The users of the financial statements use the same to make decisions of different nature, as well as to evaluate the management and situation of the entity; that is why it is not enough to have the final figures presented in the financial statements but also explanations, details, professional judgment, accounting policies, estimates and any other information useful to the reader.
I have met many managers who, as readers, are interested and find it extremely useful to know about the estimates and other judgments used in applying accounting policies. These disclosures, for example, allow users of financial statements to better understand how they apply the accounting policies, as well as making comparisons between entities with respect to the foundations on which management makes such judgments and be more involved and safe of the information presented.
As managers we know that the ideal is to have quantitative and qualitative information to be able to form an opinion and decision making as accurate as possible, this is well understood by the IASB and gives the rank (let's say it) to the notes of the state’s financial conditions that it deserves by placing it in line with the financial statements presented.
In the IFRS for SMEs , this topic is discussed in section 8, which states that the notes contain information additional to that presented in the statement of financial position , income statement and accumulated earnings or comprehensive (if presented), the statement of changes in the equity statement of cash flows. They provide narrative descriptions or disaggregation’s of items presented in those states as well as information on items that do not meet the conditions to be recognized in them, something to be clarified and made clear is the fact that in addition to the requirements of section 8, almost all other sections of the Standard require disclosures that are normally presented in the notes.
The notes to the financial statements must have a structure, this is:
- Basis of preparation and accounting policies
- Information required by the standard in each section
- Additional information that is relevant to the understanding of financial statements.
The presenter of the financial information will ensure that as far as possible the notes are systematic, counting with their related reference number, as to the order should be the first statement of the fact of being fully complying with this international standard, the summary of the significant policies, information of support of the presented games and of last any other information that is considered relevant and of great help for the users.
In the notes we usually get before the declaration of compliance with the standard the general information of the entity such as its address, registered office, legal form, country of incorporation, description of the nature of its operations and main activities, the date of authorization of the financial statements for publication and who has granted such authorization all this will help the reader to understand the entity even more.
The financial information should be as comprehensible as possible, and in this fact the notes are a fundamental part, they are to facilitate the effective communication of information in the financial statements, the managers are very grateful for the details and the additional relevant information that helps a better understanding, remember that the information presented is for a wide range of users and as such we should strive to present it as understandable and useful as possible.
