Interim reporting
The interim reporting (Engl. Interim Financial Reporting ) the task information has on business performance within a financial year between two financial statements of a company to provide the interested public.
General
The annual report of a company is published once a year. However, interested parties are keen to be informed about current business developments throughout the year. Reporting during the year comes from the USA, where "interim financial reporting" has been mandatory for American public companies since 1970 . The first part of the quarterly report includes an abridged version of the balance sheet , income statement and notes based on group data , as well as a cash flow statement . This is followed by a “Management Discussion & Analysis” comparable to the German management report . A second part gives "non-financial" information.
Interim reporting is part of accounting and is part of capital market law . In contrast to ad hoc publicity and the obligation to publish proprietary transactions by executives that relate to individual, non-periodic events, interim reports are made periodically and refer to a partial period of the financial year. It thus fills the information gap between the annual publications of the annual financial statements and management reports.
Companies are required to submit interim reports by law, stock exchange regulations or contracts. Mostly, capital market oriented companies , i. H. Companies that use an organized market for securities issued by them or have applied for such securities to be admitted to trading on an organized market are obliged to submit interim reports. The mandatory standards also stipulate the form, content and frequency of interim reporting. Instruments of interim reporting are the interim financial statements, the interim management report and reports comparable to the management report. These are drawn up at the end of a quarter or half of the financial year and essentially provide the addressees with information for assessing the company's asset, financial and earnings position. Another instrument is the interim report from the management. As part of the interim reporting , the company's legal representatives are required to submit an accounting oath , a declaration about the internal control system or similar declarations in certain cases .
The European Union's Transparency Directive (TranspRL) intends, among other goals, to achieve a minimum level of harmonization in the area of interim reporting in the European Union.
Obligation to submit interim reports and applicable accounting regulations
Germany
In Germany, interim reporting has been required by law since 1986 and has been regulated by the Securities Trading Act (WpHG) since 2007 . Section 115 (1) of the WpHG obliges companies that have issued shares or debt securities as domestic issuers to submit interim reports. Domestic issuers within the meaning of Section 2 (14) of the WpHG are essentially companies domiciled in Germany whose securities are admitted to trading on an organized market in Germany. According to § 118 WpHG u. a. excluding certain issuers of debt instruments and certain credit institutions . The companies affected by the obligation to submit interim reports must generally publish a half-yearly financial report, which includes interim financial statements (half-yearly financial statements), a management report and a balance sheet oath halfway through the financial year. Companies that are listed in the Prime Standard of the Frankfurt Stock Exchange must also publish quarterly reports for the first and third quarters due to the Frankfurt Stock Exchange Rules.
Pursuant to Section 115 (3) of the WpHG, interim reporting must be carried out in accordance with the applicable accounting regulations. According to this, most of the companies concerned are obliged to issue interim financial statements in accordance with the International Financial Reporting Standards (IFRS). If the other companies cannot or cannot opt for financial statements in accordance with IFRS, they must prepare their interim financial statements in accordance with commercial law. The DRS 16 is a directive on interim reporting in Germany. If companies are required to prepare consolidated financial statements , the interim financial statements must also be published as consolidated financial statements.
In Germany, an audit or review of the interim reports by an auditor is not mandatory. If this is waived, this must be stated in the half-yearly financial report in accordance with Section 115 (5) WpHG. However, the interim financial statements and management reports are checked by the German accounting auditor in accordance with Section 342b (2) HGB if there are concrete indications of a violation of accounting regulations, or if the Federal Financial Supervisory Authority (BaFin) orders this ( Section 107 WpHG). If there is no public interest, however, the examination is not carried out.
Section 115 (1) of the WpHG obliges the companies concerned to make their half-yearly financial statements available to the public no later than three months after the end of the reporting period. Furthermore, before the time at which the half-yearly financial report is first made available to the public, the companies must publish a notice stating from what time and at what internet address the report will be publicly available in addition to its availability in the business register . Its minimum content is regulated in Sections 53–62 BörsZulVO. It must then contain figures on the issuer's activities and results in the reporting period, as well as explanations. These rough stock exchange law standards were specified in DRS 6. Based on the announcement made by the Federal Ministry of Justice on February 13, 2001, it is part of the principles of proper accounting . The aim of this interim reporting was to bring the German interim reporting in line with the US level. In the future it is to be replaced by DRS 21, which is currently being discussed as E-DRS 21.
The interim reports include the semi- annual report , quarterly report , monthly report ( Deutsche Bundesbank ) or other periodic reports during the year. They must be prepared according to the same accounting principles as the annual financial statements.
International
In Austria, issuers of shares or debt instruments have to prepare a half-yearly financial report in accordance with Section 87 BörseG. If an issuer is obliged to prepare consolidated financial statements in accordance with IFRS at the end of the financial year, it must also prepare interim financial statements in accordance with IFRS. The other companies have to publish abridged financial statements, which contain at least a condensed balance sheet, a condensed profit and loss account and an explanatory annex and which are prepared in accordance with Austrian accounting law. It is the responsibility of the financial market supervisory authority to regulate the details for the preparation of the abbreviated financial statements. The Austrian regulations for auditing the interim report by auditors are analogous to the German regulations.
Companies listed on a US stock exchange have been required to file a Form 10-Q with the United States Securities and Exchange Commission (SEC) every quarter since 1970 . This contains interim financial statements , an assessment of the financial position and results of operations ( Management's Discussion and Analysis of Financial Statement Condition and Results of Operations ), an assessment of the market risks and an explanation of the internal control system . In the USA, the interim financial statements must generally be prepared in accordance with the United States Generally Accepted Accounting Principles (US-GAAP). In certain cases, financial statements can also be prepared in accordance with IFRS.
IAS 34, which has existed since June 1998, does not establish any obligation for interim reporting. According to this, IAS 34 must be applied when a company prepares an interim report. The standard allows less information to be reported than the information contained in annual financial statements, and this information must be based on that in the annual financial statements and must be updated. IAS 34 specifies the recognition, valuation and disclosure requirements for interim reports.
Interim financial statements
In principle, the interim financial statements correspond to the annual financial statements or consolidated financial statements that are prepared at the end of the financial year. Unlike this, it relates to a partial period of the financial year and in many cases has a smaller scope. As it relates to a partial period, special rules must be observed when preparing it, which, depending on the accounting system, differ more or less from the rules that must be observed when preparing financial statements at the end of the year. Interim financial statements are mainly prepared at the end of a quarter of a financial year (quarterly financial statements) or for the half-year period (half-yearly financial statements).
In accordance with IAS 34 .8, interim financial statements in accordance with IFRS must contain a balance sheet , a statement of comprehensive income , a cash flow statement , a statement of changes in equity and an appendix . However, these can be drawn up in a more abbreviated form than in the annual financial statements. In the case of a shortened financial statement, certain details are left out compared to the full financial statement format. However, it must include the headings and subtotals used in the previous financial statements. The notes may contain less information than the financial statements at the end of the financial year.
The balance sheet must contain the values of the assets and liabilities on the key date of the interim financial statements and, for comparison, those of the last annual financial statements. The statement of comprehensive income and the cash flow statement must show the expenses and income or the income and expenses from the beginning of the financial year to the key date of the interim financial statements. The values for the corresponding period of the previous year are to be given as comparison values. For companies whose business activities are highly seasonal, IAS 34.21 recommends disclosing additional information on expenses and income for a period of twelve months that ends on the key date of the interim financial statements.
In preparing the interim financial statements, in accordance with IAS 34.28, the same accounting and valuation methods must be applied as in preparing the financial statements at the end of the financial year. Conversely, however, the number of interim financial statements should not influence the valuation decisions in the following annual financial statements. However, more extensive estimates are necessary for the valuation decisions in the interim financial statements. For example, the estimated tax rate for the year as a whole is to be used as a basis for the assessment of income taxes . Revenues must be shown in the period in which they were realized. A smoothing of sales over the course of the year is not permitted under IFRS. Companies whose business is strongly influenced by seasonal influences have to explain this in the appendix.
The preparation of the interim financial statements under German GAAP is done in principle analogous to the preparation of the interim financial statements under IFRS, but on the basis of the German Commercial Code (HGB) and possibly 16 by the DRS The interim report can be here but in a condensed balance sheet, a condensed profit and loss statement and a condensed notes. In comparison to IAS 34, however, DRS 16 requires the balancing party to make a reference to the annual period when preparing the interim financial statements.
The interim financial statements according to US-GAAP, in comparison to the financial statements according to IFRS, also emphasize their forecast function for the entire financial year. According to FASB ASC 270, numerous expenses that cannot be directly allocated to sales in the interim period are to be measured in the amount of their time share in the estimated total annual expenses. There is no need to devalue inventories due to a low market price if it is to be expected that the devaluation will have to be attributed again by the end of the financial year due to rising market prices.
Interim management report
Regardless of whether the financial statements are prepared in accordance with IFRS or German accounting law, the interim financial statements in Germany and Austria must be supplemented by an interim management report in accordance with Section 115 WpHG Paragraph 2 and Section 87 Paragraph 1 BörseG. In Germany, significant opportunities and risks are to be presented for the six months of the financial year following the reporting period. In Austria, instead of the opportunities and risks, only the risks and uncertainties need to be presented. In both countries, share issuers must also disclose significant transactions with related parties. In principle, the management report is to be drawn up according to the general principles. According to DRS 16, however, the focus is on updating the management report of the last annual financial statements and the forecast for the outstanding financial year.
Interim reporting and internal reporting
In many companies, interim reporting is linked to internal reporting . One element of the reporting system is then the voluntary preparation of interim financial statements at the end of the month (monthly financial statements). These are not published, but serve as information for company management. For many companies these financial statements are essentially prepared according to the accounting policies for the published interim financial statements, with the companies often exercising their freedom to be less strict on some points.
Compared to the published financial statements, the internal reporting system provides the company management with significantly more detailed and extensive information and contains additional evaluations and reports. It is usually linked to corporate planning.
See also
literature
- Adolf G. Coenenberg , u. a .: Annual accounts and analysis of the annual accounts: Business, commercial, tax and international principles - HGB, IAS / IFRS, US-GAAP, DRS . 22nd edition. Schäffer-Poeschel Verlag , Stuttgart 2012, ISBN 978-3-7910-3182-8 .
- Jörg Tesch, Stefan Müller: IFRS: Interim reporting: content, recording and valuation principles , Erich Schmidt Verlag , Berlin 2010, ISBN 978-3503112371
Web links
- European Union website on the Transparency Directive
- Presentation of IAS 34 on the IAS PLUS page from Deloitte
