2. AS 25 / Ind AS 34
INTERIM FINANCIAL REPORTING
IFR is basically financial reporting for a period less than 12 months, for e.g. listed
company's prepare quarterly reports. And IFRs either you may prepare voluntarily or
by requirement of law.
Since listed co are required to prepare the interim financial reports by the
requirement of law, whenever they prepare IFR, the basic recognition and
measurement principle they will apply as per Ind as 34.
Standard is completely similar to Ind As 25.
To give timely information for user of financial reports. ( time gap between one
to another annual reports normally 12 months, in this time lot of events can happen
which can affect risk and return of investors.
• for e.g. there may be merger, demerger, sale of business unit, there may be loss
from court case, buy backs, new loans etc.,) but stakeholder will get to know about
the events next year if IFR are not prepared.
• World over for listed co it is requirement they suppose to update the investors
quarterly, since it helps to take timely decisions.
3. Many jurisdiction authorities also require listed companies to submit unaudited
financial reports. ( unaudited also allowed)
In ordered to bring uniformity in such reports; the standard prescribes certain
procedures vis –a-vis minimum component to be reported along with the content,
form and recognition criteria.
Interim period : a financial reporting period shorter than a full financial year (most
typically a quarter or half-year).
Exceptions - all reporting period less than 12 months cannot be IFRs. For e.g. if co
started on oct 1st and reporting period is 31st march. And also if accounting year change
happens in middle.
Interim financial report: a financial report that contains either a complete or
condensed set of financial statements for an interim period.
Condensed – information in cut short form ( Many details your giving in annual reports
are not necessary to give here also)
For e.g. Your going to enter as Share capital and amount.
( Authorized- issued- subscribed- call in arrears - calls in advance- forfeited shares-
shares issues without consideration- bonus shares- buy back)
4. • Even we cannot go below than condensed, just cannot give balance sheet
total amount. Since condensed is minimum and complete is maximum.
CONTENT OF AN INTERIM FINANCIAL REPORT
Ind AS 1 defines a complete set of financial statements as including the
a balance sheet as at the end of the period (including statement of changes in
equity for the period which is presented as a part of the balance sheet)
a statement of profit and loss for the period
a statement of cash flows for the period
Notes, comprising a summary of significant accounting policies and other
explanatory information; and
a balance sheet as at the beginning of the earliest comparative period when
an entity applies an accounting policy retrospectively or makes a
retrospective restatement of items in its financial statements, or when it
reclassifies items in its financial statements.
5. • In the interest of timeliness and cost considerations and to avoid repetition of
information previously reported, an entity may be required to or may elect to
provide less information at interim dates as compared with its annual financial
• Nothing in this Standard is intended to prohibit or discourage an entity from
publishing a complete set of financial statements (as described in Ind AS 1) in its
interim financial report, rather than condensed financial statements and selected
MINIMUM COMPONENTS OFAN INTERIM FINANCIAL REPORT
An interim financial report shall include, at a minimum, the following
(a) a condensed balance sheet (including condensed statement of changes in equity
for the period which is presented as a part of the balance sheet);
(b) a condensed statement of profit and loss .
(c) a condensed statement of cash flows; and
(d) selected explanatory notes.
6. Scope of the standard
• 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.
• If an entity’s interim financial report is described as complying with
Ind ASs, it must comply with all of the requirements of this Standard.
7. FORM AND CONTENT OF INTERIM FINANCIAL STATEMENTS
If an entity publishes a complete set of financial statements in its interim
financial report, the form and content of those statements shall conform to
the requirements of Ind AS 1 for a complete set of financial statements.
If an 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
In the statement that presents the components of profit or loss for an interim
period, an 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.
If an entity’s annual financial report included the parent’s separate financial
statements in addition to consolidated financial statements, this Standard
neither requires nor prohibits the inclusion of the parent’s separate
statements in the entity’s interim financial report.
8. Significant events and transactions
An entity shall include in its interim financial report an explanation of events and
transactions that are significant to an understanding of the changes in financial
position and performance of the entity.
A user of an entity’s interim financial report will have access to the most recent
annual financial report of that entity. Therefore, it is unnecessary for the notes to an
interim financial report to provide relatively insignificant updates to the information
that was reported in the notes in the most recent annual financial report.
The following is a list of events and transactions for which disclosures would be
required if they are significant:
a) The write-down of inventories to net realizable value and the reversal of such a
b) Recognition of a loss from the impairment of financial assets, property, plant and
equipment, intangible assets, assets arising from contracts with customers, or other
assets, and the reversal of such an impairment loss;
9. (c) The reversal of any provisions for the costs of restructuring.
(d) Acquisitions and disposals of items of property, plant and equipment.
(e) Commitments for the purchase of property, plant and equipment.
(f) Litigation settlements.
(g) Corrections of prior period errors.
(h) Changes in the business or economic circumstances that affect the fair value
of the entity’s financial assets and financial liabilities, whether those assets or
liabilities are recognized at fair value or amortized cost.
(i) Any loan default or breach of a loan agreement that has not been remedied on or
before the end of the reporting period.
(j) Related party transactions.
10. (k) Transfers between levels of the fair value hierarchy used in
measuring the fair value of financial instruments.
(l) Changes in the classification of financial assets as a result of a change
in the purpose or use of those assets; and
(m) Changes in contingent liabilities or contingent assets.
Measurements for interim reporting purposes should be made on a year-to-date basis, so
that the frequency of the entity's reporting does not affect the measurement of its annual
Several important measurement points:
• Accounting policies : the same accounting policies should be applied for interim
reporting as are applied in the entity'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.
A key provision of Ind AS 34 is that an entity 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
• 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.
12. • 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.
• Income tax expense should be recognized based on the best estimate
of the weighted average annual effective income tax rate expected for
the full financial year.
13. 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 entity since the last annual reporting date. Ind AS 34 states a presumption that anyone who
reads an entity's interim report will also have access to its most recent annual report.
Consequently, Ind AS 34 avoids repeating annual disclosures in interim condensed reports.
Examples of events and transactions for which disclosures are required if they are
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
corrections of prior period errors
changes in business or economic circumstances affecting the fair value of financial assets and
unremedied loan defaults and breaches of loan agreements
transfers between levels of the 'fair value hierarchy' or changes in the classification of
changes in contingent liabilities and contingent assets.
14. 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
changes in estimates
issues, repurchases and repayment of debt and equity securities
Particular segment information
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
15. Illustration 1
Jindal Company presents its interim financial reports quarterly
basis, it has earned profit of Rs 5,00,00,000 and Rs
3,00,00,000 in first two quarters ending 30th June 2017and 30th
September 2017 respectively. And incurred loss of 1 crore and
Rs 4 crore in 3rd and 4th quarter respectively.
Effective income tax rate is 30 %
What is the income tax expenses to be reported to each
16. Illustration 2
Accounts of Wipro Ltd shows a net profit of Rs 720,000 for
the 3rd quarter of 2017 after incorporating the followings.
Bad debts of Rs 40,000 incurred during the quarter and 50%
of this bad debts deferred to the next quarter.
Extra ordinary loss of Rs 35,000 incurred during the quarter
has fully recognized in this quarter.
Additional depreciation of Rs 45,000 resulting from a
change in the method of depreciation.
17. Illustration 3
Amazon Ltd reports quarterly and estimates annual
income of Rs 10,00,000 assume tax rate on 1st
5,00,000 Rupees at 30% and the balance income at
40%. Estimated quarterly incomes are Rs 75,000 and
Rs 250,000. Rs 375,000. Rs 3,00,000.
Calculate tax expenses to be recognized in each