Given the magnitude of the economic changes, companies may need to provide in their interim financial statements sufficient disclosure to explain the significant events and transactions that have occurred since the annual financial reporting date. The accountant performing the review of interim financial information ordinarily will also be engaged to perform an audit of the annual financial statements of the entity. Furthermore, an accountant performing an initial audit of an entity’s annual financial statements that includes selected quarterly data who has not previously reviewed one or more of the quarters in that year should perform a review of those quarters, in accordance with this section, in order to report on the audited financial statements containing such interim financial information. IAS 34 does not mandate when interim financial statement must be prepared, it applies when an entity is required or elects to prepare interim financial statements according IFRS.Contents of a interim financial report When you want to create interim financial statements, you simply adjust the date range for the reports so that the timeframe reflects the quarter, month or half-year period that you’d like to review.

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Interim financial statements – Assessing the impact

Likewise, the auditor’s responsibility as it relates to management’s quarterly certifications on internal control over financial reporting is different from the auditor’s responsibility as it relates to management’s annual assessment of internal control over financial reporting. A review may bring to the accountant’s attention significant matters affecting the interim financial information, but it does not provide assurance that the accountant will become aware of all significant matters that would be identified in an audit. A review consists principally of performing analytical procedures and making inquiries of persons responsible for financial and accounting matters, and does not contemplate (a) tests of accounting records through inspection, observation, or confirmation; (b) tests of controls to evaluate their effectiveness; (c) obtaining corroborating evidence in response to inquiries; or (d) performing certain other procedures ordinarily performed in an audit. Consequently, a review of the entity’s fourth quarter interim financial information must be conducted even though a quarterly report for the fourth quarter is not filed on Form 10-Q.

KPMG International Limited is a private English company limited by guarantee and does not provide services to clients. KPMG refers to the global organization or to one or more of the member firms of KPMG International Limited (“KPMG International”), each of which is a separate legal entity. © 2025 KPMG IFRG Limited, a UK company, limited by guarantee.

If the accountant has not audited the most recent annual financial statements, the accountant should perform procedures to obtain such knowledge. 8 In doing so, the accountant should specifically consider the nature of any (a) corrected material misstatements; (b) matters identified in any summary of uncorrected misstatements; (c) identified risks of material misstatement due to fraud, including the risk of management override of controls; and (d) significant financial accounting and reporting matters that may be of continuing significance, such as weaknesses in internal control. The objective of a review of interim financial information differs significantly from that of an audit conducted in accordance with the standards of the PCAOB. The interim financial information may be presented in the form of financial statements or in a summarized form that purports to conform with generally accepted accounting principles5 and applicable regulatory requirements, for example, Article 10 of Regulation S-X for Form 10-Q. Paragraphs .37 through .46 of this section provide reporting guidance for a review of interim financial information. If your company is privately held, you probably prepare financial statements just once a year — unlike public companies, which are required by the Securities and Exchange Commission (SEC) to file financial reports quarterly.

What is Workiva’s annual and interim reporting solution?

While interim reporting may provide some insight into a company’s ongoing performance, it’s important to understand the drawbacks and limitations of these reports. It is not necessary to repeat disclosures that are in the latest annual financial report, or to provide immaterial updates. The purpose of the notes is to give the reader of the financial statements more context to understand the numbers and have a better feel for the company’s situation. “Interim” financial statements  are financial statements for periods that are not year-end. Your go-to resource for timely and relevant accounting, auditing, reporting and business insights.

Fn 7 Section 325, Communication of Internal Control Related Matters Noted in an Audit, provides guidance with respect to communicating reportable conditions in internal control. This information indicates that if these lease obligations were capitalized at September 30, 19X1, property would be increased by $______, long-term debt by $______, and net income and earnings per share would be increased (decreased) by $________, $_________, $________, and $________, respectively, for the ________ and ________ periods then ended. The accountant may also wish to submit recommendations for other matters of significance that come to the accountant’s attention. The accountant should assure himself or herself that the audit committee is adequately informed about— Consequently, it ordinarily is not necessary to send an audit inquiry letter to a client’s lawyer concerning litigation, claims, and assessments.

• The benefits of uniting financial reporting, sustainability, and audit and risk management all in one platform add up.
• These financial statements are the responsibility of the Company’s management.
• Certain auditing procedures may be performed concurrently with the review of interim financial information.
• Depending on the industry and the economic environment in which a company operates, external events could affect the recognition and measurement of companies’ assets, liabilities, income and expenses.

The Accountant’s Knowledge of the Entity’s Business and Its Internal Control

The procedures for a review of interim financial information may be modified, as appropriate, to take into consideration the results of auditing procedures applied in performing an audit conducted in accordance with generally accepted auditing standards. Since many revenues, costs, and expenses are estimated to a greater extent in interim financial information than for annual financial reporting purposes, the accountant may wish to refer to the guidance in section 342, Auditing Accounting Estimates, paragraphs .05 and .06. If internal control appears to contain deficiencies so significant that it is impracticable for the accountant to effectively apply his or her knowledge of accounting and financial reporting practices to the interim financial information, the accountant should consider whether this precludes completion of such a review (see paragraph .28).

Extent of Procedures

Small business owners often think that interim financial statements don’t apply to their business due to its size, but all small businesses benefit from creating and reviewing these documents on a regular basis. The auditor ordinarily need not modify the report on the audited financial statements to refer to his or her review or to refer to the interim financial information. The accountant may perform the review procedures either at the time of an audit of the annual financial statements or quarterly before the issuance of the data. Based on our review, with the exception of the matter(s) described in the preceding paragraph(s), we are not aware of any material modifications that should be made to the accompanying financial statements (information) for them (it) to be in conformity with generally accepted accounting principles. The accountant’s report on a review of interim financial information should be modified for departures from generally accepted accounting principles, fn 12 which include inadequate disclosure and any changes in accounting principle that are not in conformity with generally accepted accounting principles. Based on our review and the report of other accountants, we are not aware of any material modifications that should be made to the accompanying financial statements (information) for them (it) to be in conformity with generally accepted accounting principles.

Actions for management

Performance of the procedures before issuance permits early consideration of significant accounting matters affecting the interim financial information and early modification of accounting procedures that the accountant believes might be improved. The interim financial information ordinarily would be presented as supplementary information outside the audited financial statements. An entity may publish various documents that contain information in addition to interim financial information and the independent accountant’s review report on that interim financial information. Fn 13 If information that the accountant believes is necessary for adequate disclosure in conformity with generally accepted accounting principles is not included in the interim financial information, the accountant should modify the report and, if practicable, include the necessary information. If the accountant becomes aware that the interim financial information is materially affected by a departure from generally accepted accounting principles, he or she should modify the report.

25Other reporting issues related to the dating of reports or subsequent events are similar to those encountered in an audit of financial statements. The interim financial information shall include disclosures either on the face of the financial statements or in accompanying footnotes sufficient so as to make the interim information presented not misleading. We confirm that we are responsible for the fair presentation of the consolidated interim financial information (statements) in conformity with generally accepted accounting principles. Management confirms the representations made in the representation letter for the audit of the financial statements of the prior year end as they apply to the interim financial information, and makes additional representations that may be needed for the interim financial information.] However, the accountant may add an explanatory paragraph to the review report, including an appropriate title (immediately following the paragraph describing the results of the review), emphasizing the matter disclosed in the interim financial information. The accountant should communicate significant deficiencies or material weaknesses of which the accountant has become aware to the audit committee or those responsible for oversight of the company’s financial reporting in a timely manner and prior to the registrant filing its periodic report with the SEC.

Presentation of the Information and Application of Review Procedures

The first letter is designed to be used in conjunction with the representation letter provided by management in connection with the audit of the financial statements of the prior year. These procedures may consist of comparing interim financial information with prior period information, actual interim results with anticipated results (such as budgets or forecasts), and recorded amounts or ratios with expectations developed by the accountant. However, the documentation should include any findings or issues that in the accountant’s judgment are significant, for example, the results of review procedures that indicate that the interim financial information could be materially misstated, including actions taken to address such findings, and the basis for the final conclusions reached. This (These) interim financial information (statements) is (are) the responsibility of the Company’s management.

• 16For additional guidance regarding written management representations, see paragraphs .08 through .12 of AS 2805, Management Representations.
• In addition, disclosure is required when management concludes that there are no material uncertainties but reaching that conclusion involved significant judgement (a ‘close call’).
• We conducted our review in accordance with the standards of the PCAOB.
• PwC refers to the PwC network and/or one or more of its member firms, each of which is a separate legal entity.
• A review may bring to the accountant’s attention significant matters affecting the interim financial information, but it does not provide assurance that the accountant will become aware of all significant matters that would be identified in an audit.

We address below some of the key areas that companies may need to consider when preparing their interim financial statements. Recognition, measurement and disclosure in interim financial statements This article focuses on the impact of external events on interim financial statements. Our auditor’s report on those financial statements includes an explanatory paragraph referring to the matters in Note 4 of those financial statements and indicating that these matters raised substantial doubt about the Company’s ability to continue as a going concern. The following is an example of a review report on a condensed balance sheet as of March 31, 20X1, the related condensed statements of income and cash flows for the three-month periods ended March 31, 20X1 and 20X0, and a condensed balance sheet derived from audited financial statements as of December 31, 20X0, that were included in Form 10-Q.27 Further, interim review procedures do not provide assurance that the accountant will become aware of all matters that might affect the accountant’s judgments about the qualitative aspects of the entity’s accounting policies and practices that would be identified as a result of an audit.

Interim Financial Information Accompanying Audited Financial Statements

Extrapolations based on the balance at the previous annual reporting date may not be appropriate. The carrying amount of assets that are measured at fair value – e.g. investment property – is determined at the interim reporting date. If a company changes its usage or retention strategy for any of its PPE, then management needs to review whether the useful life and residual value of these assets, and the depreciation method applied to them, remain appropriate. Companies are required to review the residual value and the useful life of an asset at least at each financial year end. An impairment loss recognised for goodwill is not reversed in subsequent periods, even if it was recognised in an interim period of the same financial year. Generally, items are required to be recognised and measured as if the interim period were a discrete stand-alone period.

Interim Financial Reporting

Also, in a review the accountant ordinarily is not required to corroborate management’s responses with other evidence. For example, if the accountant becomes aware of a significant change in the entity’s control activities at a particular location, the accountant may consider (a) making additional inquiries, such as whether management monitored the changes and considered whether they were operating as intended, (b) employing analytical procedures with a more precise expectation, or (c) both. If the successor accountant is reporting on the review, the successor accountant should not make reference to the report or work of the predecessor accountant as the basis, in part, for the successor accountant’s own report. Agreed-upon procedures engagements may give your stakeholders greater confidence in your interim results.

Footnote and other disclosures should be provided as needed for fair presentation and to ensure that the financial statements are not misleading. 8The accountant also may consider reviewing the predecessor accountant’s documentation related to reviews of interim period(s) in the prior interim financial statements year. If the client will not agree to include the accountant’s review report, the accountant should perform the following procedures. The information necessary for adequate disclosure is influenced by the form and context in which the interim financial information is presented. The modification should describe the nature of the departure and, if practicable, should state the effects on the interim financial information.