IAS 34 Interim Financial Reporting

Date recorded:

An amendment to IAS 34 Interim Financial Reporting as part of the annual improvements project.

The staff introduced the paper by noting that at its May 2009 meeting, the IFRIC concluded that IAS 34 provides guidance sufficient to enable entities to decide whether updates to fair value disclosures are required in interim financial reports and decided not to add the issue to its agenda as it did not expect diversity in practice. The IFRIC's decision does not specifically address other IFRS 7 disclosures such as reclassifications. However, we think that, by analogy, IAS 34 provides a clear principle for determining which explanatory notes are required in interim reports-disclosures that explain events and transactions that are significant to an understanding of changes in financial position and performances of the entity since the end of the last annual reporting period. (IAS 34.15)

The staff believed that amending IAS 34 could be addressed through the annual improvements process. The staff proposed amendments to IAS 34 that add guidance to emphasise the existing disclosure principle that when providing explanatory notes at an interim date, an explanation of events and transactions that are significant to an understanding of the changes in financial position and performance of the entity and the financial statement effects of such events and transactions since the end of the last annual reporting period are more useful. The additional examples proposed by the staff discuss disclosures relating to fair value measurements and reclassification.

One Board member queried whether the changes relating to fair value which would require disclosure (if material) of significant changes in the business or economic circumstances that affect the fair value of financial assets and liabilities related to only those assets which are measured at fair value, or if it also relates to those assets measured at say amortised cost for which disclosure of fair values is made. The Board member thought it was both. The staff agreed it was meant to be both. The Board member suggested that the wording be clarified.

The Board discussed concerns that the proposals relating to fair value measurement (for which an ED is yet to be published) include a proposal to include fair value disclosures in interim financial statements. Some Board members wondered whether disclosure is already required by IAS 34 or not. Concerns were also raised as to the amount of work would be required for entities to comply with these requirements. The staff noted that as this is an Exposure Draft the Board could reconsider the proposals depending on the responses received.

The Board agreed with including the proposed draft amendment to IAS 34 (subject to editorial changes) in the forthcoming annual improvements ED.

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