Interim financial statements

What it means

Interim financial statements are prepared as of a date inside the accounting period. The books are not closed: the company keeps posting in the same period.

The law requires them for certain events, such as transformations or entering liquidation, and a bank asks for them before a loan, an investor before entering.

What sets them apart from extraordinary financial statements is that the books stay open. Extraordinary statements are prepared in cases the law specifies and end the accounting period, so the books are closed and reopened. Interim statements only capture the position on a chosen date and the period carries on uninterrupted.

How it works in practice

Their quality depends on whether closing work is done during the year: accruals, estimates, depreciation and currency revaluation.

Companies that close monthly produce them in days. Those that pile up documents and tidy once a year need weeks, and the result is still not comparable with the year end.

Banks often want half-year figures under a loan. For a client with that obligation we do the half-year closing work in much the same scope as at year end, including an inventory count of the main stock and receivables, so the result is not just an estimate and can be compared with the annual figures.

What to watch out for

A bank compares interim figures with the last annual statements. Large unexplained differences signal either a problem in the business or that nothing was being booked properly during the year.

Profit in interim statements is no basis for paying out profit shares. Profit distribution is decided on the ordinary or extraordinary statements approved by the general meeting. Money paid to shareholders on half-year figures is an unlawful payment they have to return.