Page 105 - InterloopAnnualReport2021

NOTES TO THE

FINANCIAL STATEMENTS

For the year ended June 30, 2021

– Amendments to IAS 1, ‘Presentation of financial statements’ and IFRS Practice Statement 2-
Disclosure of Accounting Policies (effective for the Company’s annual period beginning on
January 01, 2023):
The amendments require that an entity discloses its material accounting policies, instead of its
significant accounting policies. Further amendments explain how an entity can identify a material
accounting policy. Examples of when an accounting policy is likely to be material are added. To support
the amendment, the Board has also developed guidance and examples to explain and demonstrate
the application of the ‘four-step materiality process’ described in IFRS Practice Statement 2. The
amendment is not likely to have an impact on the Company’s financial statements.

– Amendments to IAS 1, ‘Presentation of financial statements’ - Classification of Liabilities as
Current or Non-current (effective for the Company’s annual period beginning on January 01,
2022):
The amendments specify that the conditions which exist at the end of the reporting period are
those which will be used to determine if a right to defer settlement of a liability exists. Management
expectations about events after the reporting date, for example on whether a covenant will be
breached, or whether early settlement will take place, are not relevant. The amendments clarify the
situations that are considered settlement of a liability.

– Annual Improvements to IFRS Standards 2018–2020 Cycle. The new cycle of improvements
addresses improvements to following approved accounting standards (effective for annual
period beginning on or after January 01, 2022):
– IFRS 1 First-time Adoption of International Financial Reporting Standards. This amendment simplifies
the application of IFRS 1 for a subsidiary that becomes a first-time adopter of IFRS Standards later
than its parent – i.e. if a subsidiary adopts IFRS Standards later than its parent and applies IFRS
1.D16(a), then a subsidiary may elect to measure cumulative translation differences for all foreign
operations at amounts included in the consolidated financial statements of the parent, based on the
parent’s date of transition to IFRS Standards.

– IFRS 9 Financial Instruments. The amendment clarifies which fees an entity includes when it applies
the ‘10 percent’ test in assessing whether to derecognize a financial liability. An entity includes
only fees paid or received between the entity (the borrower) and the lender, including fees paid or
received by either the entity or the lender on the other’s behalf.

– IAS 41 Agriculture. The amendment removes the requirement for entities to exclude taxation cash
flows when measuring the fair value of a biological asset using a present value technique. This will
ensure consistency with the requirements in IFRS 13 - Fair Value Measurement.

There are other amendments and interpretations to the approved accounting standards that are
not yet effective and are also not relevant to the Company and therefore, have not been presented
here.

Further, the following new standards have been issued by the International Accounting
Standards Board (IASB), which are yet to be notified by the Securities and Exchange Commission
of Pakistan (SECP), for the purposes of their applicability in Pakistan:
IFRS - 1 ‘First time adoption of International Financial Reporting Standards’.
IFRS - 17 ‘Insurance Contracts’.

5. CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS
The preparation of financial statements in conformity with the approved accounting standards require management
to make judgments, estimates and assumptions that affect the application of accounting policies and the reported
amounts of assets and liabilities, income and expenses. The estimates and associated assumptions are based on
historical experience and various other factors that are believed to be reasonable under the circumstances, the
results of which form the basis of making the judgments about carrying values of assets and liabilities that are not
readily apparent from other sources. Actual results may differ from these estimates.

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