THE INSTITUTE of Chartered Accountants of Jamaica has issued an Accounting Standard covering Interim Financial Reporting - 3.34.
This standard is effective for periods beginning on or after January 1, 2002. Companies, whose shares (stock units) are quoted on the Jamaica Stock Exchange are required to comply with this standard for the reporting quarter ending March 31, 2002 or later.
The current standard is substantively the same as the International Standard (IAS) which will be adopted for periods commencing July 1, 2002.
An interim financial report should include, at a minimum, the following components:
(a) condensed balance sheet;
(b) condensed income statement;
(c) condensed statement showing either (i) all changes in equity or (ii) changes in equity other than those arising from capital transactions with owners and distributions to owners;
(d) condensed cash flow statement; and
(e) selected explanatory notes.
If an enterprise publishes a complete set of financial statements in its interim financial report, the form and content of those statements should conform to the requirements of SSAP3.30 for a complete set of financial statements. If an enterprise publishes a set of condensed financial statements in its interim financial report, those condensed statements should include, at a minimum, each of the headings and subtotals that were included in its most recent annual financial statements and the selected explanatory notes as required by this Standard.
Additional line items or notes should be included if their omission would make the condensed interim financial statements misleading.
Basic and diluted earnings per share should be presented on the face of an income statement, complete or condensed, for an interim period.
An enterprise should include the following information, as a minimum, in the notes to its interim financial statements, if material and if not disclosed elsewhere in the interim financial report. The information should normally be reported on a financial year-to-date basis. However, the enterprise should also disclose any events or transactions that are material to an understanding of the current interim period:
(a) a statement that the same accounting policies and methods of computation are followed in the interim financial statements as compared with the most recent annual financial statements or, if those policies or methods have been changed, a description of the nature and effect of the change;
(b) explanatory comments about the seasonally or cyclically of interim operations;
(c) the nature and amount of items affecting assets, liabilities, equity, net income, or cash flows that are unusual because of their nature, size, or incidence;
(d) the nature and amount of changes in estimates of amounts reported in prior interim periods of the current financial year or changes in estimates of amounts reported in prior financial years, if those changes have a material effect in the current interim period;
(e) issuances, repurchases, and repayments of debt and equity securities;
(f) dividends paid (aggregate or per share) separately for ordinary shares and other shares;
(g) material events subsequent to the end of the interim period that have not been reflected in the financial statements for the interim period;
(h) the effect of changes in the composition of the enterprise during the interim period, including business combinations, acquisition or disposal of subsidiaries and long-term investments, restructuring, and discontinuing operations and
(i) changes in contingent liabilities or contingent assets since the last annual balance sheet date.
If an enterprise's interim financial report is in compliance with this Statement of Standard Accounting Practice, that fact should be disclosed. An interim financial report should not be described as complying with Statements of Standard Accounting Practice unless it complies with all of the requirements of each applicable standard.
Interim reports should include interim financial statements (condensed or complete) for periods as follows:
(a) balance sheet as of the end of the current interim period and a comparative balance sheet as of the end of the immediately preceding financial year;
(b) income statements for the current interim period and cumulatively for the current financial year to date, with comparative income statements for the comparable interim periods (current and year-to-date) of the immediately preceding financial year.
(c) statement showing changes in equity cumulatively for the current financial year-to-date, with a comparative statement for the comparable year-to-date period of the immediately preceding financial year; and
(d) cash flow statement cumulatively for the current financial year-to-date, with a comparative statement for the comparable period of the immediately preceding financial year.
In deciding how to recognise, measure, classify, or disclose an item for interim financial reporting purposes, materiality should be assessed in relation to the interim period financial data. In making assessments of materiality, it should be recognised that interim measurements may rely on estimates to a greater extent than measurements of annual financial data.
If an estimate of an amount reported in an interim period is changed significantly during the final interim period of the financial year but a separate financial report is not published for that final interim period, the nature and amount of that change in estimate should be disclosed in a note to the annual financial statements for that financial year.
An enterprise should apply the same accounting policies in its interim financial statements as are applied in its annual financial statements, except for accounting policy changes made after the date of the most recent annual financial statements that are to be reflected in the next annual financial statements.
However, the frequency of an enterprise's reporting (annual, half-yearly, or quarterly) should not affect the measurement of its annual results. To achieve that objective, measurements for interim reporting purposes should be made on a year-to-date basis.
Revenues that are received seasonally, cyclically, or occasionally within a financial year should not be anticipated or deferred as of an interim date if anticipation or deferral would not be appropriate at the end of the enterprise's financial year.
Costs that are incurred unevenly during an enterprise's financial year should be anticipated or deferred for interim reporting purpose if, and only if, it is also appropriate to anticipate or defer that type of cost at the end of the financial year.
The measurement procedures to be followed in an interim financial report should be designed to ensure that the resulting information is reliable and that all material financial information that is relevant to an understanding of the financial position or performance of the enterprise is appropriately disclosed. While measurements in both annual and interim financial reports are often based on reasonable estimates, the preparation of interim financial reports generally will require a greater use of estimation methods than financial reports.
A change in accounting policy, other than one for which the transition is specified by a new Statement of Standard Accounting Practice, should be reflected by:
(a) restating the financial statements of prior interim periods of the current financial year and the comparable interim periods of prior financial years, if the enterprise follows the benchmark treatment under SSAP 3.31; or
(b) restating the financial statements of prior interim periods of the current financial year, if the enterprise follows the allowed alternative treatment under SSAP 3.31. In this case, comparable interim periods of prior financial years are not restated.
