CHAPTER 32:

PAS 34- INTERIM FINANCIAL STATEMENTS

OBJECTIVE AND SCOPE

 to prescribe the minimum content of an interim financial report and to prescribe the principles for
recognition and measurement in complete or condensed financial statements for an interim period.
 Timely and reliable interim financial reporting improves the ability of investors, creditors, and others to
understand an entity’s capacity to generate earnings and cash flows and its financial condition and
liquidity.

PAS 34 applies if an entity is required or elects to publish an interim financial report in accordance
with Philippine Financial Reporting Standards (PFRSs). If an entity’s interim financial report is described as
complying with PFRSs, it must comply with all of the requirements of this Standard.

GENERAL CONCEPTS

 Publicly traded entities are encouraged to provide interim financial reports at least as of the end of the
first half of their financial year and to make their interim financial reports available not later than 60 days
after the end of the interim period.
 However, some entities are required by the Securities and Exchange Commission to file quarterly
interim financial reports within 45 days after the end of each of the first three quarters.
 Each financial report, annual or interim, is evaluated on its own for conformity to PFRSs.
 If an entity’s interim financial report is in compliance with PAS 34, that fact shall be disclosed.
 In the interest of timeliness and cost considerations and to avoid repetition of information previously
reported, an entity may be required to or may elect to provide less information at interim dates as
compared with its annual financial statements.
 However, PAS 34 does not prohibit or discourage an entity from publishing a complete set of
financial statements as described in PAS 1 in its interim financial report. In the event an entity publishes a
complete set of financial statements in its interim financial report, the form and content of those statements
shall conform to the requirements of PAS 1 for a complete set of financial statements.
 The minimum content of an interim financial report shall include condensed financial statements and
selected explanatory notes.
 The interim financial report is intend to provide an update on the latest complete set of annual
financial statements.
 A user of an entity’s interim financial report will have access to the most recent annual financial
report of that entity.
 the recognition and measurement guidance provided in PAS 34 applies also to complete financial
statements for an interim period, and such statements would include all of the disclosures required by
PAS 34 as well as those required by other PFRSs.

As a rule, an entity is not required to include additional interim period financial information in its
annual financial statements. However, if an estimate of an amount reported in an interim period is changed
significantly during the final interim period of the financial year but a separate financial report is not
published for that final interim period, the nature and amount of that change in estimate shall be disclosed in
a note to the annual financial statements for that financial year.
Also, it must be noted that the frequency of an entity’s reporting (annual, half-yearly, or quarterly)
 FORM AND CONTENT

An interim financial report shall include, at a minimum, the following components:

a. a condensed statement of financial position;
b. a condensed statement or condensed statements of profit or loss and other comprehensive income;
c. a condensed statement of changes in equity;
d. a condensed statement of cash flows; and
e. selected explanatory notes.
 If an entity uses the two-statement approach in preparing the statement of comprehensive income and
thus presents items of profit or loss in a separate statement, it shall then present interim condensed
information from that statement.
 If an entity publishes a set of condensed financial statements in its interim financial report, those
condensed statements shall include, at a minimum, each of the headings and subtotals that were included
in its most recent annual financial statements and the selected explanatory notes as required by PAS 34.
Additional line items or notes shall be included if their omission would make the condensed interim
financial statements misleading.
 An entity shall include in its interim financial report 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 end of the last annual reporting period. Information disclosed in relation to those events and transactions
shall update the relevant information presented in the most recent annual financial report.
 An entity shall present basic and diluted earnings per share for that period in the statement that presents
the components of profit or loss for an interim period. If an entity presents items of profit or loss in a
separate statement, it presents basic and diluted earnings per share in that statement.
 An interim financial report is prepared on a consolidated basis if the entity’s most recent annual financial
statements were consolidated statements.
 When an event or transaction is significant to an understanding of the changes in an entity’s financial
position or performance since the last annual reporting period, its interim financial report should provide
an explanation of and an update to the relevant information included in the financial statements of the last
annual reporting period.

RECOGNITION AND MEASUREMENT

In deciding how to recognize, measure, classify, or disclose an item for interim financial reporting
purposes, materiality shall be assessed in relation to the interim period financial data.
 In making assessments of materiality, it shall be recognized that interim measurements may rely
on estimates to a greater extent than measurements of annual financial data.
The overriding goal is to ensure that an interim financial report includes all information that is
 INTERIM PERIODS

Interim reports shall include interim financial statements (condensed or complete) for periods as
follows:
a. statement of financial position as of the end of the current interim period and a comparative
statement of financial position as of the end of the immediately preceding financial year.
b. statements of profit or loss and other comprehensive income for the current interim period and
cumulatively for the current financial year to date, with comparative statements of profit or loss and
other comprehensive income for the comparable interim periods (current and year-to-date) of the
immediately preceding financial year.
c. statement of changes in equity cumulatively for the current financial year to date, with a
 OTHER DISCLOSURES

Disclosure of segment information is required in an entity’s interim financial report only if PFRS 8
requires that entity to disclose segment information in its annual financial statement.
Covered entities must provide the following segment information:
a. revenues from external customers, if included in the measure of segment profit or loss reviewed by
the chief operating decision maker or otherwise regularly provided to the chief operating decision
maker;
b. intersegment revenues, if included in the measure of segment profit or loss reviewed by the chief
operating decision maker or otherwise regularly provided to the chief operating decision maker;
c. a measure of segment profit or loss;
d. a measure of total assets and liabilities for a particular reportable segment if such amounts are
regularly provided to the chief operating decision maker and if there has been a material change from
the amount disclosed in the last annual financial statements for that reportable segment;
 CHAPTER 33:

PAS 10- EVENTS AFTER REPORTING PERIOD

OBJECTIVE AND SCOPE

 to prescribe when an entity should adjust its financial statements for events after the reporting period
and the disclosures that an entity should give about the date when the financial statements were
authorized for issue and about events after the reporting period.

PAS 10 shall be applied in the accounting for, and disclosure of, events after the
reporting period.

ADJUSTING AND NON-ADJUSTING EVENTS

Events after the reporting period

 are those events, favorable and unfavorable, that occur between the end of the reporting period
and the date when the financial statements are authorized for issue.
 include all events up to the date when the financial statements are authorized for issue, even if
those events occur after the public announcement of profit or of other selected financial information.
Two classification of events after the reporting period
1. Adjusting events after the reporting period  are those that provide evidence of conditions that existed at
the end of the reporting period
2. Non-adjusting events after the reporting period  are those that are indicative of conditions that arose
after the reporting period.
 Entities shall adjust the amounts recognized in its financial statements to reflect adjusting events after the
reporting period and they shall not adjust the amounts recognized in its financial statements to reflect the
non-adjusting events after the reporting period.
 However, some non-adjusting events may result in additional disclosure when non-disclosure
could influence the economic decisions that users make on the basis of the financial statements.
 It is important for users to know when the financial statements were authorized for issue, because the
financial statements do not reflect events after this date.
 The process involved in authorizing the financial statements for issue will vary depending upon the
management structure, statutory requirements and procedures followed in preparing and finalizing the
financial statements.
 In some cases, an entity is required to submit its financial statements to its shareholders for
approval after the financial statements have been issued; the financial statements are authorized for issue on
the date of issue.
 In other cases, the management of an entity is required to issue its financial statements to a
supervisory board (made up solely of non-executives) for approval; the financial are authorized for issue
when the management authorizes them for issue to the supervisory board.

The following are examples of adjusting events after the reporting period that require an entity to
adjust the amounts recognized in its financial statements, or to recognize items that were not previously
recognized:
a. settlement after the reporting period of a court case that confirms that the entity had a present
obligation at the end of the reporting period;
 GOING CONCERN CONSIDERATION

Regardless of when the inability was determined, whether at the end of reporting period or after the
end of reporting period, the effect of the inapplicability of the going concern assumption is so pervasive that
mere adjustments or disclosures are not enough.
 In such case, the Standard requires a fundamental change in the basis of accounting and the
presentation of additional disclosures as required by PAS 1.

DISCLOSURES

The following are the disclosures required by PAS 10:

a. the date when the financial statements were authorized for issue and who gave that authorization;
b. the fact that the entity’s owners or others have the power to amend the financial statements after
issue;
c. updates on disclosures that relate to conditions that existed at the end of the reporting period in the
light of the new information received after the reporting period;
d. the nature of material non-adjusting events after the reporting period and an estimate of its financial
effect, or a statement that such an estimate cannot be, made for each material category of non-
adjusting event after the reporting period.
 CHAPTER 34:

PFRS 1- FIRST-TIME ADAPTION OF PHILIPPINE

FINANCIAL REPORTING STANDARDS
OBJECTIVE AND SCOPE

 to ensure that an entity’s first PFRS financial statements, and its interim financial reports for part of the
period covered by those financial statements, contain high quality information that:
a. is transparent for users and comparable over all periods presented;
b. provides a suitable starting point for accounting in accordance with International Financial Reporting
Standards (PFRSs); and
c. can be generated at a cost that does not exceed the benefits.
Basically, the key principle of PFRS 1 is retrospective application of all Standards that are effective
as of the date of the first PFRS financial statements.
Basic procedures that the entity should follow:
i. Identify the First Financial Statements
ii. Prepare an opening balance sheet at the date of transition
iii. Select accounting policies that comply with these standards and apply those policies
retrospectively to all period presented in the financial statements
iv. Consider whether to apply any of the optional exemptions from retrospective application
v. Apply the mandatory exceptions from retrospective applications
vi. Make extensive disclosures to explain the transition2
The entity shall apply this PFRS in
a. its first PFRS financial statements; and
b. each interim financial report

FIRST-TIME ADOPTION GUIDANCE

1. Identify the first financial statements

entity’s first PFRS financial statements
 are the first annual financial statements in which the entity adopts PFRSs, by an explicit and
unreserved statement in those financial statements of compliance with PFRSs.
Financial statements in accordance with PFRSs are an entity’s first PFRS financial
statements in the following circumstances;
a. The entity presented its most previous financial statement in accordance with national requirements
that are not consistent with PFRSs in all respects.
b. The entity presented its most previous financial statement in conformity with PFRSs in all respects,
except that the financial statements did not contain an explicit and unreserved statement that they
complied with PFRS.
c. The entity presented its most previous financial statements containing an explicit statement of
compliance with Some, but not all, PFRS.
d. The entity presented its most previous financial statements in accordance with national requirements
inconsistent with PFRSs, using some individual PFRSs to account for items for which national
requirements did not exist.
e. The entity presented its most previous financial statements in accordance with national requirements,
with a reconciliation of some amount to the amounts determined in accordance with PFRS.
f. The entity prepared financial statements in accordance with PFRSs for internal use only, without
 OPTIONAL EXEMPTION

The PFRS establishes two categories of exceptions to the principle that tan entity’s opening PFRS
statement of financial position shall comply with each PFRS;
(1) Optional, (2) Mandatory.
Optional Exemption
 refers to exemptions provided by PFRS 1 which the entity has an option to apply or not.
Deemed costs
 PRESENTATION AND DISCLOSURE

The entity must provide information as to the following;

a. Comparative information
b. Explanation of transition to PFRS
An entity’s first PFRS financial statements shall include at least;
a. three statements of financial position,
b. two statements of profit or loss and other comprehensive income,
c. two separate Statements of profit or loss (if presented),
d. two statements of cash flows and two statements of changes in equity and
e. related notes, including comparative information for all statements presented.
In any financial statements containing historical summaries or comparative information in accordance
with previous GAAP, an entity shall:
a. label the previous GAAP information prominently as not being prepared in accordance with PFRSs;
and
b. disclose the nature of the main adjustments that would make it comply with PFRSs. An entity need
not quantify those adjustments.
An entity shall explain how the transition from previous GAAP to PFRSs affected its reported
financial position, financial performance and cash flows.
An entity’s first PFRS financial statements shall include:
(a) reconciliations of its equity reported in accordance with previous GAAP to its equity in accordance
with PFRSs for both of the following dates:
(i) the date of transition to PFRSs; and
(ii) the end of the latest period presented in the entity’s most recent annual financial statements
in accordance with previous GAAP.

(b) a reconciliation to its total comprehensive income in accordance with PFRSs for the latest period in
the entity’s most recent annual financial statements. The starting point for that reconciliation shall be
total comprehensive income in accordance with previous GAAP for the same period or, if an entity
did not report such a total, profit or loss under previous GAAP.
(c) if the entity recognized or reversed any impairment losses for the first time in preparing its opening
PFRS statement of financial position, the disclosures that PAS 36 Impairment of Assets would have
required if the entity had recognized those impairment losses or reversals in the period beginning
with the date of transition to PFRSs.
 FULL PFRS vs. PFRS for SMEs

Full PFRS (PFRS I) and PFRS for SMEs (Sec. 35) are the same, except for the following:
PFRS for SMEs FULL PFRS
Scope A first-time adopter of the IFRS for SMEs An entity shall apply this
shall apply this section in its first financial IFRS in:
statements that conform to this Standard. a. its first IFRS financial statements; and
b. each interim financial
report, if any, that it
presents for part of the
period covered by its
first IFRS financial statements.
First PFRS Financial statements prepared in Refers to No. 5
Financial accordance with this Standard are an
Statement entity’s first such financial
statements if, for example, the entity:
a. did not present financial
statements for previous periods;
b. presented its most recent previous
financial statements under national
requirements that are not consistent with
this Standard in all respects; or
c. presented its most recent
previous financial statements in conformity
with full IFRS.
Non-IFRS None Refers to No. 20
comparative
information
historical and
summaries