Â Â Post responses to two of your classmates. 2-3 sentencesÂ
Interim reporting is reporting that occurs in shorter periods of time than the the accounting period of one year, these time frames can vary are some examples are reporting quarterly and half-yearly reporting. These reports mirror the same accounting polices and principles that the annual reports are done on. This is typically done to give an insight to the operating performance of the company to help protect the interest of stakeholders. Interim reporting is good for making projections, estimates on annual earnings, identifying turning points, and evaluating management performance.
Benefits of interim reporting include; easier detection in fraud on financial statements because it can be detected earlier on, offer a periodic insight for shareholders, establishes a better connection with investors, and interim dividends can be declared and provided to shareholders.
Disadvantages to interim reporting include; the reporting period is shorter increasing the chance of errors, expenses can be seen in one period of reporting and the benefits can be seen in the next period which can make the financial statements look misleading, interim inventory calculations are time-consuming, error-prone, and repetitive leading to adjustments that are unnecessary, and they are focused on short term results and can paint a misleading image for investors and the company.
An example of a company that uses interim reporting is The Walt Disney Company. They have a page called investor relations news, listed in the news is the Walt Disney Company Reports Second Quarter and Six Months Earnings for Fiscal 2022. This report started by sharing the positives then addresses concerns. This effects stakeholder because when reading this is they see the negative and do not have an explanation of why the stakeholders could become worried about their investment. For example Walt Disney explains the decrease in their international channels revenues for quarter 2 and shares why it occurred d and what was offset at that time.
Interim reporting: Advantages and disadvantages. EDUCBA. (2022, June 14). Retrieved
Â Â Â September 12, 2022, from https://www.educba.com/interim-reporting/
The Walt Disney Company reports second quarter and six months earnings for fiscal 2022. The
Â Â Â Walt Disney Company. (2022, May 11). Retrieved September 12, 2022, from
Â Â Â https://thewaltdisneycompany.com/the-walt-disney-company-reports-second-quarter-Â
Â Â Â and-six-months-earnings-for-fiscal-2022/
Many companies provide summary financial statements and notes in their interim reports to protect the interest of different stakeholders. The interim reports â€œprovide information to investors, creditors, and even the company so as to make sound decisions regarding investments.â€ It provides insights of operating performance and financial position (for a shorter period of time). Some of the objectives of interim reports are; make projections, estimate annual earnings, identify turning points, evaluate management performance, and supplement annual reports. Some advantages are; offering a better periodic glance of the company to the shareholders, keeping the firm in the good books of investors by providing periodic information and establishing a better connection with the investors by helping them in the allocation of investment, being able to easily detect and prevent error and fraud in financial statements at an early stage, a comprehensive internal control procedure is implemented with the help of interim reporting that helps in making accounting policies robust, the interim dividend can be declared and provided to the shareholders of the company on reporting periodic financial statements which in turn helps shareholders and company to hold on to their investment, and interim reports helps big conglomerates in tracking their short-term initiates that are in line with a long-term strategy. Some disadvantages are; due to the reporting period being shorter in preparing interim reports, chances of errors increases leading to concerns of inaccurate information, certain operating expenses are incurred in one period and its benefits are earned in subsequent periods such as advertising, maintenance cost, and repairs, etc which may sometimes distort the financial status of the firm, inventory calculations in an interim period are time-consuming, repetitive, and error-prone, determination of the quantity and valuation of the inventory leads to unnecessary adjustments in the financial statements, and interim reports emphasize more on short term results that distorts the picture for both investors and companies as they might contain over/under booked expenses and income.Â A company that currently does this is Coca-Cola, they do them quarterly. It impacts their stakeholders in a good way, it keeps them more in the loop/up to date and allows them to have good communication with corporate management.
Ankit Jain, â€œInterim Reporting,â€ EDUCBA