Components of a Financial ReportComponents of a Financial Report

Components of a Financial Report

8. A financial report comprises:

(a) a balance sheet;

(b) an income statement;

(c) a statement of changes in equity showing either:

(i) all changes in equity; or

(ii) changes in equity other than those arising from transactions with equity holders acting in their capacity as equity holders;

(d) a cash flow statement; and

(e) notes, comprising a summary of significant accounting policies and other explanatory notes.

9. Many entities present, outside the financial report, a financial review by management that describes and explains the main features of the entity’s financial performance and financial position and the principal uncertainties it faces. Such a report may include a review of:

(a) the main factors and influences determining financial performance, including changes in the environment in which the entity operates, the entity’s response to those changes and their effect, and the entity’s policy for investment to maintain and enhance financial performance, including its dividend policy;

(b) the entity’s sources of funding and its targeted ratio of liabilities to equity; and

(c) the entity’s resources not recognised in the balance sheet in accordance with Australian Accounting Standards.

10. Many entities also present, outside the financial report, reports and statements such as environmental reports and value added statements, particularly in industries in which environmental factors are significant and when employees are regarded as an important user group. Reports and statements presented outside the financial report are outside the scope of Australian Accounting Standards.