Interim financial statements are financial statements that cover a period of less than one year. The concept is most commonly applied to publicly-held companies, which must issue these statements at quarterly intervals. These entities issue three sets of interim statements per year, which are for the first, second, and third quarters. The final reporting period of the year is encompassed by the year-end financial statements, and so is not considered to be associated with interim financial statements.
The interim statement concept can apply to any period, such as the last five months. Technically, the "interim" concept does not apply to the balance sheet, since this financial statement only refers to assets, liabilities, and equity as of a specific point in time, rather than over a period of time.
Interim financial statements contain the same documents as will be found in annual financial statements - that is, the income statement, balance sheet, and statement of cash flows. The line items appearing in these documents will also match the ones found in annual financial statements. The main differences between interim and annual statements can be found in the following areas:
- Disclosures. Some accompanying disclosures are not required in interim financial statements, or can be presented in a more summarized format.
- Accrual basis. The basis upon which accrued expenses are made can vary within interim reporting periods. For example, an expense could be recorded entirely within one reporting period, or its recognition may be spread across multiple periods. These issues can make the results and financial positions contained within interim periods appear to be somewhat inconsistent, when reviewed on a comparative basis.
- Seasonality. The revenues generated by a business may be significantly impacted by seasonality. If so, interim statements may reveal periods of major losses and profits, which are not apparent in the annual financial statements.
Interim financial statements are not usually audited. Given the cost and time required for an audit, only the year-end financial statements are audited. If a company is publicly-held, its quarterly financial statements are instead reviewed. A review is conducted by outside auditors, but the activities encompassed by a review are much reduced from those employed in an audit.