PAS 34 Interim Financial Reporting

Objective:

 This standard is 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.
Interim Financial Reports
- These are reports containing either complete set of financial statements or set of
condensed financial statements for an interim period.
- Are financial statements covering periods of less than a full financial year(lower than
the annual ,it could be monthly, quarterly, or semi-annual)
- Its purpose is to provide financial statement users with more timely information for
making investment and credit decisions.
- Additionally, this can yield significant information concerning trends affecting the
business and seasonality effects, both of which could be obscured in annual reports.
- Each financial report, annual, or interim are evaluated on its own for conformity to IFRSs
Scope
 PAS 34 does not require entities to provide interim financial reports
 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.(eg. stock exchange)
2 integral views of interim reporting
1. Integral view – can be included in annual and larger financial year
2. Discrete view – can stand alone on the interim period
Content
 An entity presenting an interim financial report has the option of complying either with
PAS 1 ( complete set of financial statement) or PAS 34(condensed set of financial
statement)
Complete set of financial statement
- Statement of financial position
- Statement of profit or loss and other comprehensive income
 - Statement of changes in equity
- Statement of cash flow
- Notes, comprising a summary of significant accounting policies and other explanatory
information; comparative information in respect of the preceding period, and
- Statement of financial position as at the beginning of the preceding period (i.e in cases
of retrospective application, retrospective restatement, and reclassification adjustment)
Minimum content of an interim financial report under PAS 34
- Condensed statement of financial position
- Condensed statement of profit or loss and other comprehensive income, presented as
either condensed single statement or a condensed separate income statement and a
condensed statement of comprehensive income
- Condensed statement of changes in equity
- Condensed statement of cash flow, and
- 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 item or selected
explanatory notes set out under PAS 34
 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
 Notes disclosures- only selected explanatory notes are provided in interim financial
reports to avoid repetition.
Business is highly seasonal
- Pas 34 encourages disclosure of financial information for the latest 12 months and
comparative information for the period 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 ( eg. Inventory write-downs and reversals; asset impairment losses and
reversals; discontinued operations; and fair value changes on assets 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 (eg. Depreciation, amortization,
property taxes, insurance expense, interest expense (income), 13 month pay and other
year-end bonuses (came from the prior month)
  Discretionary income are recognized immediately in the period the income is earned
(eg. Dividend income)
 Income tax expense in the interim period is computed using the best estimate of the
weighted average annual income tax rate expected for the full financial year.
Examples of events and transaction for which disclosure would be required if they
SIGNIFICANT:
a. Write-down of inventories and reversal thereof
b. Impairment losses and reversal thereof
c. Reversal of provision for restructuring costs
d. Acquisition and Disposals od PPE
e. Litigation settlements
f. Corrections of prior period errors
g. Business or economic circumstances affecting the fair value of financial assets and
financial liabilities