IAS 34 Interim Financial Reporting

IAS 34: Interim Financial Reporting
Objective of IAS 34: The objective of IAS 34 is to prescribe the minimum content of an interim
financial report and to prescribe the principles for recognition and measurement in financial
statements presented for an interim period.
Key definitions
1. Interim period: a financial reporting period shorter than a full financial year (most typically
a quarter or half-year).
2. Interim financial report: a financial report that contains either a complete or condensed set
of financial statements for an interim period.
Matters left to local regulators
IAS 34 specifies the content of an interim financial report that is described as conforming to
International Financial Reporting Standards. However, IAS 34 does not mandate:
Which entities should publish interim financial reports,

How frequently, or
How soon after the end of an interim period.
Such matters will be decided by national governments, securities regulators, stock exchanges,
and accountancy bodies.
However, the Standard encourages publicly-traded entities to provide interim financial reports
that conform to the recognition, measurement, and disclosure principles set out in IAS 34, at
least as of the end of the first half of their financial year, such reports to be made available not
later than 60 days after the end of the interim period.
Minimum content of an interim financial report: The minimum components specified for an
interim financial report are:
i. A condensed balance sheet (statement of financial position)
ii. A condensed statement of profit or loss and other comprehensive income, presented as
either a condensed single statement or a condensed separate statement of profit or loss
followed by a condensed statement of other comprehensive income
iii. A condensed statement of changes in equity
iv. A condensed statement of cash flows
v. Selected explanatory notes
In the statement that presents the components of profit or loss an entity should present the basic
and diluted EPS for the period.
If a complete set of financial statements is published in the interim report, those financial
statements should be in full compliance with IFRSs.
If the financial statements are condensed, they should include, at a minimum, each of the
headings and sub-totals included in the most recent annual financial statements and the
explanatory notes required by IAS 34. Additional line-items or notes should be included if their
omission would make the interim financial information misleading.
If the annual financial statements were consolidated (group) statements, the interim statements
should be group statements as well.
The periods to be covered by the interim financial statements are as follows:
 Balance sheet (statement of financial position) as of the end of the current interim period
and a comparative balance sheet as of the end of the immediately preceding financial year
 Statement of comprehensive income (and income statement, if presented) for the current
interim period and cumulatively for the current financial year to date, with comparative
statements for the comparable interim periods (current and year-to-date) of the immediately
preceding financial year
 Statement of changes in equity cumulatively for the current financial year to date, with a
comparative statement for the comparable year-to-date period of the immediately preceding
financial year
 Statement of cash flows cumulatively for the current financial year to date, with a
comparative statement for the comparable year-to-date period of the immediately preceding
financial year
If the company's business is highly seasonal, IAS 34 encourages disclosure of financial

information for the latest 12 months, and comparative information for the prior 12-month period,
in addition to the interim period financial statements.
Note disclosures: The explanatory notes required are designed to provide an explanation of
events and transactions that are significant to an understanding of the changes in financial
position and performance of the entity since the last annual reporting date. IAS 34 states a
presumption that anyone who reads an entity's interim report will also have access to its most
recent annual report. Consequently, IAS 34 avoids repeating annual disclosures in interim
condensed reports.
Examples of specific disclosure requirements of IAS 34
Examples of events and transactions for which disclosures are required if they are
significant
• Write-down of inventories
• Recognition or reversal of an impairment loss
• Reversal of provision for the costs of restructuring
• Acquisitions and disposals of property, plant and equipment
• Commitments for the purchase of property, plant and equipment
• Litigation settlements
• Corrections of prior period errors
• Changes in business or economic circumstances affecting the fair value of financial assets and
liabilities
• Unremedied loan defaults and breaches of loan agreements
• Transfers between levels of the 'fair value hierarchy' or changes in the classification of
financial assets
• Changes in contingent liabilities and contingent assets.
Examples of other disclosures required
• Changes in accounting policies
• Explanation of any seasonality or cyclicality of interim operations
• Unusual items affecting assets, liabilities, equity, net income or cash flows
• Changes in estimates
• Issues, repurchases and repayment of debt and equity securities
• Dividends paid
• Particular segment information (where IFRS 8 Operating Segments applies to the entity)
• Events after the end of the reporting period
• Changes in the composition of the entity, such as business combinations, obtaining or losing
control of subsidiaries, restructurings and discontinued operations
• Disclosures about the fair value of financial instruments
Accounting policies: The same accounting policies should be applied for interim reporting as
are applied in the entity's annual financial statements, except for accounting policy changes made
after the date of the most recent annual financial statements that are to be reflected in the next
annual financial statements.
A key provision of IAS 34 is that an entity should use the same accounting policy throughout a
single financial year. If a decision is made to change a policy mid-year, the change is
implemented retrospectively, and previously reported interim data is restated.
Measurement: Measurements for interim reporting purposes should be made on a year-to-date

basis, so that the frequency of the entity's reporting does not affect the measurement of its annual
results. For example, suppose that a company uses quarterly reporting and in the first quarter of
the year, it writes down some inventory to $nil. If it is then able to sell the inventory in the next
quarter, the results for the six-month period require no write-down of inventory, and the write-
down of inventory should be reversed for the purpose of preparing the interim accounts for the
first six months of the year. Several important measurement points:
 Revenues that are received seasonally, cyclically or occasionally within a financial year
should not be anticipated or deferred as of the interim date, if anticipation or deferral would
not be appropriate at the end of the financial year.
 Costs that are incurred unevenly during a financial year should be anticipated or deferred
for interim reporting purposes if, and only if, it is also appropriate to anticipate or defer that
type of cost at the end of the financial year.
 Income tax expense should be recognised based on the best estimate of the weighted
average annual effective income tax rate expected for the full financial year or interim
period tax should be accrued using the tax rate that would be applicable to expected total
earnings.
An appendix to IAS 34 provides guidance for applying the basic recognition and measurement
principles at interim dates to various types of asset, liability, income, and expense.
Intangible assets: The guidance in IAS 34 states that an entity should follow the normal
recognition criteria when accounting for intangible assets. If development costs have been
incurred, which at the interim date do not meet the recognition criteria, then they should be
expensed. It is not appropriate to capitalize them as an intangible asset in the belief that the
criteria will be met by the end of the annual reporting period.
Use of estimates in interim financial statements: The interim financial statements should be
reliable and relevant. However IAS 34 recognizes that the preparation of interim accounts will
generally rely more heavily on estimates than the annual financial statements. An appendix of
IAS 34 provides examples.
Pensions: A company is not expected to obtain an actuarial valuation of its pension liabilities at
the interim date. The guidance suggests that the most recent valuation should be rolled forward
and used in the interim accounts.
Provisions: The calculation of some provisions requires the assistance of an expert. IAS 34
recognizes that this would be too costly and time-consuming for the interim accounts. IAS 34
therefore states that the figure included in the annual financial statements for the previous year
should be updated without reference to an expert.
Inventories: A full count of inventory may not be necessary at the interim reporting date. It may
be sufficient to make estimates based on sales margins to establish a valuation for the interim
accounts.
Materiality: In deciding how to recognise, measure, classify, or disclose an item for interim
financial reporting purposes, materiality is to be assessed in relation to the interim period
financial data, not forecast annual data.
Disclosure in annual financial statements: If an estimate of an amount reported in an interim

period is changed significantly during the financial interim period in the financial year but a
separate financial report is not published for that period, the nature and amount of that change
must be disclosed in the notes to the annual financial statements.

IAS 34 Interim Financial Reporting

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IAS 34: Interim Financial Reporting

Which entities should publish interim financial reports,

If the company's business is highly seasonal, IAS 34 encourages disclosure of financial

Measurement: Measurements for interim reporting purposes should be made on a year-to-date

Disclosure in annual financial statements: If an estimate of an amount reported in an interim

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