Today, having quality financial information is largely a day-to-day need in entities, it is there that international standards play their great role, providing general principles and international acceptance, helping to ensure quality. of the financial statements.
In the business world, managers and partners are largely interested in generating economic benefits, an informative resource of great value to measure the performance and financial position of a company, it is undoubtedly the financial statements with them you can evaluate the management, know the economic benefits that have been achieved and clearly make relevant decisions for the organization.
The financial statements are mainly issued with a general purpose and their objective is to provide information on the financial situation, performance and cash flows of the entity, which is useful for making economic decisions for a wide range of users. of the financial statements.
Section 3 of the IFRS for SMEs explains the fair presentation of the financial statements, understanding this as the fact that requires the faithful representation of the effects of transactions and other events and conditions, according to the definitions and recognition criteria of each item established in section 2 of this standard.
In the field of IFRS when we speak of financial statements we refer to:
- The statement of financial position: presents assets, liabilities, (current and non-current) and equity. The statement of comprehensive income : presents the financial performance of the period. The statement of changes in equity: reflects all the variation in equity items, as well as gains or losses, effects of policy changes and corrections of errors, amounts of investments, dividends and others. The statement of cash flows: it reflects the changes that occurred in a period in cash and its equivalent, classifying it into three headings, operating, investing and financing activities, and their respective notes: They contain narrative descriptions or breakdowns of items presented. Most of the sections of this standard require information to be disclosed, which are normally contained in the notes.
There are five elements that make up a complete set of financial statements and not only the statement of financial position and the statement of income as it was normally done, the notes for IFRS are extremely important since the required disclosures, accounting policies will be made there. and any other that is relevant to inform users, so much so that it is placed at the same level as the other states.
It should be noted that regarding the statement of income, a single statement of comprehensive income can be presented, made up of the items of recognized income and expenses, and the items of other comprehensive income, or an income statement and a statement can be presented. comprehensive income separately, this will depend on the entity's accounting policy.
However, if in the period the only changes in equity come from gains and losses, payment of dividends, corrections of errors and changes in accounting policies, the standard allows presenting a statement of income and accumulated profits, that is, adding to the income statement these items (according to section 6) and not present the statement of changes in equity.
The financial statements that are prepared according to the IFRS for SMEs must be presented in a comparative way with respect to the previous year for all the amounts that are part of the financial statements of the current period to be presented, it must also be taken into account that it is required to present by Separate each class of similar items that is significant as well as be very careful with the omission or inaccuracies in the items as they can influence decision-making.
Regarding the identification of the financial statements, we must have:
- Name of the entity If they are of the individual entity or of a group of entities The presentation currency Degree of rounding, if applicable
When financial statements are presented, uniformity must be available, as well as evaluating the capacity of the entity to continue in operation, on this is based the principle of going concern, an entity must present at least annually a complete set of Financial statements.
Managers will always be linked to the financial statements since these constitute an important source of information to evaluate and improve the management in organizations as well as to make decisions, in the end the decisions that are made will be reflected in these, that is For this reason, it is of great importance that one has the ability to understand and interpret the financial statements correctly, since quality financial information would be of almost nothing if it is not known to interpret.
Finally, let us remember what Professor Fredy Kofman says about a principle of accounting in companies, he pointed out that "Information is valuable depending on the way it is interpreted, through its mental model", that is, depending on Our analysis and interpretation will or will not be valuable information and the manager must reflect on this.
Author: Lcdo. Michael Aular - Micdan Consulting
