A look at fundamentals of interim financial reporting


An interim financial report is a complete or condensed set of financial statements for the interim period. An interim period is a financial reporting period shorter than a full financial year.

One aim of timely and reliable interim financial reporting is to improve the ability of stakeholders such as investors, creditors, and others to understand the organisation’s capacity to generate earnings and cash flows and its financial condition and liquidity.

When provided timely, it is a communication tool between an organisation and its stakeholders regarding the financial performance, position and other matters affecting the organisation.

Publicly traded companies are encouraged to provide interim financial reports at least as of the end of the first half of their financial year-end and to make these interim reports available no later than 60 days after the end of the interim period.

These regulations are similar to those adopted locally by Kenyan Capital Markets Authority (CMA). IAS 34, Interim Financial Reporting, is the IFRS standard that prescribes the minimum content of an interim financial report.

Minimum content

An organisation may be required to or may elect to provide less information at the interim dates compared with its annual financial statements. However, interim financial reports should include the condensed financial statements and selected explanatory notes at the minimum.

The content should focus on new activities, events and circumstances since the latest complete set of annual financial statements and should not duplicate information previously reported. These condensed financial statements should include each headline and subtotals in the most recent annual financial statements and the selected explanatory notes required by IAS 34.

An interim financial report is prepared on a consolidated basis if the organisation’s most recent annual financial statements were equally consolidated. The comparative period for the current interim financial statements balance sheet should be the end of the immediately preceding financial year.

The comparative period for the statement of cash flows and changes in equity should be the year-to-date period of the immediately preceding financial year. The comparative period for the income statement should be similar to the immediately preceding year.

Organisations with highly seasonal businesses are encouraged to provide additional financial information for the twelve months up to the end of the interim period. Comparative financial information for the prior 12-month period may be relevant to stakeholders.

Events and transactions

On the assumption that stakeholders will already have access to the most recent annual financial statements of the organisations, the interim financial report should include an explanation of events and transactions that are significant to an understanding of the changes in the financial position and performance of the organisations since the end of the last annual report.

Investors usually review interim financial statements together with the latest annual financial statements.

It applies to events and transactions deemed significant such as a write-down on the value of inventory, recognition from the impairment of financial assets, property, plant and equipment, intangible assets, reversals of impairment loss, significant acquisitions and disposals of property, plant and equipment, litigation settlements, related party transactions and changes in the business or economic circumstances that affect the value of the organisation’s financial assets and liabilities. Organisations should also consider the disclosure requirements of specific IFRSs relating to these significant events and transactions.

Accounting policy

An organisation should apply the same accounting policies in its interim financial statements like those in its annual financial statements. The definition of assets, liabilities, income, and expenses should remain consistent for both the annual and interim reporting periods. An organisation should also include disclosures on changes to its accounting policies in the interim financial statements.

Awodumila, Associate Director at PwC Kenya. An author who writes and speaks widely on corporate reporting topics

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