Accounting and Audit News

Strategic company decisions are made on the basis of data and information disclosed in Annual Financial Statements along with cash flows and projections. Annual data is not sufficient to evaluate developments in general economy, industry, company activities and making revise projections of earnings and financial position as a basis for strategic decisions. To make such decisions, current financial information along with cash flows and projections as on any required date should be available. It is thus always suggested that company should continuously measure and report its progress and provide information on a less than annual basis. This would benefit of top management to have a more timely look into  business’s operations. Interim Financial Statements are also required to fulfil certain legal requirements with Government bodies. Reliable quarterly reports can heighten stakeholders’ confidence in the company and investment capital overall. 

As 25 Interim Financial Reporting issued by Accounting Standards Board of ICAI and Indian Accounting Standard 34, Interim Financial Reporting (Ind AS 34) notified under section 133 of the Companies Act, 2013 governs Interim Financial Reporting in India. 

The objectives of this standards is to prescribe the minimum content of an interim financial report and to prescribe the principles for recognition and measurement in a complete or condensed financial statements for an interim period. These standards however does not mandate which enterprises should be required to present interim financial reports, how frequently, or how soon after the end of an interim period. If an enterprise is required or elects to prepare and present an interim financial report, it should comply with these standards, as applicable.

In the interest of timeliness and cost considerations and to avoid repetition of information previously reported, an enterprise may be required to or may elect to present less information at interim dates as compared with its annual financial statements. Therefore, as a minimum, a set of condensed financial statements should be presented. The interim financial report containing condensed financial statements is intended to provide an update on the latest annual financial statements. Accordingly, it focuses on new activities, events, and circumstances and does not duplicate information previously reported.

If an enterprise prepares and presents a complete set of financial statements in its interim financial report, the form and content of those statements should conform to the requirements as applicable to annual complete set of financial statements.

An interim financial report should include, at a minimum, the following components: