What Is a Comprehensive Annual Financial Report?

The annual financial accounting report refers to the financial accounting report provided to the public at the end of the year. The semi-annual, quarterly and monthly financial accounting reports are commonly referred to as interim financial accounting reports. The annual financial accounting report, as a report that comprehensively reflects the financial status, business results and cash flow of the enterprise at the end of the year, plays a very important role in communicating between the management of the enterprise unit and users of the financial accounting report.

Annual financial accounting report

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The annual financial accounting report refers to the financial accounting report provided to the public at the end of the year. The semi-annual, quarterly and monthly financial accounting reports are commonly referred to as interim financial accounting reports. The annual financial accounting report, as a report that comprehensively reflects the financial status, business results and cash flow of the enterprise at the end of the year, plays a very important role in communicating between the management of the enterprise unit and users of the financial accounting report.

The annual financial accounting report includes accounting statements, notes to the accounting statements and a statement of financial situation. It is a comprehensive reflection of the company's financial status, operating results and cash flow for one year. The financial accounting statements of listed companies also include audit reports issued by certified public accountants, which should be provided to the public within 4 months after the end of the year.

Chinese name

Annual financial accounting report

Foreign name

Annual financial and accounting reports

Content

Accounting statements, notes to accounting statements, etc.

Definition

Financial accounting reports provided at the end of the year

The annual financial and accounting report prepared and submitted by an enterprise shall include the following:

1. Accounting statements. Including three main tables of balance sheet, profit statement and cash flow statement, as well as profit distribution statement, detailed list of asset impairment provisions, detailed statement of VAT payable, increase and decrease of owner's equity (statement of increase and decrease in shareholders' equity), and segment Statements and other related schedules.

2. Notes to accounting statements. Includes explanations that do not meet the prerequisites of accounting, explanations of important accounting policies and accounting estimates, explanations of important accounting policies and changes in accounting estimates, descriptions of contingencies, descriptions of events after the balance sheet date, descriptions of business combinations and divisions, and accounting Explanation of important items in the report.

3. Financial fact sheet. At a minimum, it includes the basic situation of the company's production and operation, profit realization and distribution, capital increase and decrease and turnover, and other matters that have a significant impact on the company's financial position, operating results and cash flow.

4. Comparative data for at least two years or related two accounting periods.

Balance sheet

The balance sheet describes the relationship between a company's assets and liabilities and owner's equity (or shareholder equity) at a particular point in time. To put it simply, the balance sheet is built on this identity, assets = liabilities + shareholders' equity (or owner's equity), this identity requires that the company must master the source of funds (liabilities and owner's equity) and the use of funds (how to Funds are allocated to various assets) The balance sheet is the most important tool for understanding the financial structure of an enterprise.

Income statement

The income statement explains how a company's wealth (shareholders' equity) changes due to the impact of various economic activities in a certain period of time. Simply put, net profit and net loss are the income minus various expenses. Good basis. And the idea proposed by EVA is that net profit should also be deducted from debt capital and shareholder equity, because some companies are ostensibly profiting, but they are harming shareholders' equity.

Cash flow statement

The cash flow statement explains how an organization's funds change at a particular time due to operating activities, investment activities, and fundraising activities. The cash flow statement can make up for the blind spot of the profit statement in measuring the performance of the enterprise, and examine the business results of the enterprise from another angle. The cash flow statement is the most important core tool for measuring whether a company can continue to survive and compete.

4. Statement of changes in shareholders' equity

The statement of changes in shareholder's equity explains how changes in shareholder's equity have occurred due to the profit and loss of the company's operations and the distribution of cash dividends at a particular time. He is the most important piece of information about whether management is treating shareholders fairly.

According to China s accounting law and the Regulations on Financial Accounting Reports of Enterprises, financial accounting reports prepared by enterprises shall be authentic and complete. This means that when an enterprise prepares its annual financial and accounting report, it should at least provide its accounting statements, notes to the financial statements, and financial statements in the annual financial and accounting report. Among them, the accounting statement should at least include the balance sheet, profit statement, cash flow statement and related schedules. From a technical perspective, improving the quality of the annual financial accounting report preparation should be at least from the following aspects:

1. From the perspective of basic concepts, enterprises should strictly follow the definitions of assets, liabilities, owner's equity, income, expenses, and profits as defined in the Regulations on Financial Accounting Reporting of Enterprises to confirm and measure economic transactions that have occurred in the enterprise, and reflect them truthfully In accounting statements. For example, for those "assets" that are no longer able to bring future economic benefits to the company, they actually do not meet the definition of assets, and should be reasonably accrued for asset impairment. For those current obligations that have already occurred, or potential obligations have been transformed into If there are current obligations that can be reliably measured, they should be recognized as liabilities in a timely manner.

2. From the perspective of the usefulness of information disclosure, the purpose of the company's annual financial accounting report is to reflect the financial status of the company at the end of the year, the operating performance and cash flow of the year, and so on the one hand, it can relieve the management responsibility of the management, On the other hand, users of accounting information can pass on information that is useful for their decision making. From this perspective, the preparer of a company's financial accounting report should try to disclose sufficient information to the users of the financial accounting report. This information includes not only the information of the accounting statement itself, but also the information of the notes to the accounting statement, thereby helping accounting information. Users understand the information in the accounting statements themselves. Regarding the information that enterprises should at least disclose in the notes to their accounting statements, the "Enterprise Financial Accounting Report", "Enterprise Accounting System", and "Financial Enterprise Accounting System" all have specific specifications. The China Securities Regulatory Commission disclosed the notes to the annual accounting statements of listed companies. The content and format are also regulated. In addition, from the perspective of ensuring the usefulness and completeness of the financial accounting report information, for some information that helps to understand the content of the accounting statements, even if it is not clearly regulated in relevant standards and systems, the enterprise should also disclose in the notes to the accounting statements.

3. From the perspective of accounting standards, we should continue to improve the standard system of financial accounting reporting in China. The Ministry of Finance is currently in-depth research on the characteristics and types of accounting information users in our country, the demand for accounting information, the decision-making models of information users, and so on. According to the needs of accounting information users, determine the information that enterprises should disclose in financial accounting reports. , And is intensifying the formulation of the "Reporting of Financial Reports" accounting standards, and further detailed specifications of the main content that enterprises should report in financial accounting reports.