Deloitte's publication Interim Financial Reporting: A Guide to IAS 34 provides an overview of IAS 34, application guidance and examples, a model interim financial report, and an IAS 34 compliance checklist. Contents: 1. Introduction and scope 2. Content of an interim financial report 3. Condensed or complete interim financial statements 4. Selected explanatory notes 5. Accounting policies for interim reporting 6. General principles for recognition and measurement 7. Applying the recognition and measurement principles 8. Impairment of assets 9. Measuring interim income tax expense 10. Earnings per share 11. First-time adoption of IFRSs Model interim financial report IAS 34 compliance checklist Click to Download the Deloitte Guide to IAS 34 (PDF 484k, March 2006, 60 pages).

Objective of IAS 34

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.

Key Definitions

Interim period: A financial reporting period shorter than a full financial year (most typically a quarter or half-year).

Interim financial report: A financial report that contains either a complete or condensed set of financial statements for a period shorter than an enterprise's full financial year.

Matters Left to Local Regulators

IAS 34 specifies the content of an interim financial report that is described as conforming to International Accounting Standards. However, IAS 34 does not mandate:

• which enterprises should publish interim financial reports,
• how frequently, or
• how soon after the end of an interim period.

However, the Standard encourages publicly-traded enterprises to provide interim financial reports that conform to the recognition, measurement, and disclosure principles set out in IAS 34, at least as of the end of the first half of their financial year, such reports to be made available not later than 60 days after the end of the interim period. [IAS 34.1]

Minimum Content of an Interim Financial Report

The minimum components specified for an interim financial report are: [IAS 34.8]

• a condensed balance sheet,
• a condensed income statement,
• a condensed statement of changes in equity,
• a condensed cash flow statement and
• selected explanatory notes.

If the financial statements are condensed, they should include, at a minimum, each of the headings and sub-totals included in the most recent annual financial statements and the explanatory notes required by IAS 34. Additional line-items should be included if their omission would make the interim financial information misleading. If the annual financial statements were consolidated (group) statements, the interim statements should be group statements as well. [IAS 34.10]

The periods to be covered by the interim financial statements are as follows: [IAS 34.20]

• balance sheet as of the end of the current interim period and a comparative balance sheet as of the end of the immediately preceding financial year;
• income statements for the current interim period and cumulatively for the current financial year to date, with comparative income statements for the comparable interim periods (current and year-to-date) of the immediately preceding financial year;
• statement showing changes in equity cumulatively for the current financial year to date, with a comparative statement for the comparable year-to-date period of the immediately preceding financial year; and
• cash flow statement cumulatively for the current financial year to date, with a comparative statement for the comparable year-to-date period of the immediately preceding financial year.

Note Disclosures

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 enterprise since the last annual reporting date. IAS 34 states a presumption that anyone who reads an enterprise's interim report will also have access to its most recent annual report. Consequently, IAS 34 avoids repeating annual disclosures in interim reports. [IAS 34.15]

Accounting Policies

The same accounting policies should be applied for interim reporting as are applied in the enterprise's annual financial statements, except for accounting policy changes made after the date of the most recent annual financial statements that are to be reflected in the next annual financial statements. [IAS 34.28]

A key provision of IAS 34 is that an enterprise should use the same accounting policy throughout a single financial year. If a decision is made to change a policy mid-year, the change is implemented retrospectively, and previously reported interim data is restated. [IAS 34.43]

Measurement

Measurements for interim reporting purposes should be made on a year-to-date basis, so that the frequency of the enterprise's reporting does not affect the measurement of its annual results. [IAS 34.28]

Several important measurement points:

• Revenues that are received seasonally, cyclically or occasionally within a financial year should not be anticipated or deferred as of the interim date, if anticipation or deferral would not be appropriate at the end of the financial year. [IAS 34.37]
• Costs that are incurred unevenly during a financial year should 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. [IAS 34.39]
• Income tax expenses should be recognised based on the best estimate of the weighted average annual income tax rate expected for the full financial year. [IAS 34. Appendix B.12]

An appendix to IAS 34 provides guidance for applying the basic recognition and measurement principles at interim dates to various types of asset, liability, income, and expense.

Materiality

In deciding how to recognise, classify, or disclose an item for interim financial reporting purposes, materiality is to be assessed in relation to the interim period financial data, not forecasted annual data. [IAS 34.23]

Disclosure 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. [IAS 34.26] This is to ensure that so called 'year-end adjustments' are reported in a transparent manner.