Financial statements tend to be long and difficult to understand. If anything, they have only become longer and more difficult to understand with every new disclosure requirement. Many preparers even wonder whether the lenders and investors who use the statements find them all that useful.
Typically, it’s the notes that confuse users the most. Users need to wade through jargon, duplicate content, and an unpleasant user experience to find what they need. The notes contain valuable details about the company but are sometimes ignored because those are not easily traced or identifiable.
The opportunity is great. Analysts and various stakeholders prefer financial statements that tell their stories clearly. Whether public or private, businesses benefit from financial statements that are easy to use and compare with other companies.
This threat is also increasing as the disclosures in notes to the financial statements are set to grow with changes in standards and various developments from standard setters.
However, it is not too difficult to prepare your financial statements in a way that communicate what they mean and that too clearly. Follow the following eight simple tips to supplement the disclosure checklist you use when preparing financial statements.
ABOUT THE AUTHOR
Armand Capisciolto, National Leader, Accounting Advisory Services, BDO Canada
Mary Mathews, Partner, Accounting Advisory Services, BDO Canada
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