An Initial Public Offering (IPO) refers to the first time a company's shares are made available for public purchase on a stock exchange. When a company decides to go through an IPO, it transitions from being a privately held entity to a publicly traded one. This process involves several steps, including determining share prices, preparing regulatory documents, and engaging underwriters. Companies opt for IPOs to raise capital for expansion, debt reduction, or increased market visibility. For example, a technology startup that has shown substantial growth might choose to go public to secure funds to scale its operations.

An IPO is a symbol of a company's growth and success. For shareholders, this event allows them to realize the value of their initial investments. It also offers the general public an opportunity to own a part of the company. Companies undergoing IPO must comply with strict regulatory requirements, including disclosing financial health and business strategies to potential investors. This means making balance sheet reconciliations and preparing variance reports, which are closely related to financial reporting, as existing terms.