AS 25 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 this Statement. The standard prescribes the minimum contents of an interim financial report and requires that an enterprise which elects to prepare and present an interim financial report, should comply with this standard. It also lays down the principles for recognition and measurement in a complete or condensed financial statements for an interim period. Timely and reliable interim financial reporting improves the ability of investors, creditors and others to understand an enterprise’s capacity to generate earnings and cash flows, its financial condition and liquidity.
A statute governing an enterprise or a regulator may also require an enterprise to prepare and present certain information at an interim date which may be different in form and/or content as required by this Statement. In such a case, the recognition and measurement principles as laid down in this Statement are applied in respect of such information, unless otherwise specified in the statute or by the regulator.
Terms used in AS-25
- Interim period is a financial reporting period shorter than a full financial year.
- Interim financial report means a financial report containing either a complete set of financial statements or a set of condensed financial statements for an interim period.
During the first year of operations of an enterprise, its annual financial reporting period may be shorter than a financial year. In such a case, that shorter period is not considered as an interim period.
Content of an Interim Financial Report
A complete set of financial statements normally includes Balance sheet, Statement of Profit & Loss, Cash flow statement and Notes including those relating to accounting policies and other statements and explanatory material that are an integral part of the financial statements.
The benefit of timeliness of presentation may be partially offset by a reduction in detail in the information provided. Therefore, this Statement requires preparation and presentation of an interim financial report containing, as a minimum, a set of condensed financial statements. Accordingly, it focuses on new activities, events, and circumstances and does not duplicate information previously reported. AS 25 does not prohibit or discourage an enterprise from presenting a complete set of financial statements in its interim financial report, rather than a set of condensed financial statements. The recognition and measurement principles set out in this Statement apply also to complete financial statements for an interim period, and such statements would include all disclosures required by this Statement as well as those required by other Accounting Standards. Minimum Components of an Interim Financial Report includes condensed Financial Statement
Form and Content of Interim Financial Statements
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.
If an enterprise prepares and presents a set of condensed financial statements in its interim financial report, those condensed statements should include, at a minimum, each of the headings and sub-headings that were included in its most recent annual financial statements and the selected explanatory notes as required by this Statement.
Additional line items or notes should be included if their omission would make the condensed interim financial statements misleading.
If an enterprise presents basic and diluted earnings per share in its annual financial statements in accordance with AS 20.