![](\"http:\/\/s3.amazonaws.com\/snd-store\/a\/37815125\/06_28_19_689863838_aab_560x292.jpg\")
<\/p>\n<\/p>\n
The Securities and Exchange Commission (SEC) requires certain public<\/em> companies to publish quarterly financial statements to give investors insight into midyear performance. Though interim reporting generally isn\u2019t required for private<\/em> companies, stakeholders in smaller entities can benefit even more than those of public companies from this type of information. But it\u2019s also important to understand the potential shortcomings.<\/p>\n Upsides<\/strong><\/p>\n Interim financial statements cover periods of less than a year. They show how a company is doing each month or quarter.<\/p>\n If you think of annual financial statements as report cards for a business, interim reports would be like progress reports that may forewarn of troubles ahead \u2014 or reassure you that everything is going well. A lender or investor might request interim financial statements if a company:<\/p>\n These reports may provide peace of mind. Or they might signal impending financial turmoil due to, say, the loss of a major customer, significant uncollectible accounts receivable or pilfered inventory.<\/p>\n Early detection of such problems is critical for smaller businesses. While large public companies can often recover from a bad quarter or year, waiting until year end to discover these issues can be disastrous to a smaller business.<\/p>\n Downsides<\/strong><\/p>\n Interim reports also have certain drawbacks and limitations. Unlike annual financial statements, interim financial statements are usually unaudited and condensed. So, when reviewing interim reports, revisiting last year\u2019s complete annual financial statements may be helpful. Also check that accounting practices are consistent between the interim and year-end financial statements.<\/p>\n Specifically, interim numbers may omit estimates for bad-debt write-offs, accrued expenses, prepaid items, management bonuses or income taxes. And sometimes tedious bookkeeping procedures, such as physical inventory counts, updating depreciation schedules and composing detailed footnote disclosures, aren\u2019t completed until year end. Instead, interim account balances often reflect last year\u2019s amounts or may be based on historic gross margins.<\/p>\n For seasonal businesses, there are operating peaks and troughs. So you can\u2019t multiply quarterly profits by four to reliably predict year end performance. Instead, you may need to benchmark current year-to-date numbers against last year\u2019s monthly (or quarterly) results.<\/p>\n For more information<\/strong><\/p>\n If interim statements reveal irregularities, you should consider digging deeper to find out what\u2019s happening. Our accounting and auditing pros can help you address unresolved issues and determine an appropriate course of action.<\/p>\n \u00a9 2019<\/em><\/p>\n <\/body> The Securities and Exchange Commission (SEC) requires certain public companies to publish quarterly financial statements to give investors insight into midyear performance. Though interim reporting generally isn\u2019t required for private companies, stakeholders in smaller entities can benefit even more than those of public companies from this type of information. But it\u2019s also important to understand […]<\/p>\n","protected":false},"author":3,"featured_media":13868,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-13869","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-uncategorized"],"_links":{"self":[{"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/posts\/13869","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/comments?post=13869"}],"version-history":[{"count":0,"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/posts\/13869\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/media?parent=13869"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/categories?post=13869"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/tags?post=13869"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}\n
\n<\/html><\/p>\n","protected":false},"excerpt":{"rendered":"