What Is an Interim Statement?
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 normal full-year financial reporting cycles. Unlike annual statements, interim statements do not have to be audited. Interim statements increase communication between companies and the public and provide investors with up-to-date information between annual reporting periods.
These 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.
- The goal is to keep shareholders and analysts more up-to-date and in regular communication with corporate management, and to alert the public to material changes to the company in a timely fashion.
- Quarterly reports are commonly used by companies, and may sometimes be mandated by the SEC.
Understanding Interim Statements
A quarterly report is an example of an interim statement because it is issued before year end.
The International Accounting Standards Board (IASB) suggests certain standards be included while preparing interim statements. These include a series of condensed statements covering the company's financial position, income, cash flows, and changes in equity along with notes of explanation.
The IASB also suggests that companies should follow the same guidelines in their interim statements as they use in preparing their annual reports (which are audited), including the use of similar accounting methods.
Interim statements offer a more timely look into a business’s operations, rather than waiting until year-end statements, which do not officially become available for months after year-end close anyway. Investors find the periodic snapshots helpful when allocating investment capital – all of which leads to greater market liquidity – a prime goal of capital markets.
These reports can also alert investors and analysts to recent changes that meaningfully affect the corporation. A form 8-K, for instance, is used to report unscheduled material events or corporate changes at a company that could be of importance to the shareholders or theSecurities and Exchange Commission(SEC). The report notifies the public of events reported including acquisition, bankruptcy, resignation of directors, or a change in the fiscal year. Form 8-K reports may be issued based on other events up to the company's discretion that the registrant considers to be of importance to shareholders.
Example: Quarterly Reports
The most common interim statement may be the quarterly report. Aquarterly reportis a summary or collection of un-audited financial statements, such as balance sheets, income statements, and cash flow statements, issued by companies every quarter (three months). In addition to reporting quarterly figures, these statements may also provide year-to-date and comparative (e.g., last year's quarter to this year's quarter) results. Publicly-traded companies must file their reports with the Securities Exchange Commission. This form, known as a 10-Q, does not include all the detailed information, such as background and operations detail that the annual report (known as a 10-K) would.
The SEC also mandates that investment companies file quarterly reports if they manage more than $100 million, using a form 13F.
Most companies have an accounting period that ends with the calendar year: Dec. 31 and quarters that end on March 31, June 30, September 30, and December 31. Quarterly reports are typically filed within a few weeks of a quarter's end.
FAQs
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 normal full-year financial reporting cycles. Unlike annual statements, interim statements do not have to be audited.
What is an example of an interim statement? ›
An example of an interim statement is a company's quarterly financial report. This report will typically include a balance sheet, income statement, and cash flow statement for the quarter.
What is an example of an interim period? ›
Example of an Interim Period
Let's say a company's fiscal year aligns with the calendar year, starting in January and ending in December. This company has decided to report its financial performance on a quarterly basis, which means it divides its fiscal year into four interim periods: Q1: January 1 to March 31.
What is the difference between account statement and interim statement? ›
The statement is unaudited since interim statements are not required to be audited, unlike annual financial statements. However, they still contain the same elements – a balance sheet, an income statement, and a statement of cash flows.
How to prepare an interim financial statement? ›
How to prepare interim financial statements
- Calculate all expenses for the period in question. ...
- Enter all sales, taken from your accounting software or point of sale system. ...
- Review loan statements to calculate interest paid for the interim financial statement period, reporting all payments as expenses.
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 normal full-year financial reporting cycles. Unlike annual statements, interim statements do not have to be audited.
What are 3 key features of interim reports? ›
In most cases, you'll need to include the following components in your interim report:
- Cash flow statement.
- Income statement.
- Balance sheet.
Maybe you get ice cream during the interim between school and piano lessons. This word is often used in official contexts — for example, after the CEO of a company steps down, an interim CEO might serve while a formal job search is conducted. the time between two reigns, governments, etc.
What is an example of interim in a sentence? ›
The government subsequently signed an interim one-year lease contract. In the interim the state had failed to transform its nobility into a ruling class that met its requirements. In the interim periods, relatively few interventions are needed.
Does interim mean final? ›
Interim is used to describe something that is intended to be used until something permanent is done or established. She was sworn in as head of an interim government in March. Synonyms: temporary, provisional, makeshift, acting More Synonyms of interim. 2. See in the interim.
Interim financial statements are issued for a period shorter than a financial year. Businesses may issue a complete or a condensed set of financial statements. The interim financial statements address changes since the end of the last year, and the disclosure requirements may differ from the year-end report.
Why is an interim financial statement important? ›
Your interim financial statements provide a more nuanced and detailed view of your business's financial trends, like seasonality and expense changes. They can also help you identify and leverage opportunities to grow!
What should an interim report include? ›
Your interim report should:
- State your aims and objectives.
- Explain your research.
- Show what you have achieved.
- Demonstrate the steps to complete the project on time.
Minimum content of an interim financial report
- a condensed balance sheet (statement of financial position)
- either (a) a condensed statement of comprehensive income or (b) a condensed statement of comprehensive income and a condensed income statement.
- a condensed statement of changes in equity.
The balance sheet of interim accounts must be signed, and although there is no equivalent statutory requirement for initial accounts to be signed, in practice auditors will require the accounts to be approved and signed by the directors before the report of the auditors can be signed.
What are the two views on interim financial reporting? ›
Interim reporting theories typically polarize into two extreme views: the discrete approach (i.e., each interim interval is a stand-alone reporting period), and the integral approach (i.e., an interim period is an integral part of the annual period).
How do you write a good interim report? ›
Your interim report should:
- State your aims and objectives.
- Explain your research.
- Show what you have achieved.
- Demonstrate the steps to complete the project on time.
The interim financial report is intended to provide an update on the latest complete set of annual financial statements. Accordingly, it focuses on new activities, events, and circ*mstances and does not duplicate information previously reported.
How do you use interim period in a sentence? ›
The interim period is over. In an interim period, installation of a disinfection system to the already existing water supply was accepted for smaller events. The test was scored twice by the same marker, with a 2-week interim period between scoring.
What is an example of an interim audit? ›
Example of an Interim Audit
Suppose Company A's fiscal year ends on December 31. The external auditors typically conduct the year-end audit in the first quarter of the following year to verify the financial statements of the company.
