Interim Financial StatementsExplained & Defined

Written By:
Adiste Mae

What is an Interim Statement?

Interim Financial Statements, also called Interim Reports, refer to financial statements that do not cover the full accounting year of the reporting entity.

The most common types of Interim Financial Statements are Quarterly Reports.

These reports are issued for the company to communicate the financials to investors so that they are up to date with the performance of the issuing company and are informed of any material changes that happened within the current accounting period.

Because they represent data from an incomplete year, interim reports are not audited. 

However, publicly traded companies are sometimes required by the Securities and Exchange Commission (SEC) to issue quarterly reports. 

Understanding Interim Statements

The International Accounting Standards Board (IASB) requires companies that issue Interim Reports to follow the same guidelines that they use when preparing the annual financial reports, including the accounting methods used.

These Interim Reports include the financial performance, position, cash flows, changes in equity, and explanatory notes. 

The main goal of interim reports is to provide an idea of the current operations of the business which helps investors allocate investment capital before the year-end.

When investors wait for the year-end, it could take them a few months before they get a copy of the audited reports, which will not be helpful for them to achieve greater market liquidity. 

With Interim Reports, material changes in the company are communicated to the investors through the Form 8-K, which reports to investors of publicly held companies of events or changes in the company that could be of importance to investors or the Securities and Exchange Commission.

These events or changes can include bankruptcy, acquisition, any resignation by the Board of Directors, or a change in the reporting period. 

Example: Quarterly Reports

Quarterly Reports typically include the Balance Sheet, Income Statement, and Statement of Cash Flows for a period of three months.

These quarterly reports are unedited statements and may also include year-to-date or period-to-period comparisons of financial statements.

The SEC requires publicly traded companies to report their interim reports known as Form 10-Q.

Unlike the 10-K, it does not include detailed information on the background and operations of the company.

Form 13-F is used by investment companies that manage more than $100 million when they file their quarterly reports with the SEC. 

The quarterly reports of companies are filed within just a few weeks from the end of each quarter, usually every March 31st, June 30th, September 30th, and December 31st.