Interim Reports: What You Need to Know

I would agree with the city manager in citing that there is no need to take time to prepare interim reports if they do not release them to the public. Interim reports are financial period reports provided between the actual annual financial statements to assess the performance of the organization as well as providing current information. The main objective of preparing interim reports is to provide creditors, investors, and other related users with financial information such that they can make concrete investment decisions (Morton 1971). In an ideal situation, the interim reports affect both the internal and external environments of the organization. 

For the investors to make investment decisions, they scrutinize the information presented in annual reports at the end of every accounting period. Therefore, the investors are inclined to depend on the most current data released by the organization to make sound investment decisions. Interim reporting to the public helps in fixing income generation issues at half-yearly or quarterly basis. Additionally, the interim reports provide timely financial information useful for the analysts to decipher changes required in price determination. Releasing interim reports to the public may help to interpret the results of the financial position of the organization more accurately. 

Finally, interim reporting assists the stakeholders and external users in creating a benchmark of the organization’s progress over some time. It is suggested that an organization’s financial reporting must continuously evaluate and report the organization’s development by providing financial information in shorter periods than the stipulated annual basis. However, in situations that dictate non-disclosure of the organization’s financial reports due to income tax, control of earnings per share, and seasonal expenses, the organization can take little time to make sheer interim reports. At times it becomes critical to release interim reports because the annual financial reporting does not align with interim reporting. 

Reference 

Morton Backer. (1971). “Financial Reporting and Security Investment Decisions”. Financial Analysts Journal. pp. 67-72+79