Annual Report And Its Contents

It is a document produced by the companies annually. It is designed to portray a true and fair view of the companys annual performance, with audited financial statements prepared in accordance with the company law and other regulatory requirements and also containing other nonfinancial information.

Functions Of Annual Report

1.The stewardship and accountability function 2.The decision making function to the end-users 3.The public relations function

True And Fair View

The directors are responsible for the preparation of the accounts which must give a true and fair view

A true and fair view is one where accounts reflect what has happened and do not mislead the readers
The accounts must be prepared in accordance with relevant accounting standards, gaap and requirements of the statutory laws.

Contents Of Annual Reports

1.Audited information a. Main Statements Financial statements such as income statement, Balance sheet and Cash flow statements.

b. Subsidiary Statements - such as statement showing changes in shareholders funds, working capital, assets position, Funds movements, etc
C. Explanatory Material - accounting policies, Notes/Schedules to the accounts, etc.

2.Non Audited Information

a. Narrative Statements i) Chairmans report ii) Directors report iii) Review of operations iv) Statement of Corporate governance v) Auditors report vi) Statement of directors responsibilities for the financial statements vii) Shareholder information B. Non Narrative Information i) Highlights ii) Historical summary iii) Shareholder analysis

Auditors Report
Auditors are the independent accountants who are registered to carry out the task of auditing. Auditing refers to a systematic examination of the accounts of a business enterprise to ascertain whether they are prepared in accordance with statutory requirements and disclose true and fair view.

They have to make a brief report which should be mandatorily included in the annual report of the company.

Objectives Of Auditing
I. Primary Objective : Reporting to Shareholders: True and Fair View exists when 1. The financial statements are as per the books of accounts. 2. Assets and Liabilities are properly valued 3. Proper distinction is made between Capital and Revenue expenditure. 4. Adequate provision is made for depreciation and actual liabilities. 5. Contingent liabilities are properly disclosed 6. Items of unusual nature are disclosed separately. II. Secondary Objectives (A) Detection of Errors (B) Detection of Frauds (a) Misappropriation of cash (b) Misappropriation of Goods (C) Misappropriation of Goods (i) Window Dressing (ii) Creation of Secret Reserve

Types of Audits
I. Statutory Audit

II. Internal Audit III. Continuous Audit IV. Interim Audit

Contents of Audit Report

Maintenance of statutory books

Obtainment of all necessary explanation and information

Books of accounts show true and fair view or not Branch account details

Provisions Of Companies Act Of 1956 Regarding Financial Statements

Sec 209 - Books of account to be kept by company. Sec 209A - Inspection of books of account, etc., of companies. Sec 210 - Annual accounts and balance sheet. Sec 211 - Form and contents of balance sheet and profit and loss account. Sec 215 - Authentication of balance sheet and profit and loss account Sec 219 - Right of members to copies of Balance Sheet and Auditors Report . Sec 220 - Three copies of Balance Sheet, etc., to be filed with Registrar Sec 224 - Appointment and remuneration of Auditors Sec 226 - Qualifications and disqualifications of Auditors. Sec 227 - Powers and duties of auditors. Sec 229 - Signature of audit report, etc. Sec 230 - Reading and inspection of auditor's report.

Schedule VI of the Companies Act, 1956 deals with preparation of presentation of the financial statements.
Part I : Balance sheets and its contents Horizontal and Vertical formats Part II : Profit and loss account

Part III : Notes / Schedules to accounts

Part IV : Profit and loss appropriation account

Thanks Everybody