TMI BlogInterim Financial ReportingX X X X Extracts X X X X X X X X Extracts X X X X ..... ty securities are publicly traded to publish interim financial reports 1 . This Standard applies if an entity is required or elects to publish an interim financial report in accordance with Indian Accounting Standards (Ind ASs). [Refer Appendix 1] 2 Each financial report, annual or interim, is evaluated on its own for conformity to Ind ASs. The fact that an entity may not have provided interim financial reports during a particular financial year or may have provided interim financial reports that do not comply with this Standard does not prevent the entity s annual financial statements from conforming to Ind ASs if they otherwise do so. 3 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. Paragraph 19 requires certain disclosures in that regard. Definitions 4 The following terms are used in this Standard with the meanings specified: Interim period is a financial reporting period shorter than a full financial year. Interim financial report means a financial report containing either a complete set of financial statements (as described in Ind AS 1, Presentation of Fin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es in paragraph 16A) as well as those required by other Ind ASs. Minimum components of an interim financial report 8 An interim financial report shall include, at a minimum, the following components: (a) a condensed balance sheet ; (b) a condensed statement of profit and loss; (c) a condensed statement of changes in equity; (d) a condensed statement of cash flows; and (e) selected explanatory notes. 8A [Refer Appendix 1] Form and content of interim financial statements 9 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. 10 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 sta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... chase 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 recognised at fair value or amortised 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; (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. 15C Individual Ind ASs provide guidance regarding disclosure requirements for many of the items listed in paragraph 15B. When an event or transaction is significant to an understanding of the changes in an entity s financial position or performance since the last annual reporting period, its interim financial report should provide an explanation of and an update to the relevant inform ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed to the chief operating decision maker. (ii) intersegment revenues, if included in the measure of segment profit or loss reviewed by the chief operating decision maker or otherwise regularly provided to the chief operating decision maker. (iii) a measure of segment profit or loss. (iv) a measure of total assets and liabilities for a particular reportable segment if such amounts are regularly provided to the chief operating decision maker and if there has been a material change from the amount disclosed in the last annual financial statements for that reportable segment. (v) a description of differences from the last annual financial statements in the basis of segmentation or in the basis of measurement of segment profit or loss. (vi) a reconciliation of the total of the reportable segments measures of profit or loss to the entity s profit or loss before tax expense (tax income) and discontinued operations. However, if an entity allocates to reportable segments items such as tax expense (tax income), the entity may reconcile the total of the segments measures of profit or loss to profit or loss after those items. Material reconciling items shall be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nancial year to date, with a comparative statement for the comparable year-to-date period of the immediately preceding financial year. 21 For an entity whose business is highly seasonal, financial information for the twelve months up to the end of the interim period and comparative information for the prior twelve-month period may be useful. Accordingly, entities whose business is highly seasonal are encouraged to consider reporting such information in addition to the information called for in the preceding paragraph. 22 [Refer Appendix 1] Materiality 23 In deciding how to recognise, measure, classify, or disclose an item for interim financial reporting purposes, materiality shall be assessed in relation to the interim period financial data. In making assessments of materiality, it shall be recognised that interim measurements may rely on estimates to a greater extent than measurements of annual financial data. 9 [ 24 Ind AS 1 defines material information and requires separate disclosure of material items, including (for example) discontinued operations, and Ind AS 8, Accounting Policies, Changes in Accounting Estimates and Errors requires disclosure of ch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reflected in the next annual financial statements. However, the frequency of an entity s reporting (annual, half-yearly, or quarterly) shall not affect the measurement of its annual results. To achieve that objective, measurements for interim reporting purposes shall be made on a year-to-date basis. 29 Requiring that an entity apply the same accounting policies in its interim financial statements as in its annual statements may seem to suggest that interim period measurements are made as if each interim period stands alone as an independent reporting period. However, by providing that the frequency of an entity s reporting shall not affect the measurement of its annual results, paragraph 28 acknowledges that an interim period is a part of a larger financial year. Year-to-date measurements may involve changes in estimates of amounts reported in prior interim periods of the current financial year. But the principles for recognising assets, liabilities, income, and expenses for interim periods are the same as in annual financial statements. 30 To illustrate: (a) the principles for recognising and measuring losses from inventory write-downs, restructurings, or impairments in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w the recognition of items in the balance sheet which do not meet the definition of assets or liabilities. ] 34 In measuring the assets, liabilities, income, expenses, and cash flows reported in its financial statements, an entity that reports only annually is able to take into account information that becomes available throughout the financial year. Its measurements are, in effect, on a year-to-date basis. 35 An entity that reports half-yearly uses information available by mid-year or shortly thereafter in making the measurements in its financial statements for the first six-month period and information available by year-end or shortly thereafter for the twelve-month period. The twelve-month measurements will reflect possible changes in estimates of amounts reported for the first six-month period. The amounts reported in the interim financial report for the first six-month period are not retrospectively adjusted. Paragraphs 16A(d) and 26 require, however, that the nature and amount of any significant changes in estimates be disclosed. 36 An entity that reports more frequently than half-yearly measures income and expenses on a year-to-date basis for each interim period us ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the annual financial statements in accordance with Ind AS 8; or (b) when it is impracticable to determine the cumulative effect at the beginning of the financial year of applying a new accounting policy to all prior periods, adjusting the financial statements of prior interim periods of the current financial year, and comparable interim periods of prior financial years to apply the new accounting policy prospectively from the earliest date practicable. 44 One objective of the preceding principle is to ensure that a single accounting policy is applied to a particular class of transactions throughout an entire financial year. Under Ind AS 8, a change in accounting policy is reflected by retrospective application, with restatement of prior period financial data as far back as is practicable. However, if the cumulative amount of the adjustment relating to prior financial years is impracticable to determine, then under Ind AS 8 the new policy is applied prospectively from the earliest date practicable. The effect of the principle in paragraph 43 is to require that within the current financial year any change in accounting policy is applied either retrospectively or, if th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of each reporting period, and, if required, to recognise an impairment loss at that date in accordance with Ind AS 36. However, at the end of a subsequent reporting period, conditions may have so changed that the impairment loss would have been reduced or avoided had the impairment assessment been made only at that date. This appendix provides guidance on whether such impairment losses should ever be reversed. 2 The appendix addresses the interaction between the requirements of Ind AS 34 and the recognition of impairment losses on goodwill in Ind AS 36, and the effect of that interaction on subsequent interim and annual financial statements. Issue 3 Ind AS 34 paragraph 28 requires an entity to apply the same accounting policies in its interim financial statements as are applied in its annual financial statements. It also states that the frequency of an entity s reporting (annual, half-yearly, or quarterly) shall not affect the measurement of its annual results. To achieve that objective, measurements for interim reporting purposes shall be made on a yearto- date basis. 4 Ind AS 36 paragraph 124 states that An impairment loss recognised for goodwill shall not be re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lt that the requirement to present interim financial report should be governed by the relevant law or regulation and not by way of an encouragement through an Accounting Standard. 4 The following paragraph numbers appear as Deleted in IAS 34. In order to maintain consistency with paragraph numbers of IAS 34, the paragraph numbers are retained in Ind AS 34: (i) paragraph 13 (ii) paragraph16 (iii) paragraphs17-18 (iv) paragraphs 5-6 of Appendix A 5 Paragraph 12 of IAS 34 making reference to Implementation Guidance included in IAS 1 has been deleted in Ind AS 34, as Implementation Guidance is not an integral part of IAS 1. In order to maintain consistency with paragraph numbers of IAS 34, the paragraph number is retained in Ind AS 34. 6 Following paragraphs making references to Illustrative examples which are not integral part of IAS 34 have been deleted in Ind AS 34. The paragraph numbers have been retained in Ind AS 34 in order to maintain consistency with paragraph numbers of IAS 34: (i) Paragraph 22 making reference to Illustration A of Illustrative Examples illustrating the periods required to be presented by an entity that reports half yearly and an e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Inserted vide F. No. 01/01/2009-CL-V(Part VI) Dated 28-03-2018 , w.e.f. 1st day of April, 2018 7. Inserted vide F. No. 01/01/2009-CL-V(Part VI) Dated 28-03-2018 , w.e.f. 1st day of April, 2018 8. Inserted vide F. No. 01/01/2009-CL-V(Part VI) Dated 28-03-2018 , w.e.f. 1st day of April, 2018 9. Substituted vide NOTIFICATION NO. G.S.R. 463(E) dated 24-07-2020 before it was read as 24 Ind AS 1 and Ind AS 8, Accounting Policies, Changes in Accounting Estimates and Errors, define an item as material if its omission or misstatement could influence the economic decisions of users of the financial statements. Ind AS 1 requires separate disclosure of material items, including (for example) discontinued operations, and Ind AS 8 requires disclosure of changes in accounting estimates, errors, and changes in accounting policies. The two Standards do not contain quantified guidance as to materiality. 10. Inserted vide NOTIFICATION NO. G.S.R. 463(E) dated 24-07-2020 11. Substituted vide NOTIFICATION NO. G.S.R. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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