Interim

Financial
Reporting
OBJECTIVE OF IAS 34
The objective of this Standard is to prescribe the:
• minimum content of an interim financial report
• recognition and measurement in complete or condensed financial
statements in an interim period.
SCOPE OF IAS 34
This Standard does not mandate which entities should produce interim
financial reports, how frequently, or how soon after the end of an interim period.
IAS 34 is applied when an entity chooses, or is required by the government or
other institution, to publish interim financial report that complies with IFRSs.
This Standard applies if an entity is required or elects to publish an interim
financial report in accordance with IFRSs.
IAS 34, however, encourages publicly listed entities to provide at least
a semi-annual financial report for the first half the year to be issued not later
than 60 days after the end of the interim period.
Financial reports, whether annual or interim, are evaluated for conformity
to the IFRSs on their own. Non-preparation of interim reports or non-compliance
with IAS 34 does not necessarily prevent the entity’s annual financial statements
from conforming to the IFRS. If an entity’s interim financial reporting is
described as conforming with IFRSs, it must comply with all the requirements of
this Standard.
Definitions
❖ Interim period is a financial reporting period shorter than a full financial
year.

❖ Interim financial report means a financial report containing either a

complete set of financial statements (IAS 1) or a set of condensed financial
statements (IAS 34) for an interim period.
Form and content of interim financial statements
At a minimum, condensed interim financial statements include each of the headings and subtotals
that were included in the entity’s most recent annual financial statements and the selected
explanatory notes required by IAS 34. Additional line items or notes are provided if their omission makes
the condensed financial statements misleading.

Significant events and transactions

a. write-down of inventories to net realizable value and reversal thereof
b. impairment losses and reversal thereof
c. reversal of provision for restructuring costs
d. acquisitions and disposals of PPE, including purchase commitments
e. litigation settlements
f. corrections of prior period errors
g. business or economic circumstances affecting the fair value of financial assets and financial liabilities
h. unremedied loan default or breach of loan agreement
i. related party transactions
j. transfers between levels of the fair value hierarchy used in measuring the fair value of financial instruments
k. changes in the classification of financial assets
l. changes in contingent liabilities
Other disclosures
The following are also disclosed in the interim financial report:
a. a statement that the same accounting policies were used in the interim financial statements as those used
in the latest annual financial statements. If there have been changes, those changes are disclosed.
b. explanation of seasonality or cyclicality of interim operations
c. unusual items affecting the financial statement elements
d. changes in accounting estimates
e. issuances and settlements of debt and equity securities
f. dividends paid
g. segment information (if the entity is covered by IFRS 8)
h. events after the reporting period
i. changes in the composition of the entity, e.g., business combinations, obtaining or losing control of
subsidiaries, restructurings, and discontinued operations
j. disclosures on the fair value of financial instruments
k. disclosures required by IFRS 12 when the entity becomes or ceases to be an investment property
l. disaggregation of revenue from contracts with customers as required by IFRS 15
m. The entity presents basic and diluted earnings per share if the entity is within the scope of IAS 33.
Disclosures of compliance with IFRSs
If an entity’s interim financial report is in compliance with this Standard, that fact shall be
disclosed. An interim financial report shall not be described as complying with IFRSs unless it complies
with all the requirements of IFRSs.

Periods for which interim financial statements

are required to be presented
Interim reports shall include interim financial statements (condensed or complete) 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. statement 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. As permitted by IAS 1, an interim report may present each period
a statement or statements of profit or loss and other comprehensive income.
c. 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.
d. 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.
Illustration
• Entity publishes interim financial reports half-yearly/semi-annually.
The entity’s financial year ends 31 December (calendar year). The entity will present the following
financial statements (condensed or complete) in its half-yearly interim financial report as of 30 June
20X1:
Illustration
• Entity publishes interim financial reports quarterly
The entity’s financial year ends 31 December (calendar year). The entity will present the
following financial statements (condensed or complete) in its quarterly interim financial report as of 30
June 20X1:
Materiality

Materiality shall be assessed in relation to the interim period financial data.

In making assessments of materiality, it shall be recognized that the 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 relevant to understanding an entity’s financial position and
performance during the interim period.
DISCLOSURE IN ANNUAL FINANCIAL STATEMENTS
If an estimate of an amount reported in an interim period is changed
significantly during the final interim final 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.

RECOGNITION AND MEASUREMENT

An entity shall apply the same accounting policies in its interim financial
statements as are applied in its annual financial statements, except for
accounting policy changes after the date of the most recent annual financial
statements that are to be reflected in the next annual financial statements.
However, the frequency of an entity’s reporting (annual, semi-annual, or
quarterly) shall not affect the measurement of its annual results.
Measurements for interim reporting purposes shall be made on a year-to-date
basis.
Two point-of-views in interim reporting:

1. Discrete view – According to paragraph 29 of this Standard, “requiring that an

entity apply the same accounting policies in its interim financial statements
as in its annual statements may seem to suggest that interim period
measurements are made as if each interim period stands alone as an
independent reporting period”.

2. Integral view – According to paragraph 29 of this Standard, “providing that

the frequency of an entity’s reporting shall not affect the measurement of its
annual results, paragraph 28 acknowledges that an interim period is a part of
a larger financial year.
IAS 34 provides the following accounting principles:
a. Losses from inventory write-downs, restructurings, or impairments in an interim
period are accounted for in the same way as in annual financial statements
(i.e., losses are recognized immediately in the interim period in which they
arise).The original estimate is adjusted by accruing an additional loss or by reversing
a previously recognized loss, if there are subsequent changes in estimates.
Financial statements in previous interim periods are not restated.
b. A cost that does not qualify as an asset in an interim period is not deferred either
to wait if it qualifies in the next period or to smooth earnings over the interim
periods within a financial year. A liability at the end of an interim period must meet
all the recognition criteria at that date, just as it must at the end of an annual
reporting period.
c. Income tax expenses in interim periods are based on the best estimate of the
weighted average annual income tax rate expected for the full financial year. The
recognition principles of assets, liabilities, income and expenses under the
Conceptual Framework are applied in the interim period in the same way as in the
annual period. Thus, items that do not qualify as assets, liabilities, income or
expenses in the annual period do not also qualify as such in the interim period.
Revenues received seasonally, cyclically, or
occasionally
Revenues that are received seasonally, cyclically, or occasionally (e.g.,
dividends revenue, royalties, government grants, or season revenues of retailers)
within a financial year shall not be anticipated or deferred as of an interim date
if anticipation or deferral would not be appropriate at the end of the entity’s
financial year.

Costs incurred unevenly during the financial year

Costs that are incurred unevenly during an entity’s financial year shall be
anticipated or deferred for interim reporting purposes if, and on if, it is also
appropriate to anticipate or defer that type of cost at the end of the financial
year.
Use of estimates
While measurements in both annual and interim financial reports are based on
reasonable estimates, the preparation of interim financial reports generally will
require greater use of estimation methods than annual financial reports.

Restatement of previously reported interim periods

A change in accounting policy, other than one for which the transition is specified
by a new IFRS, shall be reflected by:
a. Retrospectively – restating the financial statements of prior interim periods of the
current financial year and the comparable interim periods of any prior financial years
that will be restated in accordance with IAS 8; or
b. Prospectively – when it is impracticable to determine the cumulative effect at the
beginning of the financial year of applying a new accounting policy to all prior
periods, adjusting the financial statements of prior interim periods of the current
financial year, and comparable interim periods of prior financial years to apply the
new accounting policy prospectively from the earliest date practicable.
1. Which of the following is not an objective of IAS 34?
a. To prescribe the minimum content of an interim financial report
b. To prescribe which entities are required to publish interim financial
reports, how frequently and how soon after the end of the reporting period
c. To prescribe the principles of recognition and measurement in
complete or condensed financial statements for an interim period.
d. None of the above
2. What does the International Accounting Standards Committee encourage
publicly traded entities to do?
a. To provide interim financial reports at least as of the end of the first
quarter of their financial year
b. To make their interim financial reports available not later than 60 days
after the end of the interim period
c. To apply the same accounting policies in its interim report as are applied
in its annual financial statements, including 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.
d. All of the above
3. Interim financial report means a financial report containing ________
for an interim period.
a. A complete set of financial statements
b. An adjusted set of financial statements
c. A set of condensed financial statements
d. A or B
e. A or C
4. Which of the following is true with regards to the disclosure of compliance
with IFRSs provided in IAS 34?
a. If an entity’s interim financial report is not in compliance with IAS 34,
that fact shall be disclosed
b. An interim financial report shall not be described as complying with IFRSs
unless it complies with all the requirements of IAS 34
c. An interim financial report shall not be disclosed as complying with IFRSs
unless it complies with all the requirements of IFRSs.
d. A and B
5. If an entity does not prepare interim financial reports,
a. Its annual financial statements would not conform to the IFRSs.
b. Its annual financial statements should not be described to have been
prepared in accordance with IFRSs.
c. The conformance of its annual financial statements with the IFRSs is not
affected.
d. A and B