Interim Report: A Complete Guide

Any form of auditing can be a stressful experience.

If you own a small or medium-sized business then it’s imperative that you keep a close eye on your balance sheet. You should also make sure that all of your accounting details are kept well in order.

Whilst not a full audit, an interim report is an important process in a business’ financial year. But what exactly is an interim report? Let’s take a closer look.

Here’s What We’ll Cover:

What Is Interim Reporting?

Who Has to Provide Reports?

What Sort of Inquiries Are Made During an Interim Report?

What’s the Difference Between an Interim Report and an Audit?

Key Takeaways

What Is Interim Reporting?

Interim reporting is the process of reporting a business’s financial results. It will look at any period of time that is shorter than a fiscal year.

Any business or company that is publicly traded will usually be required to go through interim reporting.

It typically involves the issuance of three quarterly financial statements each year. These statements include:

• Balance Sheet: This balance sheet would need to be from the end of the current interim period and the immediately previous fiscal year.
• Income Statement: This would need to be for the current interim period, and the fiscal year-to-date. It would also need the corresponding periods for the immediately preceding fiscal year.
• Statement of Cash Flows: This would need to be the period from the current fiscal year to date and the corresponding period for the immediately preceding fiscal year.

These reports are often mistaken for a full audit as they are reviewed by a business’s auditors. But doing a full audit would be seen as impractical given the speed in which these reports are to be released publicly.

The report’s aim is to provide an update based on the company’s last complete set of annual accounts. They tend to focus on new activities, events and circumstances. This is rather than simply duplicating information that has been previously reported.

The Covid-19 pandemic has seen a lot of change within the business world. Therefore it’s expected that we will see increased reporting by companies. These reports will most likely cover the impact of Covid-19 on the business.

Who Has to Provide Reports?

In the UK, if a company is listed on the London Stock Exchange then they are required to prepare a consolidated statutory annual account. This will be by using the International Financial Reporting Standards, or IFRS. The applicable financial reporting framework would be IAS 34 Interim Financial Reporting.

Governments, securities regulators, stock exchanges accountancy bodies, or any companies whose equity securities or debt are publicly traded have to prepare and publish interim financial information.

The UK system for interim reporting generally included condensed financial information. This tends to be for the first six months of the financial year. These must be published within three months of the end of the chosen reporting period.

What Sort of Inquiries Are Made During an Interim Report?

An interim report will have many areas of focus. These may include inquiries about:

• Whether there have been significant changes in internal controls. This could include commitments and contractual obligations.
• The effect of changes in the business activities. This could be in relation to contracts, customers or changes in the supply chain.
• The significant assumptions relevant to fair value measurements as well as any other estimates.
• Any government support schemes that have been accessed by the business.
• Whether the company has complied with their debt covenants.

What’s the Difference Between an Interim Report and an Audit?

An interim report is fairly limited in comparison to an audit. This means that the review doesn’t provide any sort of solid basis for auditors to give an opinion on whether or not the interim financial information gives a fair and honest view.

It also can’t give an opinion on whether or not it is fairly presented and it cannot be relied upon to disclose whether fraud or errors exist. That means that there is a lower level of assurance provided by an interim report when compared to a full audit.

Key Takeaways

When any business or company is publicly traded, it’s important that there is full disclosure.

Interim reports help the public see the inner workings of a publicly traded company and allows them to see progress and any major updates.

Are you looking for more business advice on everything from starting a new business to new business practices?

Then check out the FreshBooks Resource Hub.

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