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Module 11 PAS 34

PAS 34 prescribes the minimum content and recognition/measurement principles for interim financial reports. It defines interim periods as shorter than a full financial year. Entities choosing to publish interim financial reports must comply with either a complete or condensed set of financial statements outlined in PAS 34. Key requirements include recognizing gains/losses immediately in interim periods rather than deferring, and estimating income tax using the expected annual rate. The objective is to provide minimum essential information on financial position and performance compared to the prior annual report.

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424 views

Module 11 PAS 34

PAS 34 prescribes the minimum content and recognition/measurement principles for interim financial reports. It defines interim periods as shorter than a full financial year. Entities choosing to publish interim financial reports must comply with either a complete or condensed set of financial statements outlined in PAS 34. Key requirements include recognizing gains/losses immediately in interim periods rather than deferring, and estimating income tax using the expected annual rate. The objective is to provide minimum essential information on financial position and performance compared to the prior annual report.

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Module 10

PAS 34 – Interim Financial Reporting

Introduction

Philippine Accounting Standards 34 prescribes the minimum content of an interim financial report
and the recognition and measurement principles in complete or condensed financial statements for
an interim period.

PAS 34 does not mandate which entities should produce interim financial reports. PAS 34 is
applied when an entity chooses, or is required by the government or other institution, to publish
interim financial report that complies with PFRS.

PAS 34 however, encourages publicly listed entities to provide at least a semi-annual financial
report for the first half of the year to be issued not later than 60 days after the end of the interim
period.

Learning outcomes:
1. Define an interim financial report.
2. State the scope and applicability of PAS 34.
3. Briefly describe the recognition and measurement principles applied in interim financial
reporting.

Objective of PAS 34

The objective of PAS 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.

Definition of terms
Interim reporting pertains to the preparation and presentation of interim financial report for an
interim period.

Interim period is a financial reporting period shorter than a full financial year.

Interim financial report means a financial report containing either:

a. a complete set of financial statements (PAS 1); or


b. a set of condensed financial statements (PAS 34) ………for an interim period.

THIS MODULE IS FOR THE EXCLUSIVE USE OF THE UNIVERSITY OF LA SALETTE, INC. ANY FORM OF
REPRODUCTION, DISTRIBUTION, UPLOADING, OR POSTING ONLINE IN ANY FORM OR BY ANY MEANS WITHOUT THE
WRITTEN PERMISSION OF THE UNIVERSITY IS STRICTLY PROHIBITED.
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Scope

• PAS 34 does not require entities to provide interim financial reports.


• PAS 34 applies if an entity is (a) required by government, securities regulators, stock
exchanges, and accountancy bodies or (b) the entity elects or chooses to publish an interim
financial report in accordance with PFRSs.
• PAS 34 encourages publicly traded entities to provide at least semi-annual interim financial
report and publish them not later than 60 days after the end of the interim period.

Content of an interim financial report

An entity presenting an interim financial report has the option of complying either with PAS 1
(complete set of FS) or PAS 34 (condensed set of FS).

Complete set of financial statements under PAS 1

1. Statement of financial position;


2. Statement of profit or loss and other comprehensive income;
3. Statement of changes in equity;
4. Statement of cash flows;
5. Notes, comprising a summary of significant accounting policies and other explanatory
information; (5a) comparative information in respect of the preceding period; and
6. A statement of financial position as at the beginning of the preceding period (i.e., in cases
of retrospective application, retrospective restatement or reclassification adjustment).

Minimum content of an interim financial report under PAS 34

1. Condensed statement of financial position;


2. Condensed statement of profit or loss and other comprehensive income, presented as either
(a) a condensed single statement; or (b) a condensed separate income statement and a
condensed statement of comprehensive income;
3. Condensed statement of changes in equity;
4. Condensed statement of cash flows; and
5. Selected explanatory notes.

The term “condensed” means an entity needs only to provide the minimum information required
under PAS 34.

However, an entity is not prohibited from publishing a complete set of financial statements in
accordance with PAS 1 in its interim financial report.

Furthermore, an entity is also not prohibited from including in its condensed interim financial
statements information that is more than the minimum line items or selected explanatory notes set

THIS MODULE IS FOR THE EXCLUSIVE USE OF THE UNIVERSITY OF LA SALETTE, INC. ANY FORM OF
REPRODUCTION, DISTRIBUTION, UPLOADING, OR POSTING ONLINE IN ANY FORM OR BY ANY MEANS WITHOUT THE
WRITTEN PERMISSION OF THE UNIVERSITY IS STRICTLY PROHIBITED.
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out under PAS 34.

Additional concepts

• Relevance over Reliability – in the interest of timeliness and cost considerations, less
information may be provided at interim dates.
• Materiality and Estimates – an entity may rely on estimates to a greater extent when
preparing interim financial reports.
• Note disclosures – only selected explanatory notes are provided in interim financial reports
to avoid repetition.

Periods for which interim financial statements are presented

Semi-annual interim financial reporting

Quarterly interim financial reporting (3rd qtr.)

THIS MODULE IS FOR THE EXCLUSIVE USE OF THE UNIVERSITY OF LA SALETTE, INC. ANY FORM OF
REPRODUCTION, DISTRIBUTION, UPLOADING, OR POSTING ONLINE IN ANY FORM OR BY ANY MEANS WITHOUT THE
WRITTEN PERMISSION OF THE UNIVERSITY IS STRICTLY PROHIBITED.
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Business is highly seasonal
If an entity's business is highly seasonal, PAS 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.

Recognition and measurement


Gains and losses arising in an interim period are recognized immediately and are not deferred, e.g.,
inventory write-downs & reversals; asset impairment losses & reversals; discontinued operations;
and fair value changes on assets measured at fair value.

Costs and expenses (income) that benefit the entire year or are incurred (earned) over the year are
spread out over the interim periods, e.g., depreciation, amortization; property taxes; insurance
expense; interest expense (income); 13th month pay and other year-end bonuses.

Discretionary income are recognized immediately in the period the income is earned, e.g., dividend
income.

Income tax expense in the interim periods is computed using the best estimate of the weighted
average annual income tax rate expected for the full financial year.

Materiality
In deciding how to recognize, 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.

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. PAS 34 states a presumption that anyone who reads an
entity's interim report will also have access to its most recent annual report. Consequently, PAS
34 avoids repeating annual disclosures in interim condensed reports.

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.

References:

Millan, Z. V. (2018). PAS 34 Interim Financial Reporting. In Conceptual Framework and


Accounting Standards (2018 Edition, pp. 363-371). Bandolin Enterprise.

THIS MODULE IS FOR THE EXCLUSIVE USE OF THE UNIVERSITY OF LA SALETTE, INC. ANY FORM OF
REPRODUCTION, DISTRIBUTION, UPLOADING, OR POSTING ONLINE IN ANY FORM OR BY ANY MEANS WITHOUT THE
WRITTEN PERMISSION OF THE UNIVERSITY IS STRICTLY PROHIBITED.
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IAS 34- Interim Financial Reporting
2020).http://www.iasplus.com/.https://www.iasplus.com.en/standards/oas/ais34

Activity:
Answer Problem 1 and Problem 2 (No. 1 and 2), PAS 34 Interim Financial Reporting (pp. 371-
372)

THIS MODULE IS FOR THE EXCLUSIVE USE OF THE UNIVERSITY OF LA SALETTE, INC. ANY FORM OF
REPRODUCTION, DISTRIBUTION, UPLOADING, OR POSTING ONLINE IN ANY FORM OR BY ANY MEANS WITHOUT THE
WRITTEN PERMISSION OF THE UNIVERSITY IS STRICTLY PROHIBITED.
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