IAS 34 Interim Financial Reporting
IAS 34 specifies the minimum content requirements of interim financial reports. While it does not provide guidance on who should prepare interim financial reports and when, it recommends publicly-traded entities to prepare the half-yearly financial reports within 60 days of the period end.
Due to cost-benefit considerations, IAS 34 either requires or allows disclosure of less information than the corresponding annual reports. However, it does not prohibit an entity from preparing a complete set of financial statements in which case the form and content requirements of IAS 1 must be followed.
Minimum contents of an interim financial report
At the minimum, an interim financial report shall include:
- A condensed statement of financial position;
- A single condensed statement of comprehensive income or separate condensed statements of profit or loss and other comprehensive income;
- A condensed statement of changes in equity;
- A condensed statement of cash flows; and
- Selected explanatory notes.
An entity which uses two-statement approach for statement of comprehensive income in annual financial statements must also present two statements in interim financial reports. Further, such condensed financial statements shall at least include all the headings and sub-totals disclosed in the annual financial statements and any further information whose omission would be misleading.
If a company is required to present EPS in its annual financial statements, it continues to disclose it in the statement which shows net income. If the most recent annual report contained consolidated financial statements, interim financial report must also contain consolidated financial statements. While repetition of information contained in the last annual report is prohibited, IAS 34 requires an update on significant events and transactions to be included. Such events and transactions include write down of inventories, recognition of impairment loss, any loan default or breach of loan covenants, changes in economic conditions affecting fair value of assets, etc.
Minimum disclosure requirements in interim reports
At the minimum, an entity shall make the following disclosure either in interim financial report or in the accompanying management commentary (in which case it must be cross-referenced to the interim financial statements):
- A statement that the accounting policies are the same as those in the most recent annual financial statements or a description if there is a change;
- Explanatory comments about seasonality and cyclicality of interim operations;
- Nature and amount of any unusual items;
- Any changes in estimates;
- Any issuance or retirement of debt or equity securities;
- Any dividends declared;
- Any significant subsequent events;
- Segment information (if IFRS 8 Operating Segments is applicable to the entity);
- Changes in composition of the entity, i.e. its subsidiaries, etc.;
Periods covered by each interim financial statement
The following table shows the period for which each component of the interim financial report must be presented:
|Financial statement||Current period||Comparative period|
|Statement of financial position||As at the end of the interim period||At the end of the preceding complete financial year|
|Statement of profit or loss and other comprehensive income||Current interim period and cumulative year to date for the current financial year||Equivalent interim period and cumulative year to date for the preceding financial year|
|Statement of changes in equity||Cumulative year to date for the current financial year||Cumulative year to date for preceding financial year|
|Statement of cash flows||Cumulative year to date for the current financial year||Cumulative year to date for the preceding financial year|
An entity with significant cyclicality in its business is encouraged (but not required) to also present the financial information for a rolling 12-month period and comparative information for equivalent period.
If an entity makes a significant change in any estimate since the last interim financial report and it does not separately prepare the financial report for the last interim period of a financial year, it must disclose such a change in the notes to the annual financial statements.
An entity shall apply the same accounting policies as those applied in the financial statement of the preceding year except for any changes made after the most recent annual financial statements which are to be reflected in the next annual financial statements. However, the frequency of interim reporting would not impact the amounts recognized. Amounts shall be recognized on year-to-date basis.