PAS 34
Interim Financial Reporting
• PAS 34 prescribes the minimum content of an interim financial report
and to prescribe the principles for recognition and measurement in
complete or condensed financial statements for an interim period.
Timely and reliable interim financial reporting improves the ability of
investors, creditors and others to understand an entity’s capacity to
generate earnings and cash flows and its financial condition and liquidity.
• PAS 34 does not require entities to provide interim financial report. PAS
34 applies if an entity is (a) required by government, securities
regulators, stock exchanges, and accountancy bodies or (b) the entity
elects or chooses to publish an interim financial report in accordance
with PFRSs.
• PAS 34 encourages publicly traded entities to provide at least semiannual interim financial report and publish them not later than 60 days
after the end of the interim period.
Interim Financial Report is a financial report prepared for an interim
period and contains either:
a. A complete set of financial statements as describe in PAS 1
b. A set of condensed financial statements as described in PAS 34
Complete set of financial statements under PAS 1
1. Statement of financial position
2. Statement of profit or loss and other comprehensive income
3. Statement of changes in equity
4. Statement of cash flows
5. Notes, comprising a summary of significant accounting policies and
other explanatory information
a. comparative information in respect of the preceding period
6. A statement of financial position as at the beginning of the
preceding period (i.e., in statement of financial position cases of
retrospective application, retrospective restatement or
reclassification adjustment).
Minimum content of an interim financial report under PAS 34
1. Condensed statement of financial position
2. Condensed statement of profit or loss and other comprehensive
income, presented as either
a. a condensed single statement
b. a condensed separate income statement and a condensed statement of
comprehensive income
3. Condensed statement of changes in equity
4. Condensed statement of cash flows
5. Selected explanatory notes.
Semi-annual Financial Reporting
Quarterly Interim Financial Reporting
Recognition and Measurement
Gains and losses arising in an interim period are recognized immediately and
are not deferred, e.g., inventory write-downs & reversals; asset impairment
losses & reversals; discontinued operations; and fair value changes on assets
measured at fair value.
Costs and expenses (income) that benefit the entire year or are incurred
(earned) over the year are spread out over the interim periods, e.g.,
depreciation, amortization; property taxes; insurance expense; interest
expense (income); 13th month pay and other year-end bonuses.
Discretionary income is recognized immediately in the period the income is
earned, e.g., dividend income.
Income tax expense in the interim periods is computed using the best
estimate of the weighted average annual income tax rate expected for the
full financial year.
Disclosures
• 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
• litigation settlements
• corrections of prior period errors
• changes in business or economic circumstances affecting the fair value of
financial assets and liabilities
• unremedied loan defaults and breaches of loan agreements
• transfers between levels of the 'fair value hierarchy' or changes in the
classification of financial assets
• changes in contingent liabilities and contingent assets
Other Disclosures
• changes in accounting policies
• explanation of any seasonality or cyclicality of interim operations
• unusual items affecting assets, liabilities, equity, net income or cash flows
• changes in estimates
• issues, repurchases and repayment of debt and equity securities
• dividends paid
• particular segment information (where IFRS 8 Operating Segments applies
to the entity)
• 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
PFRS 8
Operating Segment
PFRS 8 requires an entity to adopt the “management approach” to reporting on the
financial performance of its operating segments. The standard requires
explanations of the basis on which the segment information is prepared and
reconciliations to the amounts recognized in the income statement and balance
sheet.
Core Principle
“An entity shall disclose information to enable users of its financial statements to
evaluate the nature and financial effects of the business activities in which it
engages and the economic environments in which it operates.”
Scope
PFRS 8 applies to the separate, individual and consolidated financial statements of
an entity which is publicly listed or in the process of enlisting publicly.
An unlisted entity that chooses to apply PFRS 8 shall comply with all of the
requirements of PFRS 8; otherwise it shall not describe the information as segment
information.
If a financial report contains both the consolidated and separate financial
statements of a parent that is within the scope of PFRS 8, segment information is
required only in the consolidated financial statements.
Operating Segment
An operating segment is a component of an entity:
a. that engages in business activities from which it may earn
revenues and incur expenses (including revenues and expenses
relating to transactions with other components of the same
entity),
b. whose operating results are regularly reviewed by the entity’s
chief operating decision maker to make decisions about
resources to be allocated to the segment and assess its
performance, and
c. for which discrete financial information is available
Reportable Segment
An entity shall report separately information about each operating
segment that:
1. Management uses in making decisions about operating matters or
those which results from aggregating two or more of those segments
2. Qualify under the quantitative thresholds
Management Approach
PFRS 8 adopts a management approach to identifying reportable
segments. Under the management approach, operating segments are
identified on the basis of internal reports that are regularly reviewed by
the entity’s chief operating decision maker in order to allocate
resources to the segment and assess its performance.
Aggregation Criteria
Two or more operating segments may be aggregated into a
single operating segment if the segments have similar economic
characteristics, and the segments are similar in each of the
following respects:
• a. Nature of the products and services
• b. Nature of the production processes
• c. Type or class of customer for their products and services
• d. The methods used to distribute their products or provide their
services
• e. Nature of the regulatory environment, if applicable, e.g.,
banking, insurance or public utilities
Quantitative Thresholds
An entity shall report separately information about an operating
segment that meets any of the following quantitative thresholds:
1. The segment’s revenue is at least 10% of the total revenues
(external and internal);
2. The segment’s assets is at least 10% of the total assets
(external and internal, e.g., intersegment receivables)
3. The segments profit or loss is at least 10% of the greater, in
absolute amount of:
a. the combined reported profit of all operating segments that did
not report a loss and
b. the combined reported loss of all operating segments that
reported a loss
Limit on External Revenue
The total external revenue reported by reportable segments shall at
least 75% of the entity’s external revenue.
Disclosure of major customer
A major customer is a single external customer providing revenues of
10% or more of an entity’s revenues.
Other Disclosures
• Entity-wide disclosures apply to all entities subject to PFRS 8
including those entities that have a single reportable segment
• Revenues from external customers attributed to the entity’s
country of domicile and attributed to all foreign countries in total from
which the entity derives revenues
• Non-current assets other than financial instruments, deferred tax
assets, post-employment benefit assets, and rights arising under
insurance contracts located in the entity’s country of domicile and
located in all foreign countries in total in which the entity holds assets