An interim statement is a financial report covering a period of less than one year. Interim statements are used to convey the performance of a company before the end of the normal full-year financial reporting cycle. Unlike annual statements, interim statements do not have to be audited. These reports increase communication between companies and the public and provide investors with up-to-date information between annual reporting periods.
These statements may also be referred to as interim reports.
Key Takeaways
- Interim statements are financial reports produced by firms covering a period of less than one year.
- They keep shareholders and analysts more up-to-date and maintain regular communication with corporate management.
- These reports also alert the public to material changes within the company in a timely fashion.
- Quarterly reports are commonly used as interim reports and may sometimes be mandated by regulatory authorities like the SEC.
Dive Deeper: Understanding Interim Statements
A quarterly report serves as an excellent example of an interim statement since it is issued before the end of the year. The International Accounting Standards Board (IASB) suggests certain standards be included while preparing interim statements. These standards encompass a series of condensed statements that cover the company’s financial position, income, cash flows, and changes in equity, along with explanatory notes.
The IASB also advocates that companies should use similar accounting methods in both interim and annual statements, which are audited. These interim reports provide a more timely understanding of a business’s operations, instead of waiting for year-end statements that could take months to become publicly available. As a result, investors find these periodic snapshots indispensable when making investment decisions, contributing to greater market liquidity—a key objective of capital markets.
Interim statements can also alert investors and analysts to recent changes significantly impacting the company. For instance, companies may use a form called 8-K to report irregular, material events or corporate changes that could be of importance to shareholders or the Securities and Exchange Commission (SEC). Events warranting a form 8-K report can include acquisitions, bankruptcies, resignations of directors, or changes in the fiscal year. Additional events can also be reported at the company’s discretion if they are deemed crucial for shareholders.
Example: Quarterly Reports
The most common type of interim statement is the quarterly report, which is a summary of un-audited financial statements, such as balance sheets, income statements, and cash flow statements, issued every three months. Aside from quarterly numbers, these reports may include year-to-date figures and comparative results from previous periods for context. Publicly-traded companies are required to file these reports with the Securities Exchange Commission using a form known as 10-Q. This form does not contain the extensive details provided in annual reports, known as 10-K.
The SEC also requires investment companies managing more than $100 million to file quarterly reports using form 13F. Most companies’ accounting periods align with the calendar year, ending on December 31, and their quarters concluding on March 31, June 30, September 30, and December 31. Typically, quarterly reports are filed within a few weeks following the end of the quarter.
By providing consistent financial updates and timely insights into corporate performance, interim statements play a critical role in maintaining market transparency and supporting informed investment decisions.
