Interim Financial Reporting - Essay Example

The fundamental goal of interim financial reporting is to present regular and timely evaluations of a business’s performance. There are certain intrinsic limitations of interim reporting. Owing to the shortened time periods involved, inaccuracies in assessment and allocation are amplified. The consequences of seasonal fluctuations, as well as momentary market circumstances, further limit the dependability, comparability and extrapolative significance of interim reports (Motiwalla, 2003). IAS 34 & Interim Financial Reporting The IFRS had formulated several accounting standards that are supposed to be observed by business organizations while preparing their accounting reports.

The accounting standard IAS 34 delineates the requirements for the preparation of interim financial reports. IAS 34 is applicable when a business organisation chooses to issue an interim financial report that is compliant with the IFRSs. . his standard also recommends codes for recognition and measurement in the preparation of comprehensive or abridged financial statements for a provisional time period. Apt and consistent interim financial reporting enhances the ability of creditors, investors and other financial report users to recognise an organisation’s financial situation and liquidity, as well as its competence to generate income and cash flow (European Commission, 2011, pp. 1-3). IAS 34 does not provide any directive as to what kinds of organisations are supposed to issue interim financial reports, how frequent issuance should be, or after what period following the completion of an interim phase an issuance should be made.

Nevertheless, often all across the world, organisations whose shares are listed on exchanges and traded in markets have been required by governments and other authorities, such as securities regulators and stock exchanges, to issue interim financial reports. The International Accounting Standards Board, and later on the International Accounting Standards Committee, has repeatedly persuaded publicly listed organisations to issue interim financial reports. These interim reports are supposed to be compliant with the codes of recognition, disclosure and measurement, as defined in the IAS 34 (Deloitte, 2006, pp. 4-6). Organisations listed on exchanges are particularly pressured to prepare and issue interim financial reports at the end of the first six months of the financial year, and are typically asked to issue their interim financial reports no more than 60 days after to the completion of the interim phase (European Commission, 2011, pp. 6-8). The annual or interim financial reports of organisations are assessed individually to check their compliance with the IFRSs. If an