TA 1-6

Supporting Material to Financial Statements

Financial statements are not the sole output of a financial reporting system.
Additional information about a company is also communicated in the financial reports.
Simply read through any annual report and you will observe this to be the case!
1. Management discussions and analysis
Highlight any trends and identify events and uncertainties that affect a company’s:

  • Liquidity
  • Capital resources
  • Results of operations.
2. Management reports
  • Senior management’s responsibilities for the company’s financial and internal control system.
  • Shared role of management and the auditor in preparing financial statements.
3. Auditor reports
  • ​External independent certified public accountant hired by management to provide an unbiased opinion in conformity with the Accounting standards
4. Explanatory notes
​Notes entail:

  • Accounting principles and methods employed
  • Disclosure of individual financial statement items
  • Commitments and contingencies
  • Business combinations
5. Supplementary information
Supplementay information includes :

  • Business segment data
  • Export sales
  • Marketable securities
  • Valuation accounts
  • Short-term borrowings
  • Quarterly financial data.
6. Proxy statements
  • Information necessary for shareholders to vote on matters which a proxy is solicited.
  • Identity of shareholders owning 5% or more outstanding shares.
  • Biographical information on board of directors and compensation arrangements.