Drawing up an explanatory note to the balance sheet is a whole art if you take it not as a tedious bureaucratic obligation, but as a way to declare yourself to potential investors and establish your own financial reputation. At the same time, you are limited to the minimum set of provided data, but not the maximum - write any useful information!
Instructions
Step 1
The law determines the range of information that must be presented in the explanatory note, and you yourself determine the form of presentation. Along with the text, the explanatory note may contain analytical tables, graphs and diagrams. But to simplify the task, get yourself a sample form of an explanatory note from any reference system. You can then edit this form taking into account your specifics.
Step 2
The information to be disclosed in the explanatory note can be conditionally summarized in three groups: information about the organization itself; information about its accounting policies; the main factors affecting the activities of the organization and its financial results. Information about the organization includes the details of the company, information about the manager, chief accountant and regulatory authorities, the average number of employees, the size of the authorized capital, information on issued shares and similar basic information. Also, an essential part of this section of the explanatory note is the list and characteristics of the organization's activities - natural and cost indicators and factors that influenced the financial results in the reporting year. At the same time, it is worthwhile to include not all types of activities in a row in the explanatory note, but only those whose economic importance (percentage of revenue, value of assets, etc.) is at least 10%, as well as those that appeared in the accounting statements for the last reporting period.
Step 3
In the explanatory note to the balance sheet, you must reflect information about the accounting policies of your organization and changes in it. At the same time, the methods of accounting that are essential for the correct assessment of your financial position by interested users of financial statements and their decision-making are recognized as essential. For example, such items as the procedure for recognizing revenue and recognizing expenses, methods of assessing assets and inventories, methods of calculating depreciation, the method of allocating resources between the activities of the organization, etc. are subject to disclosure. If changes in accounting policy are expected for the next reporting year, the explanatory note must indicate the reasons and content of the changes.
Step 4
Information about the financial position of the organization includes an extensive list of indicators for the reporting period that affect the financial activities of the organization: from the consumer price index to the current liquidity ratio and the average salary in the organization. It is also necessary to bring the dynamics of the data - to compare the reporting year with previous ones. Any information useful for compiling a complete and objective picture of the organization's financial position is pertinent in this section of the explanatory note.
Step 5
In the explanatory note, you must indicate whether you apply the accounting rules in force in the Russian Federation or admit the non-application of these rules (in cases where their observance does not provide a complete and reliable display of the financial picture of the enterprise). The facts of non-application of PBU must be justified!
Step 6
In an explanation of the financial statements, you must disclose information about events after the reporting date that may affect the financial condition and results of operations of the organization. Such events may include the adoption of a decision on reorganization, declared dividends, a natural disaster that caused a loss, revaluation or sale of inventories, an unforeseen termination of part of the organization's activities, and so on. An approximate list of the facts of economic activity that can be recognized as events after the reporting date is given in the Appendix to RAS 7/98.
Step 7
Also subject to disclosure is information on the so-called contingent facts of economic activity, that is, such facts in relation to the consequences of which and the likelihood of their occurrence in the future there is uncertainty. These can be unfinished legal proceedings or problems with the tax authorities; issued but not extinguished obligations, guarantees, bills; relocation of an organization or its part to another region and other similar facts.
Step 8
In addition to the above, the explanatory note includes such sections as information on the cost of energy resources; information on joint ventures / discontinued operations; information about related parties (that is, individuals or legal entities that can influence the activities of the organization); any other material financial information depending on the type of activity of the organization. Remember: the explanatory note to the financial statements is your advertisement to a potential investor.
