statements; and

   2. Each specific accounting policy that is necessary for a proper understanding of the financial statements.

   (IAS 1, Para 97)

2. Examples of accounting policies that an enterprise may consider presenting include, but are not restricted to, the following:

   1. Revenue recognition;

   2. Basis of consolidation of subsidiaries and method of accounting for investments in associates;

   3. Business combinations;

   4. Joint ventures;

   5. Recognition and depreciation/amortization of tangible and intangible assets;

   6. Capitalization of borrowing costs and other expenditures;

   7. Construction contracts;

   8. Investment properties;

   9. Financial instruments and investments;

   10. Leases;

   11. Research and development costs;

   12. Inventories;

   13. Taxes, including deferred taxes;

   14. Provisions;

   15. Employee benefit costs;

   16. Foreign currency translation and hedging;

   17. Definition of business and geographical segments and the basis for allocation of costs between segments;

   18. Definition of cash and cash equivalents;

   19. Inflation accounting; and

   20. Government grants.

   (IAS 1, Para 99)

C. Service Concession Arrangements

1. All aspects of a service concession arrangement should be taken into account in determining the appropriate disclosures in the notes. Both a concession operator and a concession provider should disclose the following in each period:

   1. A description of the service concession arrangement;

   2. Significant terms of the arrangement that may affect the amount, timing, and certainty of future cash flows (e.g., period of concession, repricing dates, and the basis upon which the repricing or renegotiation is determined);

   3. The nature and extent (e.g., the quantity, time period, or amount as appropriate) of

      1. Rights to use specified assets;

      2. Obligations to provide or rights to expect provision of services;

      3. Obligations to acquire or build items of property, plant, and equipment;

      4. Obligations to deliver or rights to receive specified assets at the end of the concession period;

      5. Renewal and termination options; and

      6. Other rights and obligations (e.g., major overhauls); and

   4. Changes in the arrangement taking place during the period.

2. The above-mentioned disclosures should be provided individually for each service concession arrangement or in aggregate for each class of service concession arrangements. A "class" is a grouping of service concession arrangements involving services of a similar nature (e.g., toll collections, telecommunications, and water treatment services).

   (SIC 29, Paras 6 and 7)