Now they are the most important things when it comes to preparing an Annual Report! Those four statements – balance sheet, income statement, statement of cash flows and statement of changes in equity – are the real face of your company’s performance. They tell the story of how the year went; everything else is just a comment and describing events in more detail. When displaying those statements, it’s like stating a result or a fact. The management report and notes to financial statements are explaining what and why exactly happened. Accounting principles are the “how” things happened.
But luckily these statements are already put together after the year end so all that’s left when preparing the Annual Report’s financial statement is to quite literally copy-paste or add the tables onto the pages. And that’s that. Nothing more left to say or do about those statements. Yes, adding cross-references to notes obviously, but that’s it really.
Something to possibly consider is the ordering of the statements within the Annual Report. What usually can be different is that the income statement is in fact followed by the balance sheet and not the other way around. It’s really mostly up to you, but there are businesses, which do not have much to show on the balance sheet and the income statement is more reflective of the company. As I said, it’s really up to you.
When it comes to those statements in the Annual Report, as a side note another thing to think about is the grouping within them – namely balance sheet and income statement. The statement of cash flows is grouped by certain rules (operating, investing and financing cash flows are ever the same as their name describes) and the statement of changes in owner’s equity is reflecting the same lines presented on the balance sheet as a part of equity, however the rest of the statements – balance sheet and income statement – include some grouping rules to be kept in mind. In short it’s about dividing items between current and non-current and on the income statement following chosen consistency.
Other than that it’s also worth mentioning that obviously it’s not the accounts themselves you disclose on the statement, but groups of those accounts. For an example if you have three bank accounts and they are all presented on different accounts in your accounting alongside with cash account as well, they’re all grouped under one account on the balance sheet (for the Annual Report purposes at least) – cash and cash equivalents. Otherwise you’d end up with a balance sheet on the report that’s 3 pages long!
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