What are the Annual Financial Statements?
Annual financial statements are financial reports prepared in accordance with a common accounting framework such as International Financial Reporting Standards (IFRS). These financials basically are intended to provide the entity’s stakeholders and other users with meaningful financial information enabling them to make reliable decisions.
What does a full set of financial statements consist of?
As per International Accounting Standard 1 (IAS 1), financial statements primarily consist of statements of financial position, statements of profit or loss, statements of changes in equity, statements of cash flows, and explanatory notes that comprise accounting policies and other explanatory information. The independent auditor expresses a positive assurance opinion on the audit of annual financial statements.
What is the Interim Financial Information?
Interim financial information comprises unaudited financial statements covering a period of less than one year. The interim financial information is commonly issued on a quarterly basis and used to keep the entity’s stakeholders updated on its performance and financial position throughout the year.
What is included in the interim Financial Information?
As per International Accounting Standard 34 (IAS 34), Interim financial information contains either a complete set of financial statements as described in IAS 1 Presentation of Financial Statements or a set of condensed financial statements for an interim period. The independent auditor expresses a negative assurance opinion on the review of interim financial information.
Is it required to prepare interim financial information?
The Bourse-listed companies, entities licensed by the Capital Markets Authority (CMA) and/or Central Bank of Kuwait (CBK) are mandated to prepare and submit interim financial information on a quarterly basis.
What is the interim period in accounting?
The interim period in accounting is a financial reporting period shorter than a full financial year. It often covers time periods of three, six, or nine months.
Summary of differences between Annual Financial Statements and Interim Financial Information
| Sr | Factors | Annual Financial Statements | Interim Financial Information |
|---|---|---|---|
| 1 | Auditor opinion | Positive Assurance | Negative Assurance |
| 2 | Auditor scope of work | Audit | Review |
| 3 | Components | should include, at a minimum, the following components: (a) Statement of financial position (b) Statement profit or loss (c) Statement of changes in equity (d) Statement of cash flows (e) Notes to financial statements |
should include, at a minimum, the following components: (a) Condensed statement of financial position (b) Condensed statement of profit or loss (c) Condensed statement of cash flows (d) Selected notes. |
| 4 | Period coverage | One financial year | Shorter than a full financial year |
| 5 | The mandatory issuance | All types of business entities | Boursa-listed companies and companies licensed by regulators. |
| 6 | Purpose of issuance | Fairly presentation of financial statements provides information about the financial position, financial performance, and cash flows of an entity that is useful to a wide range of users in making economic decisions. Financial statements also show the results of the management’s stewardship of the resources entrusted to it. | Reliable interim financial reporting improves the ability of investors, creditors, and others to understand an entity’s capacity to generate earnings and cash flows and its financial condition and liquidity. |