What is an Internal Report?

Definition: An internal report is a document that communicates important information to inform people inside the organization. These documents are designed to be viewed and evaluated only by individuals working within the institution.

What Does Internal Report Mean?

Internal reports should be carefully identified since they contain sensible information about the business health, indicators, performance and development in different areas. They are often created by employees from the organization and delivered or intended to be delivered to employees in the organization. The reports can deal with different subjects like finance, sales, marketing, human resources among others. Companies often protect themselves by classifying these documents properly as confidential, in order to avoid accidental or intended disclosure.

Staff members are also frequently asked to sign non-disclosure agreements to avoid the leakage of certain sensible information contained in these reports that might jeopardize the success of the company in certain project, product or any other field. Businesses should define a clear classification for documents and reports being generated, to separate those that are designed for internal purposes only from those that can be disclosed to the public. This is particularly important for public companies, those that trade in a stock exchange, since asymmetric information or insider information is an important matter, legally speaking.

Example

Clarks Pharmaceutical Co. is a company that produces drugs for cardiovascular diseases. The company has specialized in this field for a while and it is now working on a drug that increases the level of oxygen in the blood, to help the brain’s activity. The Project Manager recently issued an internal report that contained several observations about the drug’s behavior and results obtained during the human trials phase.

The tests revealed certain side effects that were undesirable for potential clients and the manager advised the company to change some of the components to reduce the number of side effects. Somehow, the report was leaked to the media and it caused an important decline on the company’s share price, which caused big losses to investors and shareholders.

The company conducted an investigation and had to fire a group of three employees that worked together to leak the report, since they had signed a non-disclosure agreement that prohibited the disclosure of any internal report, such as this one.