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What Is A 10-Q Filing?

You may know that companies need to file quarterly financial statements with the Securities and Exchange Commission (SEC), but there's more to the process than just crunching  numbers. Companies must also compare the current quarterly statement with previous versions to unpack the larger financial picture for investors and regulators. Read on to discover 10-Q reporting requirements, including who needs to file and why. Plus, learn how DFIN can help your company with all SEC filings, including Form 10-Q.

What is Form 10-Q?

Form 10-Q compares the current financial quarter to the one preceding it. It resembles a streamlined version of the 10-K, which is the annual financial analysis. Generally, there is less information reported on the 10-Q. Additionally, companies don't need to have an auditor verify their financial statements the way they do with the 10-K. However, companies do need to prepare a 10-Q three times per year (the fourth quarter is when the 10-K is filed). To add context to the quarterly numbers, companies will also discuss any unusual circumstances or interesting datapoints that might explain a better or worse performance.

There is also room for an analysis from management regarding the company's financials. The 10-K requires this sort of discussion from management, but where companies are expected to talk at length within the 10-K, they can be far more succinct within the quarterly scope of the 10-Q filing.

It's worth noting that management's discussion should be framed through the eyes of an investor. What would an investor need to know when looking at the numbers? What context is missing that brings the data into focus? What do the previous and current quarter's financials say about future performance of the business, so that investors can maintain confidence? Answering these questions should help you formulate the detailed managerial analysis required by the SEC.

In the next section of the Form 10-Q, companies enter information about any market risks. The SEC asks specifically about risk because, generally speaking, companies that understand and manage risks do better than those unaware of external risks in the market. In this section of the Form 10-Q, companies discuss market risk related to activities such as:

  • Sector volatility
  • Market pricing trends
  • Market liquidity
  • Trading and investment decisions
  • Business lending
  • Capital investments

The final section of the Form 10-Q addresses a concept called internal control. Within this section, company management must indicate that they assume responsibility for internal financial reporting. In other words, they confirm that they are running the reports that need to be run, drawing conclusions from the numbers and acting in the best interest of the company. Managers also discuss the evaluation framework they use to determine whether there is sufficient internal control over financial reports. They then affirm that their internal control is effective or, if a weakness is identified, explain the weakness at greater length. If internal control mechanisms changed at any point over the quarter, such that it would affect financial reporting, it must be disclosed as well.

10-Q Filing Requirements

Any publicly traded company must file the Form 10-Q, along with the Form 10-K and other required filings. The SEC gives two timeframes for filing: Large accelerated and accelerated filers with a float exceeding $700 million need to submit Form 10-Q within forty days of the quarter's end. All other companies have 45 days to submit this form. If you're unfamiliar with the term, “float” references the amount of company shares held by the general public rather than owners or officers. Thus, if the value of publicly owned shares exceeds $700 million, the company must file within the 40-day timeframe.

Why does the SEC require the Form 10-Q, given that companies are already reporting their financial performance at year's end? Form 10-Q makes it easier for interested parties to evaluate the company's financial health by quickly focusing in on the major trends from the quarter. The statement contextualizes weak performance, so investors better understand why a company underperformed. It credits strong performance to underlying factors or tailwinds, which can build faith in continued high performance.

Investors review Form 10-Q along with the quarterly statements to make decisions about how to allocate their resources. An investor can always go deeper with the reports if he or she wishes, but the 10-Q is designed to provide the basic information needed to enable quarter-over-quarter comparison.

DFIN Software Makes Filing 10-Q Financial Statements Easier

At DFIN, we have systems that streamline the SEC reporting process to better assist companies with managing the complexities of filing. Our signature product, ActiveDisclosure, is an easier, collaborative filing tool for the 10-Q and other SEC financial reports.

Unlike other software, ActiveDisclosure allows you to integrate data from a single source of truth, rather than cobbling together a report based on data from email, spreadsheets, websites and other sources. ActiveDisclosure includes guided workflows that help you loop core stakeholders into the process and communicate seamlessly in-platform to reduce time delays and communication gaps often associated with complex financial reporting.

Make SEC 10-Q filings easier to generate while decreasing time spent on the process. Enjoy 24/7/365 expert support and document reviews from financial professionals. Try ActiveDisclosure from DFIN to experience a better way to meet your financial reporting obligations.