Resources (This includes links to the latest standards, drafts, PwC interpretations, tools and practice aids for this topic)
There is no IFRS requirement for an entity to publish interim financial statements. However, a number of countries either require or recommend their publication, in particular for public companies.
Entities may either prepare full IFRS financial statements (conforming to the requirements of IAS 1, ‘Presentation of financial statements’) or condensed financial statements. Condensed reporting is the most common approach. Condensed financial statements include: i) a condensed statement of financial position (balance sheet), ii) a condensed statement of comprehensive income or, if presented separately, an income statement and other comprehensive income statement, iii) a condensed statement of cash flows, iv) a condensed statement of changes in equity, and v) selected explanatory notes.
An entity should apply accounting policies consistently for recognising and measuring assets, liabilities, revenues, expenses and gains and losses at interim dates as compared to those to be used in the current year annual financial statements.
There are special measurement requirements for certain costs that can only be determined on an annual basis (for example, items such as tax that shall be calculated based on an estimated full-year effective tax rate). It is also acknowledged that the preparation of interim reports generally requires a greater use of estimates than for annual financial reports. An impairment loss recognised in a previous interim period in respect of goodwill should not be reversed.
As a minimum, current period and comparative figures (for condensed or full primary statements) are disclosed as follows:
- Statement of financial position (balance sheet): as of the end of the current interim period with comparatives for the immediately preceding year end.
- Statement of comprehensive income (or, if presented separately, income statement and statement of other comprehensive income): for the current interim period and the current year to date information, with comparatives for the equivalent periods in the previous year.
- Cash flow statement and statement of changes in equity: for the current interim period on a year to date basis, with comparatives for the equivalent period in the previous year.
IAS 34 sets out criteria to determine what information should be disclosed in the interim financial statements. These include:
- materiality to the overall interim financial statements;
- unusual or non-recurring items;
- changes since previous reporting periods that have a significant effect on the interim financial statements (of the current or previous reporting financial year); and
- relevant information for understanding the estimates used in the interim financial statements.
The overriding objective is to include an explanation of events and transactions that are significant to understand the changes in the entity’s financial position and performance since the end of the last annual reporting period.