AS 25 Interim Financial Reporting: A Practitioner Guide for FY 2026-27
AS 25 (Interim Financial Reporting) is the Indian Accounting Standard that prescribes the minimum content and principles for interim financial statements covering periods shorter than a full financial year.
The Institute of Chartered Accountants of India (ICAI) issued AS 25 in 2002. The Ministry of Corporate Affairs (MCA) notified it through the Companies (Accounting Standards) Rules, effective from 1 April 2002. The standard’s predecessor was also issued by ICAI in 2002.
For FY 2026-27, listed companies governed by the Securities and Exchange Board of India (SEBI) must present quarterly results under AS 25 and Schedule III to the Companies Act, 2013. Audit committees and statutory auditors play a central role in this process.
AS 25 at a Glance
AS 25 sets out the discrete period approach for interim financial reporting. It is designed primarily for listed companies and regulated entities required to publish quarterly or half-yearly results.
| Field | Value |
|---|---|
| Standard Number | AS 25 |
| Full Name | Interim Financial Reporting |
| Issuing Body | ICAI (Accounting Standards Board) |
| Notified By | MCA, Companies (Accounting Standards) Rules, 2006 (reaffirmed in Companies (Accounting Standards) Rules, 2021) |
| Effective Date | 1 April 2002 (for periods governed by statute or where the entity voluntarily prepares interim financial statements) |
| Supersedes | Issued by ICAI in 2002 |
| Equivalent Standard | AS 25 ↔ Ind AS 34 ↔ IAS 34 |
| Applies To | AS 25 applies if an entity is required or elects to publish an interim financial report. The standard does not mandate preparation of interim reports - that requirement comes from external sources (SEBI for listed companies, regulatory bodies for banks/NBFCs/insurers). Ind AS-applicable companies follow Ind AS 34. |
What is AS 25: Interim Financial Reporting?
AS 25 defines how entities must prepare and present interim financial statements covering periods shorter than a full year. The standard requires minimum content and sets out recognition and measurement principles that mirror those used in annual reporting but applied to interim periods.
ICAI introduced this standard in response to increased demand from regulators like SEBI and RBI for timely interim disclosures. Its core principle aligns with international practice under IAS/Ind AS 34, each interim period stands alone as an independent accounting period.
The primary users of this standard are listed companies, banks, non-banking financial companies (NBFCs), insurers regulated by IRDAI, their statutory auditors, CFOs and finance teams preparing quarterly results.
Objective of AS 25
- Prescribe minimum content of an interim financial report and the principles for recognition and measurement in financial statements presented for an interim period.
- Establish the discrete period view (each interim is independent) for measurement, with limited integral period adjustments.
- Improve timeliness and reliability of interim financial information.
By defining these objectives, AS 25 ensures that users receive reliable information reflecting current performance while upholding the “true and fair view” principle embedded in Section 129 of the Companies Act, 2013.
Who Must Apply AS 25?
Entities covered, applicability table
AS 25 applies when an entity is required or voluntarily elects to publish an interim financial report. It does not itself mandate such reporting; requirements arise from regulators or internal policy.
| Category | Applicability |
|---|---|
| Level I entities | Mandatory if required by SEBI/RBI/IRDAI or law/regulation |
| Level II/III entities | Voluntary application permitted; not mandatory unless required |
| Ind AS-applicable entities | Not covered; must apply Ind AS 34 |
Scope exclusions
Entities excluded from scope:
- Entities not preparing interim reports under any requirement
- Internal management reports not intended for external publication
When the standard does not apply
If an entity does not prepare or publish interim reports as per statutory or regulatory requirements, or only prepares internal management accounts, AS 25 does not apply. Ind AS-applicable companies follow Ind AS 34 instead.
Key Definitions under AS 25
| Term | Definition |
|---|---|
| Interim period | A financial reporting period shorter than a full financial year. |
| Interim financial report | A report containing either a complete set of annual statements or condensed statements as per AS 1/AS 25. |
| Year-to-date | Cumulative period from beginning of financial year to end of interim period. |
| Discrete period view | Each interim period is treated as a separate reporting period with its own measurement basis. |
| Integral view | Each interim is part of annual period; allocations occur, NOT followed by AS 25. |
Recognition and Measurement under AS 25
When to recognise
An entity applies recognition and measurement principles under AS 25 once it prepares an interim financial report, either because law requires it or by voluntary choice. The trigger is publication or preparation of such a report; there is no obligation unless mandated externally.
Initial measurement
At each interim date, the entity must use the same accounting policies as applied in its most recent annual financial statements (Para 28). Measurement occurs on a year-to-date basis, revenues and expenses are recognised cumulatively from start of year up to the end of the current interim period.
Costs accruing unevenly through the year, such as insurance premiums paid annually or planned maintenance, are recognised only when they accrue during that specific period. Anticipating future costs or deferring them across quarters is prohibited unless a present obligation exists at the reporting date.
Subsequent measurement
Estimates may require revision at each subsequent interim date based on new information available since previous interims or year-end (Para 38). Changes in estimates are reflected immediately in profit or loss when they arise.
Income tax expense must be computed using an effective annual tax rate approach rather than applying statutory rates quarter-by-quarter (Para 32). This involves projecting total expected tax expense for the full year divided by estimated pre-tax income for the year, a method critical for reflecting underlying business seasonality and tax planning strategies:
Effective Annual Tax Rate = Estimated Full-Year Tax Expense / Estimated Full-Year Pre-Tax Income
Interim Tax Expense = Effective Annual Tax Rate × Year-to-Date Pre-Tax Income − Tax Already Recognised in Previous Interims
Inventory write-downs to net realisable value are recognised at each interim date if criteria are met, even if management expects recovery later in the year. If reversal occurs before year-end due to improved conditions, reversal is recognised then.
Impairment losses on assets are recognised if indicators exist at any interim date; reversals follow normal rules applicable at annual close.
Year-to-Date Approach with Discrete Period Measurement
AS 25 mandates a discrete period view (Para 28): each quarter or half-year stands alone as a self-contained accounting period using consistent policies throughout the year.
Year-to-date measurement means cumulative results reflect all activity up to that point, not just activity within each quarter alone. For income taxes, this approach anchors on expected effective annual rate applied proportionately across interims rather than mechanical application of statutory rates per quarter.
Costs incurred unevenly, such as insurance paid upfront, are matched against revenue only when incurred during that particular quarter; anticipation or deferral across periods is not permitted unless justified by present obligations at balance sheet date.
Special situations include:
(a) Inventory write-downs at interims are recognised immediately; reversal occurs only if recovery happens before year-end.
(b) Tax credits/incentives dependent on full-year activity are recognised proportionate to YTD activity if reasonable assurance exists.
(c) Pension/employee benefit costs use actuarial estimates rolled forward at interims rather than full revaluation every quarter.
This discrete-period methodology provides timely information while ensuring consistency with annual reporting frameworks such as those prescribed by Schedule III to the Companies Act, 2013 and other relevant standards like AS 22 for income taxes.
Worked Examples on AS 25
Example 1: Effective annual tax rate computation
Maharashtra Industries’ Q1 FY 2026-27 pre-tax profit totals Rs 25 crore. Estimated full-year pre-tax profit stands at Rs 100 crore with total estimated tax expense Rs 25 crore, yielding an effective tax rate:
| Computation Step | Amount | Explanation |
|---|---|---|
| Estimated full-year pre-tax profit | Rs 100 crore | Management forecast |
| Estimated full-year tax expense | Rs 25 crore | Based on current legislation |
| Effective annual tax rate | Rs 25 crore / Rs 100 crore = 25% | Core principle |
| Q1 pre-tax profit | Rs 25 crore | Actual result |
| Q1 tax expense | Rs 6.25 crore | = Rs 6.25 crore (= Q1 profit × effective rate) |
If Q2 estimates revise upward, pre-tax now estimated Rs 110 crore; tax Rs 28 crore, the new effective rate becomes ~25.45%:
Q2 H1 cumulative tax = Rs 12.73 crore (= H1 pre-tax × new effective rate). Less Q1 already recognised (Rs 6.25 crore) gives Q2 incremental tax expense Rs 6.48 crore.
Journal entries:
Q1:
Dr Tax Expense (P&L) Rs 6.25 crore
Cr Provision for Income Tax Rs 6.25 crore
Q2:
Dr Tax Expense Rs 6.48 crore
Cr Provision for Income Tax Rs 6.48 crore
The cumulative provision after H1 totals Rs 12.73 crore.
Example 2: Year-end planned maintenance cost
Krishna Steel Industries plans major maintenance shutdown every March costing Rs 12 crore annually but has not yet incurred this cost as of September-end H1 FY 2025-26.
Under Para 30:
Costs are recognised only when shutdown occurs, not allocated across quarters unless obligation exists at balance sheet date.
Computation Table:
| Computation Step | Amount | Explanation |
|---|---|---|
| Planned maintenance cost | Rs 12 crore | Expected total cost |
| Cost incurred by Sep-end H1 | Nil | Shutdown has not yet occurred |
| Expense recognised H1 | Nil | No present obligation |
Journal entry:
No entry required at H1 close since no obligation exists yet.
In Q4 when shutdown occurs:
Dr Maintenance Expense (P&L) Rs 12 crore
Cr Various payables/accounts Rs 12 crore
This treatment contrasts with integral view methods where costs might be spread evenly across quarters, a practice prohibited by AS 25’s discrete-period approach.
Disclosure Requirements under AS 25
Under Schedule III to the Companies Act, 2013 and AS 25, interim financial reports must provide transparent and timely disclosures. These disclosures allow users to understand the basis of preparation, significant events, and changes affecting financial performance during the interim period. Statutory auditors must ensure these requirements are met for reliable stakeholder reporting.
| Item | Requirement | Para Reference |
|---|---|---|
| Statement that same accounting policies are followed as in annual financial statements | If a complete set of FS is presented, comply with AS 1; if condensed, this disclosure required | Para 16 |
| Explanatory comments about seasonality or cyclicality | Of interim operations | Para 16(b) |
| Nature and amount of items affecting assets, liabilities, equity, net income that are unusual | Because of their nature, size, or incidence | Para 16(c) |
| Issuances, repurchases, and repayments of debt and equity securities | Material transactions in capital structure | Para 16(e) |
| Dividends paid | Aggregate or per share for ordinary shares and other shares | Para 16(f) |
| Effect of changes in composition of enterprise | Business combinations, acquisitions or disposals of subsidiaries, restructurings, discontinuing operations | Para 16(h) |
Auditors must verify these disclosures under SA 700 to support the “true and fair view” opinion on interim results.
Common Mistakes & Industry-Specific Considerations
Common errors auditors flag
- Applying integral period view (allocating year-end costs across quarters) instead of AS 25’s discrete period view.
- Not applying effective annual tax rate, using statutory rate or prior year’s tax without forward estimates.
- Failing to recognise inventory NRV write-downs at interim because “situation may improve.”
- Inadequate disclosure of seasonality and cyclicality where significant.
- Not preparing required cash flow statement for interim periods (or providing only condensed P&L).
- Inconsistent application of accounting policies between interims and annual statements.
Industry application notes
Listed AS-framework companies must publish quarterly results within 45 days under SEBI LODR. AS 25 and Schedule III dictate content and format. Audit committee approval and limited review by statutory auditors are mandatory before publication.
NBFCs applying AS submit quarterly results to the Reserve Bank of India (RBI). Quarterly provisioning updates are required. The effective annual tax rate method is critical due to frequent changes in tax positions from quarter to quarter.
Insurance companies governed by IRDAI regulations prepare regular interim reports. Actuarial estimates for policyholder liabilities are updated quarterly. Significant professional judgement is needed due to the complexity and volatility in insurance operations.
AS 25 vs Ind AS 34 vs IFRS: Key Differences
The table below summarises how AS 25 compares with Ind AS 34 (the applicable standard for Ind AS entities) and IFRS (IAS 34):
| Aspect | AS | Ind AS | IFRS |
|---|---|---|---|
| Approach | Discrete period view | Discrete period view | Discrete period view |
| Tax computation | Effective annual tax rate | Effective annual tax rate | Same |
| Content - condensed | Allowed if framework permits | Detailed minimum content (Para 8) | Same as Ind AS |
| Comparative information | Prior year comparable interim | Prior year comparable + year-to-date | Same as Ind AS |
| Inventory write-downs | Recognised at interim | Recognised at interim | Same |
India’s Accounting Standards Board has aligned key measurement principles with international practice under IAS/IFRS. However, differences remain in presentation, Ind AS/IFRS require more detailed minimum content for condensed statements and broader comparative information than legacy Indian GAAP under AS. Entities transitioning from AS to Ind AS should plan for enhanced disclosure requirements.
Latest Amendments to AS 25 (FY 2026-27)
No amendments have been notified to AS 25 for FY 2026-27 as of 2026-05-02. The standard continues to apply in its existing form.
Related Standards You Should Know
- [Ind AS 34](/ind-as-34-interim-financial-reporting/), Equivalent interim reporting standard for Ind AS-applicable companies.
- [AS 1](/as-1-disclosure-of-accounting-policies/), Accounting policies framework for interim reports.
- [AS 5](/as-5-net-profit-prior-period-changes/), Changes in accounting estimates within interim periods.
- [AS 22](/as-22-accounting-for-taxes-on-income/), Tax expense computation - effective rate methodology.
- [AS 17](/as-17-segment-reporting/), Segment reporting at interim follows annual standard.
Need Help with AS 25 Compliance?
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Frequently Asked Questions (FAQs)
Any entity required by law or regulation (such as SEBI LODR for listed companies or RBI guidelines for NBFCs) or that voluntarily elects to publish an interim financial report must comply with AS 25 if it follows Indian GAAP rather than Ind AS.
The discrete period view treats each interim period as a separate reporting period. Revenues and expenses are recognised based on activity within that specific period rather than allocating annual amounts evenly across all interims.
Both standards adopt a discrete period approach but Ind AS 34 requires more detailed minimum content in condensed statements and broader comparative information than legacy Indian GAAP under AS 25. Measurement principles remain aligned across both frameworks.
Income tax expense is computed using an estimated effective annual tax rate applied to year-to-date pre-tax income. This method ensures seasonality or irregular income patterns do not distort quarterly results compared to statutory rates applied per quarter.
Yes. If inventory net realisable value falls below cost at an interim date, the loss is recognised immediately under AS 25, even if management expects recovery later in the year. Reversal is permitted only if value recovers before year-end.
Planned maintenance costs are recognised only when incurred during an interim period, not allocated across quarters unless a present obligation exists at the balance sheet date. Anticipating future costs is prohibited by Para 30 of AS 25.
Entities must disclose explanatory comments on seasonality or cyclicality that materially affect operations during the interim period (Para 16(b)). This helps users interpret fluctuations in revenue or expenses that arise from seasonal business patterns.
Yes. If an entity presents a complete set of financial statements at interims, a cash flow statement is required per Schedule III and SA 700 audit responsibilities, even if only condensed formats are used under regulatory frameworks like SEBI LODR.
Listed companies following Indian GAAP must publish quarterly results within forty-five days after quarter-end as mandated by SEBI Listing Obligations and Disclosure Requirements (LODR). Audit committee review and limited auditor review are also mandatory steps before publication.
Yes. Entities must apply the same accounting policies at each interim date as used in their most recent annual financial statements (Para 28). Any inconsistency can result in audit qualifications or regulatory non-compliance findings.
About This Article
Reviewed by CA & CS Team · Patron Accounting LLP
Technical reviewer: CA Sundram Gupta, FCA
Last reviewed: 2026-05-02
Sources: ICAI Compendium of Accounting Standards · MCA Notification (Companies (Accounting Standards) Rules, 2006 (reaffirmed in Companies (Accounting Standards) Rules, 2021)) · IFRS Foundation