Financial Reporting and Ethics - The Institute of Chartered ...

FINANCIAL REPORTING AND ETHICS4.2 CONTENTS OF A COMPANYANY’S ’S ANNUAL REPORTS TS AND ACCOUNTSAs provided in section 334 of CAMA 2004 (as amended), the financialstatements of a company should contain the following items:(a) Statements of accounting policies.(b) The balance sheet as at the last day of the financial year.(c) A profit and loss account/income statement or in the case of nonprofitorganisation, an income and expenditure account for the year.(d) Notes to the accounts.(e) The Auditor’s report.(f) Directors’ report.(g) Statement of Cash Flow.(h) Value Added Statement for the year,(i) Five year financial summary, and(j) In the case of a holding company, the group financial statements.Section 334(3) stipulates that the financial statements of a private companyneed not include the matters stated in paragraphs (a), (g), (h) (and (i) above.It should, however, be noted that this is the minimum requirement, and privatecompanies should be encouraged to include those items in their financialstatements.Financial statements are the accounting reports in respect of economic activitiesof an enterprise, prepared periodically and usually at the end of every financialyear. These statements form an integral part of the company’s annual reportand accounts, and they are components specified not only in CAMA, but also inthe Statement of Accounting Standard (SAS) No. 2, issued in November 1984by the Nigerian Accounting Standards Board (NASB). This SAS provides thatall accounting information that will assist users to assess the financial liquidity,profitability and commercial viability of a reporting entity should be disclosedand presented in a logical, clear and understandable manner.This reporting requirement is also emphasised by the International FinancialReporting Standard (IFRS) 5 in relation to information to be disclosed infinancial statements of a company. The Generally Accepted AccountingPrinciples (GAAPs) also describes all the accounting conventions, postulates,rules, and procedures necessary to define accepted accounting practice to beadopted by reporting entities at any given time and in any given situation.Over the years, GAAPs have been developed in various countries. For instance,the pace of development of UK and US GAAPs has always supported thedevelopmental process of accounting principles and practices of developingcountries, like Nigeria. At the international scene, International AccountingStandards have been harmonized and worked upon to the extent that, witheffect from January 2005, all the listed European Union (EU) companies mustprepare their consolidated financial statements in accordance withInternational Accounting Standard. Many countries in the developing world(Nigerian inclusive) have also adopted IAS where there are no local alternatives.68