What accounting principles should be used for interim reporting?

Interim reporting is intended to provide timely financial information throughout the year and should ideally utilize the same accounting principles that were applied in the most recent annual financial statements. This consistency allows for comparability and a clearer understanding of financial performance over time. By using the same principles as in the last annual report, users of the financial statements can assess the company's progress and performance without the confusion that might arise from varying accounting methods.

Applying consistent standards ensures that interim financial results are aligned with the annual data, preserving the integrity of the financial reporting process, and aiding stakeholders in making informed decisions. This approach aligns with the framework set forth by accounting standards, which emphasizes that interim financial reporting should not create significant disparities from annual reports unless explicitly required.

In contrast, adopting new accounting principles or principles focusing on minimizing tax liabilities could lead to inconsistencies and would not provide a true reflection of the company’s ongoing financial health. Similarly, utilizing the most conservative principles could unintentionally distort financial results, potentially leading to overly pessimistic interpretations of performance. Therefore, retaining the same principles used in the last annual report is the most effective means of ensuring clarity and consistency in interim financial reporting.