【自用】期中財務報告 Interim Financial Reproting

(in English)

Interim Financial Reporting

Interim financial reports provide info about a firm's operations for less than a full year. They are uaually issued on a quarterly basis and always include cumulative, year-to-date info, and comparative info for corresponding periods of prior year. Before 1973, there' s little uniformity existed in the content of interim financial reports issued to shareholders. Now the thing has changed. The increasing importance of interim reports to investors led to the issuance of APB Opinion No. 28, "Interim Financial Reporting," in May 1973.

The guideline for interim reporting are specificly applicable to public-traded companies that are required to prepare quarterly reports based on SEC and NYSE requirements.

Nature of Interim Reports

Interim fianacial reports provide more timely, but less complete, info than annual financial reports. It reflet a trade-off between timeliness and reliability. Because estimates must replace many of the extensive reviews of receivables, payables, inventory, and the related income efffects that support the measurements presented in annual financial reports. Therefore, interim financial statements are usually labeled unaudited.

Generally, interim-period results should be based on the accounting priciples and practices used in the latest annual financial statements. ex, interim reports may modify the procedures used in annual statements for product costs and other expenses as discussed below.

Product Costs

GROSS PROFIT METHOD

The G/P method of estimating inventory and COGS was discussed in intermediate accounting. This method is not acceptable for annual financial reports. However, a company could use G/P method when it doesn't use the perpetual inventory method and it's to costly to perform an inventory count and to price out the inventory.

LIFO INVENTORIES

Companies use LIFO method is to reduce taxable income, and therefore taxes paid, when the prices are rising. To avoid paying taxes previously avoided, companies tend to avoid LIFO layer liquidation that results in lower COGS, higher N/I, and a higher tax bill. LIFO inventory layers can be liquidated during an interim period but expected to be replaced by year end. COGS can include the replacement cost of the liquidated LIFO layer if the reduction is determined to be temporary.

INVENTORY MARKET DECLINES

Permanent inventory market declines are recognized in the interim period unless they are considered temporary.

STANDARD COST SYSTEM

Planned variances under a standard cost system that are expected to be absorbed by year end are usually deferred at the interim date.

Expenses Other Than Product Costs

ANNUAL EXPENSES IN INTERIM REPORTS

Annual expenses are allocated to the interim periods expected to be benefited. Major annual repair allwances are an example of this kind of allocation. Expenses arising in an interim period are not deferred unless they would be deferred at year end.

ADVERTISING COSTS

Advertising costs are expected to the interim period in which they were incurred

--unless the benefits clearly apply to subsequent interim periods

INCOME TAXES

Income taxes are divided into (1) those applicable to income from continuing operations before income taxes, excluding unusual or infrequently occurring items, and (2) those applicable to significant, unusual, or infrequently occurring items, discontinued items, and extraordinary items. Income tax expense for an interim period is based on an estimated effective annual tax rate that is applied to taxable income from continuing operations, excluding unusual and infrequently occurring items. Gains and losses on discontinued operations and extraordinary items are reported on a net-of-tax, as in annual reports.

Computation of Estimated Annual Effective Tax Rate

Guidelines for Preparing Interim Statement The APB summarized the financial info to be disclosed in interim reports in the APB Opinion No. 28 guidelines. At a minimum, publicly traded companies should report: 1. a Sales or gross revenues b Provision for income taxes c Extraordinary items net of income taxes d Cumulative-effect-type changes in accounting principles e Net income 2. Basic and diluted earnings per share 3. Seasonal revenue, costs, or expenses 4. Significant changes in estimates of income tax expense 5. Disposal of a segment of business, extraordinary items and unusual or infrequently occurring items 6. Contingent items 7. Changes in accounting principles and estimates 8. Significant changes in financial position SEGMENT DISCLOSURE IN INTERIM REPORTS The interim reports must include the following info about each reportable segment: (1) revenue from external customers, (2) intersegment revenues, (3) a measure of segment profit or loss, (4) total assets for which there has been a material change since the amount disclosed in the last annual report, (5) a description of any differences in the basis of segmentation or measurement of segment profit or loss since the last annual report, and (6) a reconciliation between segment and total profits, just as in the annual report. SEC Interim Financial Disclosures The SEC requires that quarterly reports be prepared for the company's stockholders and for filing with the SEC. These reports are to be prepared using GAAP and are filed on Form 10-Q within 45 days after the end of a quarter. 4th-quarter reports are not required, but SEC Rule 14a-3 requires inclusion of selected quarterly data in the annual report to stockholders. Quarterly reports are not audited, so the CPA's report states that a review, rather than an audit, has been performed. The info required in Form 10-Q beyond that required by APB Opinion No. 28 is available from the company to its shareholders upon request. 在閱讀過期中報導之後，我們想問兩個問題 一、在不考慮正確性而著重於時效性的同時，我們能否將季報表進化到月報表，甚至是週報表？ 二、高度著重於時效性的做法能否讓投資人正確的掌握一間公司的財務資訊？且能及時反應在市場可用資金流動上？