Which of the following basic financial statements are prepared as a minimum for interim financial reporting?

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 the Securities 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. A quarterly report is 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.

An interim financial report is a complete or condensed set of financial statements for a period shorter than a financial year. IAS 34 does not specify which entities must publish an interim financial report. That is generally a matter for laws and government regulations. IAS 34 applies if an entity using IFRS Standards in its annual financial statements publishes an interim financial report that asserts compliance with IFRS Standards.

IAS 34 prescribes the minimum content of such an interim financial report. It also specifies the accounting recognition and measurement principles applicable to an interim financial report.

The minimum content is a set of condensed financial statements for the current period and comparative prior period information, ie statement of financial position, statement of comprehensive income, statement of cash flows, statement of changes in equity, and selected explanatory notes. In some cases, a statement of financial position at the beginning of the prior period is also required. Generally, information available in the entity’s most recent annual report is not repeated or updated in the interim report. The interim report deals with changes since the end of the last annual reporting period.

The same accounting policies are applied in the interim report as in the most recent annual report, or special disclosures are required if an accounting policy is changed. Assets and liabilities are recognised and measured for interim reporting on the basis of information available on a year-to-date basis. While measurements in both annual financial statements and interim financial reports are often based on reasonable estimates, the preparation of interim financial reports will generally require a greater use of estimation methods than annual financial statements.

In April 2001 the International Accounting Standards Board adopted IAS 34 Interim Financial Reporting, which had originally been issued by the International Accounting Standards Committee in 2000. IAS 34 that was issued in 2000 replaced the original version that was published in February 1998.

Other Standards have made minor consequential amendments to IAS 34. They include Improvements to IFRSs (issued May 2010), IFRS 13 Fair Value Measurement (issued May 2011), Presentation of Items of Other Comprehensive Income (Amendments to IAS 1) (issued June 2011), Annual Improvements to IFRSs 2009–2011 Cycle (issued May 2012), Investment Entities (Amendments to IFRS 10, IFRS 12 and IAS 27) (issued October 2012), IFRS 15 Revenue from Contracts with Customers (issued May 2014), Annual Improvements to IFRSs 2012–2014 Cycle (issued September 2014), Disclosure Initiative (Amendments to IAS 1) (issued December 2014), IFRS 16 Leases (issued January 2016), IFRS 17 Insurance Contracts (issued May 2017), Amendments to References to the Conceptual Framework in IFRS Standards (issued March 2018) and Definition of Material (Amendments to IAS 1 and IAS 8) (issued October 2018).

Which basic financial statement are prepared as a minimum for interim financial reporting?

Which basic financial statements are prepared as a minimum?

Which basic financial statements are prepared as a minimum for interim financial reporting quizlet?

What are the financial statements included in the interim financial statements?