Accounting For Canadians For Dummies by John A. Tracy & Cécile Laurin

Author:John A. Tracy & Cécile Laurin [Tracy, John A. & Laurin, Cécile]
Language: eng
Format: epub
ISBN: 9781119575818
Publisher: Wiley
Published: 2019-04-09T00:00:00+00:00

Making Sure Disclosure Is Adequate

The financial statements are the backbone of the financial report section of the annual report. In fact, a financial report is not deserving of the name if the three primary financial statements are not included. But a financial report is much more than just the financial statements; a financial report needs disclosures. Of course, the financial statements themselves provide disclosure of important financial information about the business. The term disclosures, however, usually refers to additional information provided in a financial report.

The CEO of a public corporation, the president of a private corporation, or the managing partner of a partnership has the primary responsibility to make sure that the financial statements are prepared according to generally accepted accounting principles (GAAP) — ASPE or IFRS, as the case may be — and that the financial report provides adequate disclosure. He or she works with the business’s chief financial officer and controller to make sure that the financial report meets the standard of adequate disclosure. (Many smaller businesses hire an independent public accountant to advise them on their financial reports.)

For a quick survey of disclosures in financial reports, the following distinctions are helpful:

Notes provide additional information about the basic figures included in the financial statements. Virtually all financial statements need notes to provide additional information for several of the account balances.

Supplementary financial schedules and tables to the financial statements provide more details than can be included in the body of financial statements.

A wide variety of other information is presented, some of which is required if the business is a public corporation. Other information is voluntary and not strictly required legally or according to GAAP.

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