13.4 Interim Reporting
ASC 270-10
Accounting Principles and Practices
45-1 Interim financial information is essential to provide investors and others with timely information as to the
progress of the entity. The usefulness of such information rests on the relationship that it has to the annual
results of operations. Accordingly, each interim period should be viewed primarily as an integral part of an
annual period.
Disclosure of Summarized Interim Financial Data by Publicly Traded Companies
50-1 Many publicly traded companies report summarized financial information at periodic interim dates in
considerably less detail than that provided in annual financial statements. While this information provides
more timely information than would result if complete financial statements were issued at the end of each
interim period, the timeliness of presentation may be partially offset by a reduction in detail in the information
provided. As a result, certain guides as to minimum disclosure are desirable. (It should be recognized that
the minimum disclosures of summarized interim financial data required of publicly traded companies do
not constitute a fair presentation of financial position and results of operations in conformity with generally
accepted accounting principles [GAAP].) If publicly traded companies report summarized financial information
at interim dates (including reports on fourth quarters), the following data should be reported, as a minimum: . . .
g. Changes in accounting principles or changes in accounting estimates (see paragraphs 270-10-45-12
through 45-16)
h. Significant changes in financial position (see paragraph 270-10-50-4) . . . .
Pending Content (Transition Guidance: ASC
105-10-65-7)
50-1 Many publicly traded companies
report summarized financial information at
periodic interim dates in considerably less detail
than that provided in annual financial statements.
While this information provides more timely
information than would result if complete
financial statements were issued at the end of
each interim period, the timeliness of
presentation may be partially offset by a
reduction in detail in the information provided.
As a result, certain guides as to minimum
disclosure are desirable. (It should be recognized
that the minimum disclosures of summarized interim
financial data required of publicly traded
companies do not constitute a fair presentation of
financial position and results of operations in
conformity with generally accepted accounting
principles [GAAP].) If publicly traded companies
report summarized financial information at interim
dates (including reports on fourth quarters), the
following data should be reported, as a minimum: .
. .
g. Changes in accounting principles, changes
in accounting estimates, or changes in the
reporting entity (see paragraphs 270-10-45-12
through 45-16)
h. Significant changes in financial position
(see paragraph 270-10-50-4) . . . .
50-2 If interim financial data and disclosures are not separately reported for the fourth quarter, users of the
interim financial information often make inferences about that quarter by subtracting data based on the third
quarter interim report from the annual results. In the absence of a separate fourth quarter report or disclosure
of the results (as outlined in the preceding paragraph) for that quarter in the annual report, disposals of
components of an entity and unusual or infrequently occurring items recognized in the fourth quarter, as well
as the aggregate effect of year-end adjustments that are material to the results of that quarter (see paragraphs
270-10-05-2 and 270-10-45-10) shall be disclosed in the annual report in a note to the annual financial
statements. If a publicly traded company that regularly reports interim information makes an accounting
change during the fourth quarter of its fiscal year and does not report the data specified by the preceding
paragraph in a separate fourth quarter report or in its annual report, the disclosures about the effect of the
accounting change on interim periods that are required by paragraphs 270-10-45-12 through 45-14 or by
paragraph 250-10-45-15, as appropriate, shall be made in a note to the annual financial statements for the
fiscal year in which the change is made.
50-3 Disclosure of the impact of the financial results for interim periods of the matters discussed in paragraphs
270-10-45-12 through 45-16 and 270-10-50-5 through 50-6 is desirable for as many subsequent periods as
necessary to keep the reader fully informed. There is a presumption that users of summarized interim financial
data will have read the latest published annual report, including the financial disclosures required by generally
accepted accounting principles (GAAP) and management’s commentary concerning the annual financial
results, and that the summarized interim data will be viewed in that context. In this connection, management
is encouraged to provide commentary relating to the effects of significant events upon the interim financial
results.
50-4 Publicly traded companies are encouraged to publish balance sheet and cash flow data at interim dates
since these data often assist users of the interim financial information in their understanding and interpretation
of the income data reported. If condensed interim balance sheet information or cash flow data are not
presented at interim reporting dates, significant changes since the last reporting period with respect to liquid
assets, net working capital, long-term liabilities, or stockholders’ equity shall be disclosed.
ASC 718-10-50-1 states that the disclosure requirements for annual periods (see Sections 13.1 and
13.2) are not required for interim periods. In addition, ASC 718 does not specify the requirements for share-based compensation disclosures in interim financial statements. However, paragraph B239 of the Basis for Conclusions of FASB Statement 123(R) refers to the requirements for disclosing “information about changes in accounting principles or estimates and significant changes in financial position,” which were codified in ASC 270-10-50-1.
Paragraph B239 of Statement 123(R) also notes that when “share-based
compensation cost is significant [registrants] may
wish to provide additional information, including
the total amount of that cost, on a quarterly
basis.” This may apply to registrants that
recognize a significant amount of compensation
cost throughout the year and grant a substantial
portion of their share-based payment awards at a
single time each year (in which case, it may be
relevant to disclose information related to those
grants in the period in which they occur).
In addition, SEC Regulation S-X, Rule 10-01(a)(5), requires registrants to
disclose in their quarterly financial statements information that is “sufficient so
as to make the interim information presented not misleading.” When assessing the
volume and type of information to be disclosed in quarterly financial statements,
registrants should consider factors such as the amount and timing of grants of
share-based payment awards, material modifications to existing share-based payment
awards, material share repurchases, material changes in assumptions used in the
valuation of awards, and material changes to the type of awards issued.