How Often Are Financial Statements Prepared?

Save

Bank customers generally like to receive their account statements at the end of every month or quarter, but that doesn’t prevent them from checking account balances when the need arises -- whether it be hourly, daily or weekly. The same frequency applies to the way companies prepare and report financial statements -- they may stick to a quarterly or monthly schedule, but still publish interim accounting reports if necessary.

Financial Statements

A company publishes financial statements to show the public why it is ahead of the pack, experiencing fits and starts, or lying low, competitively speaking. By sifting through the firm's accounting reports, investors can have better ideas about how the business attracts new customers, innovates and invents new products and services, and designs more efficient operating processes. These data summaries also tell financiers various areas where the firm is losing money and whether it is effectively slashing costs to maintain profitability. Financial statements run the gamut from statements of financial position and reports on cash flows to shareholders' equity reports and statements of profit and loss.

Frequency

By law, companies prepare financial statements at the end of every quarter and fiscal year. That's the frequency that regulatory agencies, such as the U.S. Securities and Exchange Commission and financial market watchdogs, require from publicly listed companies. Most investors pay attention to quarterly filings, but the annual publication of accounting statements draws more interest. This is because annual filings are more comprehensive and touch on various aspects of a firm's activities, including nonfinancial data. Internally, a company may adopt a shorter or longer time frame to review its activities, and it's not uncommon for accountants to prepare interim reports covering periods as short as two weeks or one month.

Relevance

The publication of financial statements, and the implicit economic hierarchy that often ensues, are perhaps the most watched financial races in the global marketplace. Investors and financial-market players call the quarterly period during which companies announce their performance data "earnings season." Businesses that show mediocre results lose points in investors' hit parade of profitable institutions, whereas firms with higher-than-expected, positive results climb in the selection of sound financial bets.

Regulatory Compliance

Besides the SEC, other regulatory agencies dictate how often businesses must report performance data. For example, a public company that is listed on the New York Stock Exchange must abide by reporting-frequency rules the NYSE has put into place. Other accounting policy-setters and interested parties weigh in on the debate over higher-frequency reporting versus annual or quarterly reporting. These include consumer advocates, groups working toward greater financial transparency, the Financial Accounting Standards Boards, the American Institute of Certified Public Accountants and the Public Company Accounting Oversight Board.

Related Searches

References

Promoted By Zergnet

Comments

You May Also Like

Related Searches

Check It Out

Are You Really Getting A Deal From Discount Stores?

M
Is DIY in your DNA? Become part of our maker community.
Submit Your Work!