Indian Accounting Standard (Ind AS) 34 Summary
Indian Accounting Standard (Ind AS) 34, Interim Financial Reporting is applicable if the entity is required to or elects to publish an interim financial report in accordance with Ind ASs. The standard does not mandate which entities would be required to publish interim financial reports, how frequently, or how soon after the end of an interim period.
While unaudited financial results prepared and presented under Regulation 33 of the Securities Exchange Board of India (SEBI) (Listing Obligations and Disclosure Requirements) Regulations, 2015 (Listing Regulations) with stock exchanges are not an ‘Interim Financial Report’ as defined in this standard, the recognition and measurement guidance in this standard should be complied with while following the disclosure requirements prescribed by SEBI.
Interim financial statements contain either a complete or a condensed set of financial statements for a period shorter than an annual reporting period.
The following, as a minimum, are presented in condensed interim financial statements:
– A condensed balance sheet,
– A condensed statement of profit and loss,
– A condensed statement of changes in equity,
– A condensed statement of cash flows, and
– Select explanatory notes.
If the entity publishes a set of condensed financial statements in its interim financial report, those condensed statements shall include, at a minimum, each of the headings and subtotals that were included in its most recent annual financial statements and the selected explanatory notes as required by this standard. Additional line items or notes shall be included if their omission would make the condensed interim financial statements misleading.
Items are generally recognised and measured as if the interim period were a discrete period. As an exception, income tax expense for an interim period is based on an estimated average annual effective income tax rate.
In the statement that presents the components of profit or loss for an interim period, the entity shall present basic and diluted earnings per share for that period when the entity is within the scope of Ind AS 33, Earnings per Share.
Generally, the accounting policies applied in the interim financial statements are those that will be applied in the next annual financial statements.
The interim financial report should 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 end of the last annual reporting period by disclosing the update on the relevant information presented in the most recent annual financial report in relation to such events and transactions. Since a user of the entity’s interim financial report will have access to the most recent annual financial report of that entity, the notes to the interim financial report need not provide relatively insignificant updates to the information that was reported in the notes in the most recent annual financial report. Two examples of significant events include:
– The write-down of inventories to net realisable value and the reversal of such a write-down, or
– The reversal of any provisions for the costs of restructuring.
The recognition and measurement guidance in this standard applies also to complete financial statements for an interim period, and such statements would include all of the disclosures required by this standard.