Foreign currency cash flows

Chapter 23 – Interim Reporting Page 331 Condensed means that each of the headings and sub-totals presented in the entity’s most recent annual financial statements is required, but there is no requirement to include greater detail unless this is specifically required by IAS 34. Generally there is no requirement to update detailed notes presented in the last full financial statements, because a user will have access to this previously published information. However, an entity should provide additional line items and headings if their omission would be misleading to users of the interim information. [IAS 34.10] IAS 34 requires an entity to present both basic and fully diluted earnings per share EPS figures, calculated for the interim period. [IAS 34.11]

4.3 Selected explanatory notes

As mentioned above, relatively insignificant updates to the information presented in the notes in the most recent full financial statements are not required in an interim report. A user of the financial statements will have the last set of financial statements and a comparison of these with the condensed reports presented in the interim statement should provide enough information to ensure that an informed decision about the current financial position of the entity can be made. However, some information is essential to the understanding of the interim report, and therefore IAS 34 does require that it is presented in the notes in the interim report. This information should normally be prepared on a year-to-date basis i.e. by treating the interim period as distinct in its own right rather than as part of a longer period. Other information should be presented if the omission of such information would affect the economic decisions of users of the information. Information presented and measured during an interim period is based on the facts for that interim period. The overriding goal is for a user of the interim report to understand the information that is presented within it on a stand alone basis. The use of estimates is inherent in the preparation of all financial information, including that contained in an interim report. Where an estimate made in an interim period changes significantly in the following interim period, but no separate financial information has been presented for the following interim period, an entity should explain this change in the full financial statements. This additional disclosure is only required where the change is significant, for example where the original assessment of a fall in the value of an asset has changed due to the outcome of an event that happened in the remaining part of the financial year. [IAS 34.26] The explanatory information required to be presented in the notes to the interim financial statements is set out below. [IAS 34.16]  In preparing an interim report an entity should apply the same accounting policies and methods of computation that were followed and used for the preparation of its most recent annual financial statements. This provides consistency of measurement and presentation and assists comparability. An entity is required to disclose this fact clearly in the interim report. Where it has been necessary to adopt a different policy or method, for example following the publication of a new international standard, this should be fully explained, providing a description of the nature and effect of the change. Where an entity has changed its accounting policy during an interim period, it should restate comparative interim period results in line with IAS 8 Accounting policies, changes in accounting estimates and errors. [IAS 34.43]  Many businesses are seasonal in nature or go through cycles; for example, a retail outlet selling ice-cream will make the majority of its sales during the summer months. An interim period which only covers the winter months is likely to be very different to one covering the summer months for such an entity. Information should therefore be disclosed to explain this difference. In seasonal businesses an entity is encouraged to present additional comparative information as well as that set out in Section 5 below. [IAS 34.21]