The notes to the financial statements are an integral part of an entity's financial statements.
Its main purpose is to provide additional explanations and details that complement and clarify the information presented in the primary financial statements.
Notes enable users of financial information to better understand the economic and financial facts behind the figures appearing in the reports.
Main features of the notes to the financial statements:
- Clarification and expansion of information: The notes explain the valuation method, the accounting criteria adopted by the company, accounting policies applied and other relevant circumstances that are not directly evident from the numbers.
- Disclosure of contingencies: They may include future contingencies or commitments that may affect the company's finances, such as litigation, guarantees, pending contracts, and other risks.
- Information on specific items: They explain details about items that, by their nature, require further clarification. For example, in the case of fixed assets, the notes specify their useful life, depreciation methods, among others.
- Relevant aspects of the entity: Notes may describe significant events that occurred after the close of the accounting period, changes in the composition of assets or liabilities, mergers, acquisitions, among others.
- Compliance with regulations: They are regulated by accounting standards (such as those International Financial Reporting Standards or the Mexican Financial Reporting Standards) that specify what type of information must be disclosed to ensure transparency and comparability.
Common examples of information included in notes:
- Accounting Policies: The accounting criteria that the company follows are explained, such as the accrual basis, amortization methods, etc.
- Detail of assets and liabilities: Explanation of the composition of balance sheet items, such as accounts receivable, inventories, intangible assets.
- Debt information: Details about loans, payment terms, interest rates and maturities.
- Deferred taxes: Detail of the calculation of taxes, provisions or tax credits.
- Related party transactions: Information on operations with other entities or persons who have a direct relationship with the company.
Conclusions
Notes are essential to properly assess the financial and operational situation of a company, as they allow the numbers presented in the financial statements to be contextualized.
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