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Content of the annual report and financial statements - Coggle Diagram
Content of the annual report and financial statements
Includes
Strategic Report
Directors report
Directors Remuneration Report
Corporate Governance Statement
Auditors report
Audited financial statements
SOFP
Statement of Profit or Loss and OCI
Statement of changes in equity
Statement of cash flows
Notes to the financial statements
Strategic Report
A detailed report written in non-financial language
Provides clear and coherent information about the company's activities, performance, position, the strategic position of the business and probable risks attached with the business
It ensures information is accessible to a range of users
All companies except from small and micro companies must produce a strategic report
Companies which have more than 500 employees and meet the CA2006 definition of a traded company, banking company, authorised insurance company or company carrying on an insurance market activity have additional strategic reporting requirements as a result of the EU's non-financial reporting directive
It is the duty of the directors to prepare the strategic report for each financial year
In case of group financial statements, the strategic report must be a consolidated report (a 'group strategic report') prepared and signed by directors of the parent company
Failure to comply with the requirements of the strategic report will result in the directors being fined
Contents
Fair review
A fair review is a balanced and comprehensive analysis of the company's business for an understanding of
The performance and development of the company's business during the financial year
Analysis using financial KPIs
Large companies should also include non-financial KPIs such as those relating to environmental and employee matters in their analysis
The position of the company's business at the end of that year
Description of the principal risks and uncertainties the company faces
Going concern
If an event has affected the going concern assessment, this should be disclosed
References to the financial statements
The strategic report should include references to and additional explanations of amounts included in the company's financial statements which the directors consider are of strategic importantance to the company
Exceptional or there items identified on the face of the primary statements
Signing and approval
Additional information for quoted companies
A description of the company's strategy
A description of the company's business model
Information on environmental, employee and social issues, including human rights and gender diversity information
A company has the option to send the strategic report, along with certain supplementary material to shareholders in place of the full annual report
The full strategic report must be sent to shareholders, including cross-reference to the annual report. Shareholders retain the right to ask for the full annual report and financial statements
Supplementary material must include information on the auditors report, administrative particulars and provide a net on how to obtain a copy of the full annual report and financial statements
For quoted companies, the supplementary material must include selected excerpts from the directors remuneration report.
Directors Report
A financial document prepared by the directors
Purpose is to inform members of he company of the financial state of the company as well as its compliance with financial reporting, accounting and CSR standards
All companies must produce a directors report although there are certain exemptions available for small companies
Governed by company law
The directors report helps shareholders make informed decisions when casting their votes at the AGM or other GM
Provides information on
Whether the company has good finances
Whether the business has the structural capacity to expand and grow
How well it is performing within its market and market in general
Whether the company is complying with financial regulations, financial reporting and accounting standards and social responsibility requirements
These reports are used for credit checking, to assess investment worthiness, for social accounting and to gain background information on individual directors
Must disclose the following
Names of all directors during the financial year
Summary of the company's trading activities
Summary of future prospects
Principal activités of the company
Principal activities of subsidiaries
The amount of dividend recommended by directors for the reporting year
Any financial events that occurred after the date on the SOFP if these events could affect the company's finances
Any significant changes to the company's non-current assets
A statement confirming that all relevant audit information has been provided to the company's auditor
A record of all board and board committee meetings in a financial year with a directors attendance record
A directors statement of responsibilities
That the directors have a responsibility to promote the success of the company
That the directors are responsible for preparing the annual report, remuneration report and the financial statements in accordance with applicable law and regulations and with the specific requirements of IFRS
That the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period
That the directors are required to properly select and apply accounting policies to provide relevant, reliable, comparable and understandable information
That accounting estimates are based on reasonable and prudent judgement
That the board recognises its responsibility to establish and maintain a sound system of internal control which is regularly reviewed and monitored
That the appointment of the chair and other members of the board along with terms of their appointment and remuneration policy is in line with the best prevailing practices of the country
That the directors are responsible for keeping proper accounting records, safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities
The directors report must be approved by the board and signed on its behalf by a director or the company secretary