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CA Final · Financial Reporting · Ind AS 34 Interim Financial Reporting

Godavari Auto Ltd's auditors note that the company applied a different accounting policy for a class of inventory in its quarterly statements than in its annual statements, arguing that quarterly reporting is only indicative. Which requirement of Ind AS 34 does this most directly breach?

The company breaches the requirement that an entity applies the same accounting policies in its interim financial statements as in its annual financial statements. Ind AS 34 paragraph 28 imposes this, so using a different inventory policy in quarterly statements is not permitted.

  1. AThe same accounting policies must be applied in interim statements as in annual statementsCorrect
  2. BInterim statements must always be a complete set under Ind AS 1
  3. CInterim measurements must be made on a period-only basis, not year-to-date
  4. DInterim statements need not follow policies if condensed

Explanation

Paragraph 28 requires the same accounting policies in interim statements as in annual statements. Godavari's different policy breaches it. The option on period-only measurement is wrong because measurements are made on a year-to-date basis, and the standard does not require a complete set.

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