IFRS Interim Financial Statements
Interim financial statements are not required specifically under IFRS. However, many funds are required for regulatory purposes to prepare and file interim, half-yearly financial statements. In addition, some funds may voluntarily prepare interim financial statements. If a fund does prepare interims under IFRS, then they must comply with IFRS requirements.
A set of interim financial statements is a set of financial statements for a period shorter than one year. In some cases, condensed financial statements will be prepared, and in some cases complete financial statements will be prepared. Typically a fund will prepare interims for the first six months of the year. The statements will usually be presented in a condensed or abbreviated format, so they will not include all of the information and disclosures that are presented in a full annual set of financial statements. In any case, the financial statements must comply with all regulatory requirements, and with any specific IFRS requirements in relation to interim financial statements. If the interims are unaudited, this should be clearly stated. This is usually included in all of the page headings and descriptions.
At a minimum, the interim financial statements should include:
- Condensed statement of financial position
- Condensed statement of comprehensive income
- Condensed statement of change in net assets
- Condensed statement of cashflows
- Selected explanatory notes.
If a full, rather than a condensed set of interim financial statements is prepared, then they must comply with all IFRS requirements.
If a set of condensed financial statements is prepared, they must include, at a minimum:
- The same headings and subtotals as the most recent annual financial statements.
- Selected explanatory notes required under IFRS.
- Additional line items or notes if their omission would make the condensed interim financial statements misleading. For example: a change in the valuation methodology for OTC derivatives.
If a condensed set of interims is prepared, most funds prepare the main statements in a similar format to the annual financial statements in order to meet the requirements. In a condensed set of interims, the notes will typically be shorter.
The interim financial statements should also include:
- A statement that the financial statements have been prepared in accordance with IFRS, specifically IAS 34: Interim Financial Reporting.
- A statement that the accounting policies followed are the same as in the annual financial statements, Or, if they have changed, a description of the nature and effect of the change.
- Significant events and transactions since the date of the annual financial statements. These could include correction of prior period errors or transfers between fair value hierarchy levels.
- Unusual items affecting assets, liabilities, equity, net income or cashflows.
- Changes in estimates from prior periods.
- Fair Value Measurement and Financial Instruments disclosures in line with the disclosures required for annual financial statements.
- Issues and redemptions of shares.
- Dividends paid to shareholders.
- Events after the period end.
Segmental reporting and Earnings per Share disclosures should be included in the interim financial statements if the fund is required to make these disclosures in their annual financial statements. This will usually be the case if the fund’s shares are traded, rather than just listed for information purposes, on a stock exchange.
The requirements for comparative information included in interim financial statements are slightly different to the requirements for annual financial statements. The statement of comprehensive income, statement of changes in net assets, and statement of cashflows for the equivalent prior period should be included. However, the statement of financial position for the end of the immediately preceding financial year should be included.
- Interim financial statements are not required under IFRS, but they may be required for regulatory purposes.
- If interim financial statements are prepared they should comply with IAS 34: Interim Financial Reporting.
- A statement of financial position, statement of comprehensive income, statement of changes in net assets, statement of cashflows, and selected notes must be included.
- The same accounting policies as the annual financial statements should be followed and any changes should be disclosed.
- Significant events and transactions, unusual items, changes in estimates, and events after the period end should be disclosed, and fair value measurement and financial instrument disclosures are required.
- The interim financial statements for a fund are for the six months ended 30th June 2016. All comparatives should be for the six months ended 30th June 2015. True or False?
- Is Earnings Per Share a required disclosure in interim financial statements?
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