Indian Accounting Standard (Ind AS) 34, Interim Financial Reporting, Important Material
Ind AS 34: Interim Financial Reporting
It is the reporting for periods of shorter than a full financial year, say, for a period of three months or quarterly results. Interim Financial Report means a financial report containing either a complete set of financial statement or set of condensed financial statement for an interim period.
However interim reporting has inherent limitation, which is not the case of annual accounts as the reporting period is shortened, the effect of errors in estimations and allocation get magnified.
The main problems are:
- Proper allocation of operating expenses.
- Some operating expenses may be incurred in one interim period and yet benefit the full year operation.
- For some entities revenue may be seasonal or cyclical and therefore concentrated in certain interim period.
- Determination of appropriate amount of provisions.
- Income-tax expenses – one interim period may have profit and next interim period may have losses.
The objective of 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.
This Standard does not mandate which entities should be required to publish interim financial reports, how frequently, or how soon after the end of an interim period. However, governments, securities regulators, stock exchanges, and accountancy bodies often require entities whose debt or equity securities are publicly traded to publish interim financial reports. This Standard applies if an entity is required or elects to publish an interim financial report in accordance with Indian Accounting Standards.