Accountants' Handbook Volume One: Financial Accounting and General Topics, Eleventh Edition

Chapter 15. INTERIM FINANCIAL STATEMENTS

Anthony J. Mottola, CPA

Mottola & Associates, Inc.

IMPORTANCE OF INTERIM FINANCIAL INFORMATION: TIMELY DISCLOSURE

As the age of information gathers greater momentum in a new millennium, so the appetite for financial information has increased, as have the sensitivity and reaction of the securities markets for that information. In this climate, interim financial information plays an increasingly important role. Financial statements continue to evolve from a historical archive, through being a basis for making decisions about the future, to confirming the results of previously announced expectations. Recent Securities and Exchange Commission (SEC) proposals would have the chief executive officer (CEO) and chief financial officer (CFO) sign the interim disclosures of public companies to stress their involvement in the process and the accuracy of the data communicated to the public, as well as shorten the time frames for filing the disclosures. And in the post-Enron/post-Andersen environment, the involvement of the independent auditor is likely to increase. Today's markets respond with almost equal vigor to the press release of quarterly earnings, followed by the issuance of related interim financial statements as they do to year-end audited financial information.

Publication of financial information at interim dates enables users to assess an enterprise's current performance, compare and contrast that performance with previous expectations announced ...