Also Refer: IFRIC 10 Interim Financial Reporting and Impairment

IAS 34
Interim Financial
Reporting
Also refer: IFRIC 10 Interim Financial Reporting and
Impairment
Effective Date: Periods beginning on or after
1 January 1999
● Applies to entities required by legislation or other pronouncements or that
elect to publish interim financial reports.
● Standard does not mandate which entities should produce interim financial
reports.
OBJECTIVE
● The objective of IAS 34 is to prescribe the minimum content of an interim
financial report and to prescribe the principles for recognition and
measurement in financial statements presented 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.
DEFINITIONS :
● Interim period – financial period shorter than full financial year (most
typically a quarter or half-year)
● Interim financial report – either a complete (as described in IAS 1) or
condensed set of financial statements.
INTERIM REPORTS
● Reports covering a period shorter than a full financial year
● Intended to provide an update on the latest complete set of financial
statements
● Do not duplicate information previously presented on annual financial
statements
● To provide financial statement users more timely information for making
investment and credit decisions.
● Can yield significant information concerning trends affecting the business
and seasonality effects.
Who and When?
● Not mandated by FRSC; however SEC, PSE and some trade associations
require certain companies to file interim reports.
● International Accounting Standards Board (IASB) encourages publicly
traded entities to provide interim financial reports that conform the
recognition, measurement and disclosure principles set out in IAS 34.
● Specifically, public traded entities encouraged:
○ (a) to provide interim financial reports at least as of the end of the first
half of their financial year; and
○ (b) to make their interim financial reports available not later than 60
days after the end of the interim period.
Philippine Setting
● SEC and PSE require entities to submit a quarterly report on SEC Form 17-
Q, within forty five (45) days after the end of each of the first three quarters
of each fiscal year. (SRC Rule 17)
INTERIM FINANCIAL REPORT
● If complete set is published in the interim report, full compliance with IFRS
is required.
● If condensed set is published the interim report is required to include at a
minimum:
○ A condensed statement of financial position
○ A condensed statement of comprehensive income (using either the one
or two statement approach – see IAS 1)
○ A condensed statement of changes in equity
○ A condensed statement of cash flows
○ Selected explanatory notes
● The condensed statements are required to include at least:
○ Headings and subtotals included in most recent annual financial
statements
○ Selected minimum explanatory notes - explaining events and
transactions significant to an understanding of the changes in financial
position/performance since last annual reporting date
○ Selected line items or notes if their omission would make the
condensed financial statements misleading
○ Basic and diluted earnings per share (if applicable) on the face of
statement of comprehensive income.(IAS 33 Earnings per share)
IAS 34 does not require the issuance of interim financial report. However, the Philippine
SEC and the PSE requires the issuance of semi-annual unaudited financial statements.
Creditors usually require quarterly unaudited interim financial report .
PERIODS TO BE
PRESENTED FOR
AN ENTITY
WHICH
PUBLISHED
INTERIM
FINANCIAL
STATEMENTS
QUARTERLY
Condensed Statement of Financial Position
Statement of
financial
position as at the
end of the
current interim
period (March
31, 2020) and as
of the end of the
immediate
preceding
financial year
(December 21,
2019)
Condensed Statement of Income
Statements of comprehensive
income for the current interim
period (Jan1– Mar..31 2020)
and cumulatively for the
current financial year (which
will be the same for half year
ends), with comparatives for
the interim period of the
preceding financial year (Jan.
1 – Mar. 31 2019)
Consolidated Statement of Changes in Equity
Statements of
changes in
equity for the
current
financial year to
date, with
comparatives
for the year to
date of the
immediately
preceding
financial year
Condensed Statement of Cash Flows
Statements of cash flows
cumulatively for the
current financial year to
date, with comparatives
for the year-to-date of the
immediately preceding
financial year.
NOTE DISCLOSURE
● The explanatory notes required are designed to provide 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 last
annual reporting date.
● IAS 34 states a presumption that anyone who reads an entity's interim report
will also have access to its most recent annual report. Consequently, IAS 34
avoids repeating annual disclosures in interim condensed reports.
Examples of specific
disclosure
requirements of IAS
34
Examples of events and transactions for
which disclosures are required if they are
significant
● write-down of inventories
● recognition or reversal of an impairment loss
● reversal of provision for the costs of restructuring
● acquisitions and disposals of property, plant and equipment
● commitments for the purchase of property, plant and equipment
● litigation settlements
● corrections of prior period errors
● changes in business or economic circumstances affecting the fair value of
financial assets and liabilities
● unremedied loan defaults and breaches of loan agreements
● transfers between levels of the 'fair value hierarchy' or changes in the
classification of financial assets
● changes in contingent liabilities and contingent assets
Examples of other disclosures required
● changes in accounting policies
● explanation of any seasonality or cyclicality of interim operations
● unusual items affecting assets, liabilities, equity, net income or cash flows
● changes in estimates
● issues, repurchases and repayment of debt and equity securities
● dividends paid (aggregate or per share)
● particular segment information (where IFRS 8 Operating Segments applies
to the entity)
● events after the end of the reporting period
● changes in the composition of the entity, such as business combinations,
obtaining or losing control of subsidiaries, restructurings and discontinued
operations
● disclosures about the fair value of financial instruments
MATERIALITY
In deciding how to recognize, measure, classify, or disclose an item for interim
financial reporting purposes, materiality is to be assessed in relation to the
interim period financial data, not forecast annual data.
RECOGNITION AND
MEASUREMENT
ACCOUNTING COSTS INCURRED COMPLIANCE WITH

POLICIES UNEVENLY IAS 34
USE OF ESTIMATES SEASONAL, OTHER

CYCLICAL OR
OCCASIONAL
REVENUE
ACCOUNTING POLICIES
● Principles for recognizing assets, liabilities, income and expenses are same
as in the most recent annual financial statements, unless:
There is a change in an accounting policy that is to be reflected in the next
annual financial statements.
● Tax recognized based on weighted average annual income tax rate expected
for the full year
● Tax rate changes during the year are adjusted in the subsequent interim
period during the year
USE OF ESTIMATES
● Interim reports require a greater use of estimates than
annual reports. (IAS 34 par. 41)
● Periodic inventory system may adopt inventory

estimation method to determine cost of goods sold
during the interim period
COSTS INCURRED
UNEVENLY
● Anticipated or deferred only if it would be possible to
defer or anticipate at year end.
● Depreciation and Amortization based only on assets
owned during the interim period.
● Paid vacation, Holiday leave shall be accrued
● Assets disposal planned for later in the financial year
shall not be taken into account.
● Gains or losses from disposal of interim periods shall
not allocated over interim period.
COSTS INCURRED
UNEVENLY
● Periodic inventory system may adopt inventory
estimation method
● Income tax expense based on the best estimate od
weighted average annual income tax rate
● Bonus if it is a legal obligation and reliable estimate of
the obligation can be made.
SEASONAL, CYCLICAL OR
OCCASIONAL REVENUE
● Revenues are recognized when they earned during the interim period they
occurred.
● Revenue received during the year should not be anticipated or deferred
where anticipation would not be appropriate at year end .
● Seasonal revenue of retailers. Such revenue are recognized when they occur.
● Examples include dividend revenue, royalties, and government grants.
COMPLIANCE WITH
IAS 34
● Disclose the fact that the interim
financial statements comply with IAS
34.
OTHER
● For highly seasonal entities, consider reporting additional information for 12
months
● Changes in accounting policies accounted as normal in terms of IAS 8
Accounting Policies, Changes in Accounting Estimates and Errors.
○ Restating the FS of prior interim periods of the current financial year
and the comparable interim periods of any prior financial years.
DISCLOSE IN ANNUAL FINANCIAL
STATEMENTS
If an estimate of an amount reported in an interim period is changed
significantly during the financial interim period in the financial year but a
separate financial report is not published for that period, the nature and amount
of that change must be disclosed in the notes to the annual financial statements.
IMPAIRMENT
Guidance on impairment is given in IFRIC
10Interim Financial Reporting and Impairment.
SAMPLE
QUESTION
S
QUESTION #1 (AICPA Adapted)
Conceptually, interim financial statements can be described as emphasizing
a. Comparability over neutrality

b. Relevance over comparability
c. Reliability over relevance
d. Timeliness over reliability
Suggested answer: D
IAS 34 states a presumption that anyone reading the interim financial report will
a. Understand all IFRS.

b. Have access to the record of the entity.
c. Have access to the most recent annual report.
d. Not make decisions based on the report.
Suggested answer: C
QUESTION #3
In deciding how to recognize, measure, classify, or disclose an item for interim
financial reporting purposes _________ is to be assessed in relation to the
interim period financial data, not forecast annual data.
a. Materiality
b. Comparability
c. Relevance
d. Understandability
Suggested Answer: A
Which of the following statement(s) is(are) in compliance with IAS 34?
I. Revenues that are received seasonally, cyclically, or occasionally within a

financial year shall not be anticipated or deferred as pf an interim date if
anticipation or deferral would not be appropriate at the end pf the entity’s
financial year.
II. Costs that are incurred unevenly during an entity’s financial year shall be
anticipated or deferred for interim reporting purposes if, and only if, it is
also appropriate to anticipate or defer that type of cost at the end of the
financial year.
a. I only c. Both I and II

b. II only d. Neither I nor II
Suggested Answer: C
QUESTION #5
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 described as complying with IFRSs
unless it complies with all the requirements of IFRSs.
d. A and B
Suggested Answer: C
REFERENCES
IFRS at a Glance:
https://www.bdo.global/getmedia/8a9400d7-ff7d-478c-b853-10fc6d0ee4b2/IAAG
-30-June-2020.aspx
Notes and Quizzers Theory of Accounts 2016 by Robles
https://www.iasplus.com/en/standards/ias/ias34
https://www.youtube.com/watch?v=MGEcF4Z9Qoc&t=2286s
https://www.sanmiguel.com.ph/files/reports/SMC-SEC_FORM-17-Q_(2020-
1st_quarter)_(05.29_.2020)_.pdf

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IAS 34

● Timely and reliable interim financial reporting improves the ability of

ACCOUNTING COSTS INCURRED COMPLIANCE WITH

USE OF ESTIMATES SEASONAL, OTHER

● Periodic inventory system may adopt inventory

a. Comparability over neutrality

a. Understand all IFRS.

I. Revenues that are received seasonally, cyclically, or occasionally within a

a. I only c. Both I and II

Notes and Quizzers Theory of Accounts 2016 by Robles

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