Form 10-Q is the quarterly report a public company files with the US Securities and Exchange Commission for each of the first three quarters of its fiscal year, carrying interim financial statements that may be unaudited. Two rules put issuers on that duty, each subject to its own exceptions. Every issuer with securities registered under section 12 of the Securities Exchange Act that is required to file annual reports under section 13 of that Act, and has filed or intends to file them on Form 10-K, must file one (eCFR, section 240.13a-13(a)), and so must every issuer with securities registered under the Securities Act that is required to file annual reports on Form 10-K under section 15(d) (eCFR, section 240.15d-13(a)). Both routes run within the period General Instruction A.1 to that form specifies. The statements inside it follow the general form and content prescribed by the rest of Regulation S-X, need only be provided for the registrant and its subsidiaries consolidated and its predecessors, and may be unaudited (eCFR, section 210.10-01(a)(1)).
Who Files a 10-Q, and Who Does Not
The obligation tracks registration and the annual report rather than size or profitability. Three classes of issuer sit outside the rule entirely: investment companies that report under section 270.30a-1, foreign private issuers that report under Rule 13a-16, and asset-backed issuers that report under Rule 13a-17 (eCFR, section 240.13a-13(b)). A further carve-out excuses mutual life insurance companies and certain exploration-stage mining companies from Part I of the form only (eCFR, section 240.13a-13(c)). The section 15(d) route carries the same exclusions, keyed to Rule 15d-16 and Rule 15d-17 in place of Rule 13a-16 and Rule 13a-17, and it repeats the same Part I carve-out (eCFR, section 240.15d-13).
What a 10-Q Contains
Part I is financial information, in four items. Item 1 is the financial statements, provided under Rule 10-01 of Regulation S-X, though a smaller reporting company as Rule 12b-2 defines it may provide the information required by Article 8-03 of Regulation S-X instead. Item 2 is management’s discussion and analysis of financial condition and results of operations, furnished under Item 303 of Regulation S-K, and Item 3 is quantitative and qualitative disclosures about market risk, under Item 305 (SEC, Form 10-Q).
Item 4 is controls and procedures. It calls for the conclusions of the registrant’s principal executive and principal financial officers on the effectiveness of the registrant’s disclosure controls and procedures as of the end of the period covered by the report (eCFR, section 229.307), an evaluation management must perform as of the end of each fiscal quarter (eCFR, section 240.13a-15(b)). Item 4 also picks up Item 308(c) of Regulation S-K, which asks for any change in internal control over financial reporting during the last fiscal quarter that has materially affected, or is reasonably likely to materially affect, that control (eCFR, section 229.308(c)). What Item 4 does not carry is management’s annual report on internal control over financial reporting or the auditor’s attestation on it, which Item 308(a) and Item 308(b) place in the annual report (eCFR, section 229.308).
Part II is other information, and it is drafted as an update rather than a fresh account. A legal proceeding need only be reported in the quarter in which it first became reportable and in later quarters where there have been material developments. Risk factors are limited to material changes from what the registrant already disclosed in its Form 10-K, and smaller reporting companies are not required to provide that update. Item 5 sweeps up anything that should have been disclosed on a Form 8-K during the period and was not (SEC, Form 10-Q).
The Interim Review Behind the Numbers
Unaudited does not mean untouched. Interim financial statements included in a quarterly report on Form 10-Q must be reviewed by an independent public accountant using applicable professional standards and procedures before the filing goes in, and where a filing states that they have been reviewed, the accountant’s report on the review must be filed with them (eCFR, section 210.10-01(d)).
That engagement is not a small audit, and the standard says so in terms. Its objective is to give the accountant a basis for communicating whether he or she is aware of any material modifications that should be made to the interim financial information for it to conform with generally accepted accounting principles, and it does not provide a basis for expressing an opinion on whether the statements are presented fairly in all material respects. A review consists principally of analytical procedures and inquiries of the people responsible for financial and accounting matters, and it does not contemplate tests of accounting records through inspection, observation or confirmation, tests of controls to evaluate their effectiveness, or corroborating evidence obtained in response to inquiries (PCAOB, AS 4105, paragraph .07).
The analytical work is prescribed in part rather than left open, and the rest is tailored to the engagement on the accountant’s knowledge of the entity’s business and its internal control (PCAOB, AS 4105, paragraph .15). Those procedures have to include comparing the quarter with the immediately preceding interim period and the quarterly and year-to-date figures with the corresponding periods of the previous year, considering plausible relationships among both financial and, where relevant, nonfinancial information, comparing recorded amounts or ratios against expectations the accountant develops, and comparing disaggregated revenue data, for example revenue reported by month and by product line or operating segment, against comparable prior periods (PCAOB, AS 4105, paragraph .16). Those expectations are ordinarily less precise than the ones developed in an audit, and the accountant ordinarily is not required to corroborate management’s responses with other evidence, though the accountant should still consider whether those responses are reasonable and consistent with the results of the other review procedures (PCAOB, AS 4105, paragraph .17).
Is a 10-Q the Same as a 10-K?
No. An issuer with securities registered under section 12 must file an annual report on the appropriate form for each fiscal year (eCFR, section 240.13a-1), and Form 10-K is the form used for annual reports under Section 13 or 15(d) for which no other form is prescribed (SEC, Form 10-K). Its financial statements must meet the requirements of Regulation S-X, subject to the sections Item 8 of that form excepts (SEC, Form 10-K). What those requirements ask for is an audited set rather than a reviewed one, starting with audited balance sheets (eCFR, section 210.3-01(a)), and the periods each statement has to cover are worked through in the income statement.
A year holds three quarterly reports and not four. The form’s own instruction requires a 10-Q after each of the first three fiscal quarters and states that no report need be filed for the fourth quarter of any fiscal year (SEC, Form 10-Q), and that fourth quarter falls inside the fiscal year the annual report covers. Which months those quarters cover follows the issuer’s own fiscal year rather than the calendar, a mechanic set out in fiscal year.
Common Questions
Within 40 days after the end of the fiscal quarter for large accelerated filers and accelerated filers as Rule 12b-2 defines them, and within 45 days after the end of the fiscal quarter for all other registrants (SEC, Form 10-Q). A newly registered issuer’s first quarterly report is due either within 45 days after the effective date of its registration statement or on the date the report would otherwise have been due, whichever is later (eCFR, section 240.13a-13(a)).
Read it against the annual report, because that is how it is written. A registrant may presume that users of the interim financial information have read or have access to the audited financial statements for the preceding fiscal year, so footnote disclosure that would substantially duplicate the annual disclosure may be omitted, and the rule names the statement of significant accounting policies as one such case (eCFR, section 210.10-01(a)(5)). The movement shows up in the comparative periods the rule requires for the interim statements of comprehensive income: the most recent fiscal quarter, the period from the end of the preceding fiscal year to the end of that quarter, and the corresponding periods of the preceding fiscal year (eCFR, section 210.10-01(c)(2)).
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