This is one of the common concern that the users of the financial statements express on the extent of disclosures in the financial statements. Users of financial statements always feels that annual reports are becoming thicker every year, but lacks relevance of information and completeness of disclosures. Sometimes, it appears that IFRS disclosures are made in financial statements by the preparers more for formal compliance than providing relevant useful information to users.

There are several publications globally by various regulatory authorities expressing their concerns on the quality of disclosures. These publications emphasized that improving disclosure is not the matter of quantity but is the matter of quality. Following are some of the key principles that can be considered in this regard while preparation of financial statements:

  • Entity specific disclosures and avoid boilerplate languages.
  • Consideration of Materiality.
  • Clear and concise presentation of all information (e.g., use of graphs, charts in some cases to make it more use-friendly).
  • Avoidance of repetition and use of cross referencing.
  • Easy navigation of the annual report.
  • Consistency of information.

Financial statements with good quality disclosures will have many benefits including increased confidence of users, greater efficiency and credibility.

This article is prepared for general guidance on matters of interest only and should not be acted solely based on this without obtaining specific professional guidance.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.