IAS 34: Interim Financial Reporting Requirements
Understand the framework for preparing reliable interim financial reports by applying consistent, year-to-date accounting principles under IFRS.
An interim financial report provides updated information for a period shorter than a full financial year. International Accounting Standard (IAS) 34 governs these reports by establishing the minimum content and the principles for recognition and measurement. The goal of IAS 34 is not to require these reports, but to ensure that when entities publish them, the information is timely and reliable. This standard offers a current view of an entity’s performance, updating data from the most recent annual financial statements.
Scope and Applicability of IAS 34
IAS 34 does not mandate which entities must publish interim financial reports or how frequently. Its requirements apply when an entity is compelled by government regulations, securities commissions, or stock exchanges to publish such a report. The standard also applies if an entity voluntarily chooses to publish an interim report and states that it complies with International Financial Reporting Standards (IFRS).
The standard encourages publicly traded entities to provide interim reports at least for the first half of their financial year and suggests they be made available no later than 60 days after the end of the interim period. If an entity describes its interim report as IFRS compliant, it must adhere to all stipulations within IAS 34 to ensure consistency.
An entity can present either a complete or a condensed set of financial statements for its interim period. If an entity provides a complete set, the form and content must align with the requirements for annual financial statements. Regardless of the format chosen, the recognition and measurement principles of IAS 34 apply.
Minimum Content of an Interim Financial Report
An interim financial report prepared under IAS 34 must, at a minimum, include a condensed statement of financial position, a condensed statement of comprehensive income, a condensed statement of changes in equity, and a condensed statement of cash flows. These condensed statements must be accompanied by selected explanatory notes.
The term “condensed” signifies that the interim statements can include less detail than annual financial statements. They must present the headings and subtotals that were featured in the most recent annual financial statements. This approach allows for a more streamlined presentation while still providing sufficient information.
The statement of comprehensive income can be presented as a single condensed statement or as a separate condensed income statement displayed with a condensed statement of comprehensive income. If an entity is subject to the standard on Earnings per Share, it must present basic and diluted earnings per share for the interim period. The selected explanatory notes provide context for the figures and highlight significant events since the last annual reporting date.
Recognition and Measurement Principles
A primary principle of IAS 34 is that an entity must use the same accounting policies in its interim financial statements as it does in its annual financial statements. This consistency ensures the interim report is a reliable update. If an entity changes an accounting policy, the change must be reflected in accordance with the standards that govern such changes, just as it would be in an annual report.
Measurements for interim reporting purposes are made on a year-to-date basis. This means that the frequency of an entity’s reporting—whether quarterly or half-yearly—should not affect the measurement of its annual results. Each interim period is viewed as an integral part of the larger financial year.
The standard provides guidance on handling revenues and costs not incurred evenly throughout the year. Revenues received seasonally, cyclically, or occasionally are not to be anticipated or deferred if such treatment would be inappropriate at year-end. For example, a retailer recognizes a holiday sales surge as it occurs, not spread throughout the year. Costs incurred unevenly are deferred or anticipated only if it is appropriate to do so at year-end.
The preparation of interim financial reports often requires a greater use of estimates than annual reports due to the shorter time frame. The standard requires that measurement procedures are designed to ensure the resulting information is reliable and that all material financial information relevant to understanding the entity’s financial position is disclosed.
Required Disclosures and Periods for Presentation
IAS 34 mandates specific disclosures to provide sufficient context. The notes must include a statement that the same accounting policies are followed as in the most recent annual financial statements, or a description of any changes. Disclosures are also required for any seasonality of interim operations, and for items affecting assets, liabilities, equity, net income, or cash flows that are unusual because of their nature, size, or incidence.
Other required disclosures include:
- Details on dividends paid.
- Significant events that have occurred since the end of the last annual reporting period.
- The effect of changes in the composition of the entity, such as business combinations or restructurings.
- Disclosure of changes in contingent liabilities or contingent assets since the last annual balance sheet date.
A new standard on presentation and disclosure, effective for periods beginning on or after January 1, 2027, will amend IAS 34 to require disclosures about management-defined performance measures in interim reports.
The standard is precise about the comparative periods that must be presented for each statement. The statement of financial position must be presented as of the end of the current interim period and a comparative statement as of the end of the immediately preceding financial year. For the statement of comprehensive income, the presentation must show the current interim period and cumulatively for the current financial year to date, with comparative statements for the corresponding interim periods of the preceding financial year.
The statement of changes in equity must be presented for the current financial year to date, with a comparative statement for the same year-to-date period of the preceding financial year. The statement of cash flows must also be presented for the current financial year to date, with a comparative statement for the corresponding year-to-date period of the preceding financial year. This comprehensive set of comparative periods allows users to analyze trends and seasonality in the entity’s performance and cash flows.