Prescribe the minimum content of an interim financial report.
Establish the principles for recognition and measurement in complete or condensed financial statements for an interim period.
Aims to ensure timely and reliable interim reporting to enhance the ability of investors, creditors, and others to understand an entityā€™s capacity to generate earnings and cash flows and its financial condition and liquidity.
IAS 34 applies if an entity is required or elects to publish an interim financial report in accordance with IFRS.
The standard does NOT mandate:
Which entities should publish interim reports.
How frequently reports should be published (e.g., quarterly, half-yearly).
How soon after the end of an interim period the report should be published.
These aspects are typically determined by securities regulators, stock exchanges, or local laws. IAS 34 applies to the content and principles once the decision to report is made.
Encourages publicly traded entities to provide interim reports at least as of the end of the first half of their financial year, within 60 days of the interim period end.
An interim financial report should include, at a minimum:
Condensed statement of financial position.
Condensed statement(s) of profit or loss and other comprehensive income.
Condensed statement of changes in equity.
Condensed statement of cash flows.
Selected explanatory notes.
Comparative information must also be presented (see Disclosures section for periods required).
"Condensed" generally means including at least the headings and subtotals presented in the most recent annual financial statements. Additional line items are included if omission would be misleading. Basic and Diluted EPS must still be presented on the face of the condensed income statement (IAS 33).
An entity shall apply the same accounting policies in its interim financial statements as are applied in its annual financial statements.
Measurements for interim reporting purposes shall be made on a year-to-date basis.
The frequency of an entity's reporting (annual, half-yearly, or quarterly) shall not affect the measurement of its annual results.
This means interim periods are viewed as integral parts of the full financial year, not discrete periods. E.g., costs anticipated over the full year are accrued/deferred across interim periods. Seasonality should be disclosed, not smoothed. Income tax expense is based on estimated average annual effective rate.
Preparing interim reports generally requires a greater use of estimates than annual reports.
In deciding how to recognize, measure, classify, or disclose an item for interim reporting, materiality must be assessed in relation to the interim period financial data.
It must be recognized that interim measurements may rely on estimates to a greater extent than annual measurements.
An item might be immaterial for annual reporting but material for understanding the interim period's results or changes since the last annual report.
Minimum required disclosures include:
Statement that the same accounting policies and methods of computation are followed as in the most recent annual statements, or if changed, a description of the nature and effect of the change.
Explanatory comments about the seasonality or cyclicality of interim operations.
Nature and amount of items affecting assets, liabilities, equity, net income, or cash flows that are unusual because of their nature, size, or incidence (e.g., inventory write-downs, restructuring costs, litigation settlements, impairment losses).
Nature and amount of changes in estimates reported in prior interim periods or prior financial years, if they have a material effect in the current interim period.
Issuances, repurchases, and repayments of debt and equity securities.
Dividends paid (aggregate or per share), separately for ordinary and other shares.
Segment information (if IFRS 8 applies): Revenues from external customers, intersegment revenues, measure of segment profit/loss, total assets/liabilities if materially changed from last annual report.
Material events subsequent to the end of the interim period that have not been reflected.
Effect of changes in the composition of the entity during the interim period (e.g., business combinations, disposals, restructuring).
Changes in contingent liabilities or contingent assets since the last annual balance sheet date.
For financial instruments, the disclosures about fair value hierarchy required by IFRS 13.
Comparative Periods Required:
Statement of Financial Position: Current interim period-end vs. End of immediately preceding financial year.
Statement of Comprehensive Income: Current interim period vs. Corresponding interim period of preceding year (both current YTD and comparative YTD also required).
Statement of Changes in Equity: Current interim period YTD vs. Corresponding YTD period of preceding year.
Statement of Cash Flows: Current interim period YTD vs. Corresponding YTD period of preceding year.
Determining the materiality of items and disclosures in the context of the interim period.
Assessing the need for, and reliability of, estimation methods used more extensively in interim reporting.
Evaluating the impact of seasonality or cyclicality on operations and ensuring appropriate disclosure rather than artificial smoothing of results.
Estimating the annual effective income tax rate to apply to interim period income.
Identifying unusual items requiring specific disclosure.
