What Is an Interim Statement?
Let me explain what an interim statement is. It's a report that shows a company's performance before the end of the usual full-year financial cycle. Unlike annual statements, these don't need to be audited. They help increase communication between the company and the public, giving you, as an investor, the latest information between those yearly reports.
You might also hear them called interim reports.
Key Takeaways
- The goal of an interim statement is to keep shareholders and analysts more up-to-date and in regular communication with corporate management.
- Interim statements alert the public to material changes to the company in a timely fashion.
- The most common interim statement may be the quarterly report.
- Quarterly reports are sometimes mandated by the SEC.
Understanding Interim Statements
The International Accounting Standards Board (IASB) recommends including certain standards when preparing these statements. You should expect a series of condensed statements on the company's financial position, income, cash flows, and changes in equity, plus explanatory notes.
The IASB also advises that companies use the same guidelines for interim statements as for their audited annual reports, including similar accounting methods.
These statements give you a more timely view of a business's operations instead of waiting for year-end reports, which aren't available for months after the year closes. As an investor, you'll find these periodic updates useful for deciding where to put your money, which helps improve market liquidity—a key aim of capital markets.
These reports can also notify you about recent changes that significantly impact the company. For example, a Form 8-K reports unscheduled material events or changes important to shareholders or the SEC, such as acquisitions, bankruptcies, director resignations, or fiscal year changes. Companies might issue these for other events they deem important to you as a shareholder.
Example: Quarterly Reports
The quarterly report is probably the most common interim statement you'll encounter. It's a summary of unaudited financial statements like balance sheets, income statements, and cash flow statements, issued every three months. Besides quarterly figures, these might include year-to-date and comparative results, such as last year's quarter versus this year's.
Publicly traded companies must file these with the Securities and Exchange Commission using Form 10-Q. This form doesn't have all the details like background and operations that you'd find in the annual Form 10-K.
The SEC also requires investment companies managing over $100 million to file quarterly reports using Form 13F.
Most companies end their accounting period on December 31, with quarters ending March 31, June 30, September 30, and December 31. You can expect these reports to be filed within a few weeks after the quarter ends.
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