Issuers in the UK that are not required to apply IAS 34 can satisfy the requirement in the DTR for half-yearly financial statements by following the provisions of this [draft]. The FSA's Disclosure and Transparency Rules (DTR) also require the preparation of half-yearly financial reports in accordance with IAS 34. Other UK issuers must use UK generally accepted accounting practice (GAAP) to prepare their half-yearly financial statements.
4 Semi-annual financial reports play an important role as a progress report in the ongoing reporting process of a business's operating, financing and investment activities. The DTR requires companies to make available their six-month financial reports within two months of the end of the six-month period. 6 Half-yearly financial reports, like annual financial statements, are presented in relation to a particular reporting period.
8 The integrated method considers the half-year period as part of the larger annual reporting cycle. 11 DTR requires that the accounting practices and presentation of figures in half-year accounts are in accordance with the annual accounts. In accordance with this, half-year accounts should be prepared with the same measurement basis and follow the same accounting principles and practices as used in the annual accounts.
12 Half-yearly financial reports should include a statement that they have been prepared on the basis of the accounting policies set forth in the most recent financial statements. 18 A company is seasonal when there is a substantial and recurring variation between profit levels in the semi-annual period and the rest of the year. 22 The semi-annual financial report should include a brief explanation of the basis of the effective tax rate.
24 When determining the amount of tax losses to be recognized in the half-year period, an estimate should be made of the expected utilization over the entire tax year. The amount recognized in the half-year period must be in relation to the half-year result before tax and the estimated annual result before tax. 32 Significant events and trends mentioned in the content of the half-year financial statements must be supported by the underlying figures stated either on the front page of the primary statements or as notes.
39 A half-yearly financial report must include a condensed profit and loss account showing each of the headings and subtotals included in the most recent annual financial statements. Additional line items must be included if, as a result of their omission, the half-yearly financial statements would give a misleading view of the profit or loss of the entity. They must be recognized and disclosed in the profit and loss account of the half-yearly period in which they occur.
Additional line items must be included if, due to their omission, the semi-annual financial statements would give a misleading representation of the entity's assets, liabilities and financial position.
Measures
This includes an obligation by the Commission to specify the minimum content of the summary balance sheet and profit and loss account and explanatory notes to these accounts where they are not prepared in accordance with IAS 34. The statement must provide (a) an explanation of significant events and transactions that have occurred during the relevant period and their effect on the financial position; and (b) a general description of the issuers' financial position and results. the half-yearly accounts would not give a true and fair view of the issuer's assets, liabilities, financial position and profit or loss. In addition, the following comparative information must be included:. a) balance sheet at the end of the first six months of the current financial year and comparative balance sheet at the end of the immediately preceding financial year.
The notes must contain sufficient information to ensure the comparability of the condensed semi-annual financial statements with the annual financial statements. The Financial Services Authority (FSA) is responsible for enforcing TD in the UK. In the Republic of Ireland, the Investment Fund Companies and Other Provisions Act 2006 provides, inter alia, for the implementation of certain aspects of TD.
These requirements are expected to supersede section 6.9 ('Half-yearly reports') of the Irish Stock Exchange Listing Rules after the enactment of the legislation. The FSA Listing Rules (currently section 9.9) require listed companies to prepare a report, on a group basis where appropriate, of their activities and profit and loss for the first six months of the financial year. Prior to the implementation of the Transparency Directive in Ireland, listed companies prepared half-yearly reports in accordance with the Listing Rules and in accordance with IAS 34 'Interim Financial Reporting'.
The Disclosure and Transparency Rules (DTR) are the rules that have been developed by the FSA for the UK implementation of TD$. The rule for half-yearly reporting is DTR 4.2. There is no DTR equivalent in the ROI as the requirements of the Transparency Directive will be set out in legislation. The DTR 'copies' the requirements of the Level 2 measures, summarized in paragraphs A7 to A9 above.
'Interim Financial Reporting' elaborates on aspects related to quarterly reporting, the core elements of the two statements are consistent in all material respects. IAS 34 'Interim Financial Reporting', like the [draft] statement of the ASB, states that the same accounting principles of recognition and measurement must be applied in the semi-annual report as in the financial statements. However, as a result, amounts reported in earlier semi-annual periods of the current fiscal year may need to be remeasured at a later date when new information becomes available.
