Annual report

An annual report is a comprehensive report on a company's activities throughout the preceding year. Annual reports are intended to give shareholders and other interested people information about the company's activities and financial performance. 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. Companies listed on a stock exchange are also required to report at more frequent intervals (depending upon the rules of the stock exchange involved).

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Contents

Typical annual reports will include:[1]

Other information deemed relevant to stakeholders may be included, such as a report on operations for manufacturing firms or corporate social responsibility reports for companies with environmentally or socially sensitive operations. In the case of larger companies, it is usually a sleek, colorful, high-gloss publication. Research has found that annual reports that convey optimistic tone are associated with lower audit fees, suggesting that annual report tone reflects factors that auditors consider in assessing audit risk.[2]

The details provided in the report are of use to investors to understand the company's financial position and future direction. The financial statements are usually compiled in compliance with IFRS and/or the domestic GAAP, as well as domestic legislation (e.g. the SOX in the U.S.).

In the United States, a more-detailed version of the report, called a Form 10-K, is submitted to the U.S. Securities and Exchange Commission.[3] A publicly held company may also issue a much more limited version of an annual report, which is known as a "wrap report." A wrap report is a Form 10-K with an annual report cover wrapped around it.[4]

Directors' Role

Statement of Directors' responsibilities for the shareholders' financial statements

The Directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable Law of the Republic of Ireland, including the accounting standards issued by the Accounting Standards Board and published by The Institute of Chartered Accountants. Irish company law requires the directors 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 Directors 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 directors 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 in Ireland and with Irish statute comprising the Companies Acts 1963 to 2009...

History

In 1903, US Steel published an annual report whose financial accuracy was certified by Price, Waterhouse & Co in what is known as the earliest modern corporate annual report.[5]

'Alternative' annual reports

Certain groups such as The True Cost Of Chevron Network have released 'alternative' annual reports as a way to highlight ongoing environmental destruction and/or human rights abuses committed by a particular company.[6]

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See also

References
  1. Annual Report and Accounts - Contents http://tutor2u.net/business/accounts/annual-report-and-accounts-contents.htm
  2. Bicudo de Castro, Vincent; Gul, Ferdinand A.; Muttakin, Mohammad Badrul; Mihret, Dessalegn Getie (2019). "Optimistic tone and audit fees: Some Australian evidence". International Journal of Auditing. 23 (2): 352–364. doi:10.1111/ijau.12165. ISSN 1090-6738.
  3. Dictionary of Finance and Investment Terms by John Downes and Jordon Elliot Goodman Barron 1995 ISBN 0-8120-9035-7 page 23
  4. "Wrap Report Definition". AccountingTools. Retrieved 2013-08-27.
  5. Wessel D. (2002). When Standards Are Unacceptable Wall Street Journal
  6. The True Cost Of Chevron, An Alternative Annual Report, May 2011 http://truecostofchevron.com/2011-alternative-annual-report.pdf Retrieved 19 July 2017
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