An Annual audited report is a comprehensive audited report on the Assembly’s activities throughout the preceding year. Annual reports are intended to give shareholders or stakeholders and other interested people information about the company’s activities and financial performance. Every year, they are prepared for filing income tax returns and consist of a balance sheet, profit and loss statement, and cash flow statement.
They may be considered as grey literature. Most jurisdictions require companies to prepare and disclose annual reports, and many require the annual report to be filed at the company’s registry.
The Balance Sheet
The balance sheet is a financial statement that will provide you with a snapshot of the assets, liabilities, and equity of the owners in your company at a specific time point. It is an indicator of the company’s financial health at the time it created accounts being a measure of what is owned and what is owed.
Profit and Loss Statement
The report of profit and loss varies from the balance sheet because it tracks results over some time, rather than just a snapshot. You can see the net income and overall cost of the company for the financial year in the profit and loss (P&L) statement.
Calculating gross profit is relatively straight forward. The first thing you can see on the P&L is the turnover number; this is your selling amount. This, minus the selling cost from that number, and you’ve got it there!
Cash Flow Statement
The purpose of a cash flow statement is to clarify the movements of cash in and out of the company during the financial year. Cash flow is the sum of money that comes in over some time and goes out of a company. It varies from the profit and loss statement as income is usually reported when the transaction is made, and cash flow is indicated when the money is earned. The two are very different, in that sense.
The Head Finance Officers are mostly responsible for preparing the Annual Report and the financial statements in accordance with applicable including the accounting standards issued by the Accounting Standards Board and published by The Institute of Chartered Accountants. The Finance Officers are required to prepare financial statements for each financial period which give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period.
In preparing these financial statements, the Finance Officers are required to:
- select suitable accounting policies and then apply them consistently
- make judgements and estimates that are reasonable and prudent
- prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business
The Finance officers confirm that they have complied with the above requirements in preparing the financial statements. The directors are responsible for keeping proper books of account that disclose with reasonable accuracy at any time the financial position of the company and to enable them to ensure that the financial statements are prepared in accordance with accounting standards generally accepted.