Explanatory note to the balance sheet. Information related to reporting (formerly explanatory note) with an example of filling
In accordance with paragraph 1 of Article 13 of Law No. 129-FZ “On Accounting”, organizations are required to draw up financial statements based on synthetic and analytical accounting data.
Note:In accordance with paragraph 3 of article 4 of Law No. 129-FZ, organizations that have switched to the USNO, released from accounting duties. At the same time, organizations that are on the simplified taxation system must keep records of fixed assets and intangible assets in accordance with applicable law.
In accordance with paragraph 28 of PBU 4/99 "Accounting statements of the organization", Explanations to the balance sheet and income statement disclose information in the form of separate reporting forms and in the form explanatory note.
The explanatory note is included in the financial statements in accordance with paragraph 2 of Article 13 of Law 129-FZ, along with the balance sheet and other forms of financial statements.
An explanatory note to the annual financial statements must contain essential information:
- about the organization
- her financial situation,
- comparability of data for the reporting and previous years,
- valuation methods and material items of financial statements.
Otherwise, non-application of accounting rules is considered as an evasion from their implementation and is recognized as a violation of the legislation of the Russian Federation on accounting.
In the explanatory note to the financial statements, the organization announces changes in its accounting policy for the next reporting year (clause 4, article 13 of the Law 129-FZ "On Accounting").
Also, an organization may provide additional information related to financial statements if it considers it useful for interested users in making economic decisions (clause 39 of PBU 4/99).
It reveals:
- dynamics of the most important economic and financial indicators of the organization's activities over a number of years;
- planned development of the organization;
- prospective capital and long-term financial investments;
- borrowing policy, risk management;
- activities of the organization in the field of research and development work;
- environmental protection measures;
- other information.
Guided by the requirements of Law No. 129-FZ and the provisions of the current PBU, we will draw up an approximate Explanatory Note to the balance sheet of a small organization Romashka LLC for 2011.
EXPLANATORY NOTE
to the annual balance sheet for 2011 LLC firm "ROMASHKA"
1. Basic information about the organization.
Limited Liability Company "ROMASHKA" company, legal and actual address: 117437, Moscow, Profsoyuznaya st., building No. 110, building B.
PSRN: 1012357987234.
TIN: 7723123702.
Gearbox: 772301001.
Registered with the Federal Tax Service of Russia No. 23 for Moscow on July 20, 2007. certificate 77 No. 005555155.
The financial statements of the Company are formed on the basis of the rules of accounting and reporting in force in the Russian Federation.
The number of employees at the end of the reporting period was 55 people.
In 2011, there was an increase in the authorized capital at the expense of retained earnings of previous years in accordance with Minutes No. 1U dated April 11, 2011 in the amount of 3 000 000 rub. The size of the authorized capital of the Company as of 31.12.2011. is 3 100 000 rubles.
The main activities of the Company are the production and wholesale of hosiery.
Production and financial activities were carried out by the Company throughout the entire period of 2011 and were aimed at generating income in the reporting and subsequent periods.
Materiality level fixed by the Company in the accounting policy for accounting purposes is 15% from the relevant item in the financial statements.
2. Revenue (income) from sales
Revenue from the performance of work, the provision of services, the sale of products with a long production cycle is recognized when ready works, services, products (clause 13 PBU 9/99 "Income of the organization").
Sales revenue in 2011 amounted to 2 000 000 rub. (without VAT):
Revenues from sales for the previous reporting periods amounted to (without VAT):
- 2010 - 1 700 000 rub.;
- year 2009 - 1 500 000 rub.;
- 2008 - 1 200 000 rub.;
- 2007 - 800 000 rub.
3. Costs related to implementation
Management expenses accounted for in the debit of account 26 "General expenses" at the end of the reporting period are not distributed among the objects of calculation and are written off as conditionally permanent directly to the debit of account 90 "Sales of products (works, services)" with distribution between product groups in proportion to the specific the weight of sales proceeds.
Recognized in the cost of sold products, goods, works, services in full in the reporting year of their recognition as expenses for ordinary activities (clause 9 PBU 10/99 "Expenses of the organization").
The costs associated with the implementation in 2011 amounted to 1 000 000 rub. (without VAT):
For the purposes of tax accounting, the amount of expenses associated with the sale amounted to 970 000 rub.
The resulting difference in accounting for production and management expenses for the purposes of accounting and tax accounting was formed in connection with the use of PBU for determining expenses in accounting and the provisions of the Tax Code for accounting for expenses for tax purposes.
30 000 rub. made up of a temporary difference in the amount 20 000 rub. and permanent differences in the amount 10 000 rub. in the following way:
1. Temporary size difference 20 000 rub. was formed due to differences in accounting for depreciation of fixed assets for tax and accounting purposes.
2. Permanent differences in size 10 000 rub. (5,000 + 5,000) consist of expenses not accepted for NU purposes, namely:
- 5 000 rub. fixed assets depreciation not accepted for NU purposes;
- 5 000 rub. health insurance costs in excess of the norm.
- 2010 - 900 000 rub.;
- year 2009 - 800 000 rub.;
- 2008 - 700 000 rub.;
- 2007 - 600 000 rub.
4. Financial result obtained from the main activities
The financial result obtained from the main activities in 2011 amounted to 1 000 000 rub. ( 2 000 000 - 1 000 000 ).
For the purposes of tax accounting, the amount of profit from sales amounted to 1 030 000 rub. ( 2 000 000 - 970 000 ).
In addition, the main activity does not reflect the results of the sale of a large batch of finished products, due to the delay in the transfer of the batch of goods to the buyer LLC "LUTIK" and the signing of the consignment note TORG-12.
The sale of goods took place in the 1st quarter of 2012. All production work was completed in the 4th quarter of 2011.
Finished products are reflected on account 43 "Finished products" in the amount of actual costs for its manufacture - 200 000 rub.
The amount of proceeds from the sale of this batch of products of own production is 470 000 rub.
The amount of profit (before tax) on this project will be 270 000 rub.
5. Other income
The amount of other income in 2011 amounted to 150 000 rub.
100 000 rub.
The resulting difference in the accounting of other income for the purposes of accounting and tax accounting was formed in connection with the application of PBU to determine the amount of other income in accounting and the provisions of the Tax Code - to account for income for tax purposes.
The amount of the difference between BU and NU in the amount 50 000 rub. represents a constant difference, which consists of the amount of the contribution of the founder, who owns 100% of the shares in the LLC.
6. Other expenses
The amount of other expenses in 2011 amounted to 350 000 rub.
For the purposes of tax accounting, the amount of other income amounted to 185 000 rub.
The resulting difference in the accounting of other expenses for the purposes of accounting and tax accounting was formed in connection with the use of PBU to determine the amount of other expenses in accounting and the provisions of the Tax Code - to account for expenses for tax purposes.
The amount of the difference between BU and NU in the amount 165 000 rub. is a permanent difference, which is formed from the following expenses not accepted for NU purposes:
- 10 000 rub. interest on loans (including promissory notes) exceeding the maximum amount accepted for the purposes of NU in accordance with Article 269 of the Tax Code;
- 50 000 rub. expenses of previous tax periods that are not taken into account in the current tax period;
- 60 000 rub. bonuses from net profit and material assistance to employees of the organization;
- 40 000 rub. fines and penalties under the act of the on-site inspection of the PFR and the FSS dated September 27, 2011 No. 547;
- 5 000 rub. other expenses (including depreciation of fixed assets for non-production purposes, purchase of drinking water and other expenses not taken into account for NU purposes).
This loan was provided to the Company by Vozrozhdenie Bank to replenish working capital, in accordance with the loan agreement dated November 15, 2011. No. 2342/2.
The loan amount, according to the agreement, is 1 000 000 rub. and was fully received by the Company in November 2011.
The maturity date for the principal amount of the debt under the loan agreement is November 15, 2014. Interest is repaid monthly.
7. Income tax calculations
The Company forms in the accounting records and discloses in the financial statements information on corporate income tax calculations in accordance with the requirements of PBU 18/02 “Accounting for corporate income tax calculations”.
Profit for income tax purposes in accordance with the data of tax accounting registers and tax return data amounted to 945 000 rub.
The income tax rate in 2011 was 20%. The amount of accrued income tax according to the tax return for 2011 amounted to 189 000 rub.
The amount of accounting profit according to the accounting registers amounted to 800 000 rub.
The amount of the conditional expense reflected in the accounting records in the debit of account 99.02.1 “Conditional income tax expense” amounted to 160 000 rub. (800,000*20%).
The amount of deferred tax assets (hereinafter DTA) at the beginning of 2011 was 16 000 rub. During 2011 there was an increase in IT by the amount 4 000 rub. due to the occurrence of a temporary difference (in terms of depreciation of fixed assets) in the amount of 20 000 rub. (20,000*20% = 4,000).
The amount of permanent tax assets (hereinafter PTA) was in 2011 10 000 rub. PNA arose due to a permanent difference in the amount of the contribution of the founder who owns 100% of the shares in the LLC in the Company's management company in the accounting records in the amount of 50 000 rub.
The amount of permanent tax liabilities (hereinafter referred to as TTL) in 2011 amounted to 35 000 rub. PNR arose due to permanent differences in the amount 175 000 rub. ((10,000 + 165,000)*20% = 35,000).
The current corporate income tax calculated in accordance with the provisions of PBU 18/02 is 189 000 rub. ( 160 000 + 4 000 + 35 000 - 10 000 )* and corresponds to the data of the tax return for 2011.
*Current corporate income tax = conditional expense + Accrued IT + PNO - PNA.
8. Financial result of economic activity
The financial result obtained in 2011 amounted to 615 000 rub. ( 800 000 - 189 000 + 4 000 ).
The financial result of the enterprise in 2011 was affected by the expenses incurred and written off to the financial result:
- managerial,
- commercial,
- others,
9. Information about the accounting policy of the organization
The regulation on the accounting policy applied by the Company was drawn up in accordance with the provisions of Federal Law No. 129-FZ dated November 21, 1996. “On Accounting” and the requirements of PBU 1/2008 “Accounting Policy of the Organization” and other current provisions, guidelines, instructions.
The accounting policy of the Company was approved by Order No. 1UP dated December 30, 2010.
The initial cost of the fixed assets of the Company is repaid:
- in a linear way according to depreciation rates established depending on the useful life of fixed assets in accordance with the Classification of fixed assets, approved by the Decree of the Government of the Russian Federation of 01.01.2002. No. 1.
- the useful life is reduced by the number of years (months) of operation of this property by the previous owner.
- as part of inventories and are written off as expenses as they are put into operation.
Fixed asset repair costs:
- are included in the cost of products (works, services) of the reporting period.
- 1 time in 3 years.
Society creates reserveunder the reduction of the cost of inventory through financial results.
The reserve for the decrease in the cost of inventory is formed:
- by the amount of the difference between the current market value and the actual cost, if the latter is higher than the current market value.
- The amount of the reserve in the absence of asset movement:
- during the year - 50% of the book value,
- over a year - 100% of the book value.
- in a linear way.
- written off at the same time.
The allowance for doubtful debts is:
- 100%, if a court decision is made not in favor of the Company, or on bankruptcy/liquidation of the debtor.
- 100%, if all attempts made to search for the debtor were unsuccessful.
- 50% if it was not possible to avoid pre-trial settlement and the case was brought to court.
- 50% if the period of delay of the debt exceeds 3 months and the debtor does not sign the act of reconciliation of mutual settlements / does not agree with the amount of the debt.
- 30%, if the period of delay of the debt exceeds 3 months and the debtor signed the act of reconciliation of mutual settlements and agrees with the amount of the debt.
- as soon as work, services, products are ready (clause 13 PBU 9/99).
Unfinished production takes into account:
- on account 20 "Main production" in the amount of the actual cost. Account 21 "Semi-finished products of own production" does not apply.
- The actual cost of raw materials, materials used in the production of goods (performance of work, provision of services) and forming their basis, or being a necessary component in the production of goods (performance of work, provision of services);
- The cost of finished products used in production;
- General production expenses.
TO overhead expenses related to the production and sale of goods of own production, as well as the performance of work and the provision of services include:
- The actual cost of raw materials and materials used for general production purposes;
- Depreciation deductions for fixed assets for production and general production purposes;
- Depreciation deductions for intangible assets for production and general production purposes;
- The cost of purchased goods and finished products used in production;
- Expenses for work and services of third-party organizations of a production and general production nature;
- Labor costs of the main production personnel with deductions for insurance premiums;
- Deferred expenses in the part related to general production expenses.
- proceeds from the sale of products (works, services).
- are not distributed among the objects of calculation and are debited directly to the debit of account 90 “Sales of products (works, services)” as conditionally constant with distribution between product groups in proportion to the share of sales proceeds.
- fully in the reporting year of their recognition as expenses for ordinary activities (clause 9 PBU 10/99).
- based on the cost of their acquisition. Transportation costs for the delivery of goods are recorded separately on account 44 "Sales costs".
Costs incurred by the organization in the reporting period, but related to the next reporting periods are reflected in the balance sheet:
- in accordance with the conditions for the recognition of assets established by regulatory legal acts on accounting, and are subject to write-off in the manner established for writing off the value of assets of this type (clause 65 of the Regulations on Accounting and Reporting).
Non-exclusive rights for software products and other similar intangible objects that are not intangible assets in accordance with PBU 14/2007:
- accounted for on account 97 "Deferred expenses" and written off to expenses on a monthly basis in equal installments during the period of the contract (clause 39 PBU 14/2007).
Reserves for future expenses for the payment of vacation pay are recognized as an estimated liability and are reflected in the account of reserves for future expenses. The amount of the estimated liability is included in other expenses. The amount of the estimated liability is determined on the basis of the entire amount of vacation pay due, but not taken off by employees on the reporting date (clauses 17, 18, 19 of PBU "Estimated Liabilities, Contingent Liabilities and Contingent Assets").
Reserves for future expenses and payments in 2011, the creation of which is not mandatory in accordance with the current legislation - are not created.
Received loans and credits are accounted for as part of short-term or long-term borrowings, in accordance with the terms of the agreement, namely:
- With a maturity not exceeding 12 months, loans and borrowings are accounted for as short-term debt on loans and borrowings;
- With a maturity exceeding 12 months - as part of long-term debt on loans and borrowings.
Interest charges and (or) discount on bonds are reflected in:
- other expenses in those reporting periods to which these accruals relate.
CEO
Fomin Ivan Vladimirovich __________________ (signature)
Chief Accountant
Ivanova Elena Sergeevna __________________ (signature)
The composition of the annual financial statements of organizations includes an explanatory note to the balance sheet-2017. There is no sample of this document, so it can be drawn up in any form. In it, the accountant describes the most important changes that have occurred during the reporting period, and characterizes the financial situation at the end of the year. Learn how to do it right in this article.
Currently, the current legislation does not provide for the mandatory provision of an explanatory note to the balance sheet as part of the annual reporting. However, in most cases it is indispensable. There are no special requirements for this document, but it is desirable to compile it without errors. After all, if the data does not match those indicated in the report itself, the tax service may have questions. Let's see who, when, why and in what form should make explanations to the balance sheet?
Explanations to the balance sheet and a note are not the same
The explanatory note to the balance sheet, a sample of which can be seen in this article, does not replace the explanation to the balance sheet. By virtue of PBU 4/99 "Accounting statements of the organization", the latter concept, in fact, deciphers the individual reporting forms:
- statement of changes in equity;
- cash flow statement;
- other reporting forms and applications as part of financial statements.
Whereas the note is an arbitrary transcript of the entire financial situation in the organization. It can contain both general information and detailed explanations on the lines of the balance sheet and income statement. According to Article 14 of Federal Law No. 402 dated December 6, 2011 and paragraph 4 of Order No. 66n of the Russian Ministry of Finance dated July 2, 2010, this document is included in the annual financial statements. In particular, paragraph 28 of PBU 4/99 provides that business entities are required to issue explanations to the balance sheet and form No. 2 in the form of separate reporting forms and a general explanatory note. Although officials do not put forward any specific requirements for the form and content of this document, all organizations must submit an explanatory note with a balance sheet.
An exception to the general rule are representatives of small businesses who have the right to draw up and submit accounting reports in a simplified form. They must provide only two mandatory forms: a balance sheet and a statement of financial results. It is not necessary for them to decipher the meanings and describe their financial situation. However, if such a desire arises, it is not forbidden to draw up this document.
Who needs an explanatory note to the annual financial statements and why
A sample of this important document is necessary for all users of financial statements to obtain more complete additional information about the financial and economic activities of a legal entity. Such information, as a rule, cannot be provided in other reporting forms, but it is important and is of interest both to the founders or creditors of the company, and to regulatory authorities. Data can be included in this document based on specific wishes, for example, the board of directors, as well as based on the specifics of the economic situation at the enterprise by the end of the year. For example, if the income tax for the reporting period turned out to be significantly lower than the previous one, it makes sense to describe the reasons for this in an explanatory note, since the tax authority, having received such data, will still ask them to explain. Anticipating this desire, you can avoid not only unnecessary questions from the tax authorities and calls to the “carpet” to the inspection, but also an on-site audit, which can be scheduled as part of a desk audit.
What information should be in the explanatory note
There are no legal requirements for the content of this document. Each accountant independently determines not only the composition and completeness of the data in it, but also in what form it is more convenient to provide them:
- plain text;
- diagrams;
- tables;
- schemes;
- graphs.
There is a general plan for this document. Based on it, you can get an idea of what information is appropriate to provide. The most complete note may contain, in particular, the following sections:
- general data of the organization (address, average annual number of employees, types of economic activity, management staff, etc.);
- general data on the applied accounting policy;
- analysis of the current financial performance of the organization;
- textual and tabular explanations for financial statements.
In order for the inspectors to have as few questions as possible, the document should necessarily indicate at least brief information about accounting methods. This is especially true in areas such as:
- evaluation of goods, inventories and finished products;
- evaluation of work in progress;
- depreciation of fixed assets;
- recognition of sales revenue.
In addition, if changes have been made to the accounting policy of the organization, you must not only report this in a note, but also justify their reasons and necessity. There must be an assessment of the result of changes in monetary terms, namely the amount by which the assessment of financial statements items has changed due to a change in the accounting method. If there are actions in the plans for the current year that affect the facts of the organization’s economic activity or its continuity, for example, the upcoming liquidation of the organization, then this must be written in a note.
In the form of tables, it is desirable to provide transcripts of the lines of the balance sheet and Form 2, in particular:
- data on changes in the capital of the organization (authorized, reserve, additional, etc.);
- on the composition and movement of reserves for future expenses and payments;
- estimated reserves of the organization;
- changes in the structure and volume of intangible assets and fixed assets;
- data on the leased property of the organization;
- information on financial investments, receivables and payables;
- composition of production costs and other expenses;
- sales volumes of products, goods, works, services by type of activity of the organization and sales markets;
- data on securing the obligations of the organization;
- all extraordinary facts of the economic activities of the organization in the reporting period and their consequences.
In addition to dry facts and figures, the explanatory note welcomes the analysis of the financial performance of the organization. Such information, first of all, is of interest to founders, shareholders and investors, but this data will also tell tax specialists a lot. In particular, information about the business activity of the organization and its position in the market will be useful when applying for VAT deductions or when starting a foreign economic activity. If the work is not going as fast as you would like, and the results of the year are losses, a well-written explanatory note with a detailed analysis of all factors will help to avoid suspicion from the tax authorities of the use of illegal methods of tax reduction. If it is possible to find answers to all the questions of interest to the tax authorities in the document, then it will be easier to avoid additional methods of supervision.
Explanatory note to financial statements, sample
In order for our readers to have an idea of what this document might look like, we took the conditional organization Horns and Hooves LLC, which has been operating since 2005 and is engaged in the production and sale of dairy products. Her chief accountant compiled this document as follows:
Explanations to the balance sheet of Horns and Hooves LLC for 2017
1. General information
Limited Liability Company (LLC) "Horns and Hooves" was registered by the Federal Tax Service No. 1 for St. Petersburg on March 29, 2005. State registration certificate No. 000000000, TIN 1111111111111111, KPP 22222222222, legal address: St. Petersburg, Nevsky Prospekt, 1.
The balance sheet of the organization was formed in accordance with the rules and requirements of accounting and reporting in force in the Russian Federation.
- The authorized capital of the organization: 5,000,000 (five million) rubles, paid in full.
- Number of founders: two individuals O.M. Kurochkin and I.I. Ivanov and one legal entity Moloko LLC.
- Primary activity: milk processing OKVED 15.51.
- The number of employees as of December 31, 2016 was 165 people.
- There are no branches, representative offices and separate subdivisions.
2. Main provisions of the accounting policy
The accounting policy of LLC "Horns and Hooves" was approved by the order of the director Ivanov I.I. dated December 25, 2013 No. 289. The straight-line depreciation method is applied. Evaluation of inventories and finished products is carried out at actual cost. The financial result from the sale of products, works, services, goods is determined by shipment.
3. Information about affiliates
Ivanov Ivan Ivanovich - the founder of a 50% share of ownership in the management company, holds the position of general director.
Kurochkin Oleg Mikhailovich - founder of a 30% stake in the management company.
Moloko LLC is the founder of a 20% share in the management company, a Russian organization (founders V.P. Petrov and Yu.K. Sidorov).
In the reporting period, the following financial transactions were made with related parties:
- On March 12, 2017, the general meeting of founders of Horns and Hooves LLC reviewed and approved the financial statements of the organization for 2016. The meeting decided to pay the profit in the amount of 3,252,000 rubles based on the results of 2016 to the founders based on their share in the authorized capital. The payment (taking into account the withholding of personal income tax for two individuals) was made on 04/01/2017;
- On May 25, 2017 LLC "Horns and Hooves" concluded with the founder of LLC "Moloko" Yu.K. Sidorov an agreement on the acquisition of non-residential premises worth 5,102,000 rubles. The cost of the transaction is determined by an independent appraisal of the value of the property. Settlements under the contract were made in full on June 6, 2017, the act of acceptance and transfer of real estate was signed.
4. Key performance indicators of the organization for 2017
In the reporting year, the revenue of Horns and Hooves LLC amounted to:
- for the main activity "production and sale of dairy products" - 385,420,020 rubles;
- for other types of activities - 650,580 rubles;
- other income: 170,800 rubles (sales of fixed assets).
Costs for production and sale of products:
- acquisition of fixed assets: 1,410,500 rubles;
- OS depreciation: 45,230 rubles;
- purchase of raw materials: 110,452,880 rubles;
- wage fund: 137,580,040 rubles;
- travel expenses: 238,300 rubles;
- rental of premises: 8,478,190 rubles;
- other expenses: 532,458 rubles.
5. Breakdown of balance sheet items as of December 31, 2017 (on the example of accounts payable)
Availability and movement of receivables
Indicator Period For the beginning of the year Changes over the period At the end of the year Accounted for under agreements Reserve for doubtful debts Received dropped out Remainder In thousands of rubles with a decimal sign Under contracts (transactions) Fines, penalties, forfeits Redeemed Written off in fin. result Written off to allowance for doubtful debts Current Overdue Total short-term
accounts receivable, including:2017 25 489,3 (200,0) 15 632,7 300,4 (25 023,2) (102,1) (48,9) 15 726,1 522,1 buyers 20 409,0 (200,0) 10 015,5 300,4 (17 315,3) (87,7) (48,9) 12 750,9 522,1 suppliers 5080,3 - 5617,1 - (7707,9) (14,4) - 2975,2 - Total long-term receivables, including: 2017 50 000,0 - - - - - - 50 000,0 - on interest-free loans 40 000,0 - - - - - - 40 000,0 - TOTAL accounts receivable 30 489,3 (200,0) 15 632,7 300,4 (25 023,2) (102,1) (48,9) 65 726,1 522,1 6. Estimated liabilities and provisions
As of December 31, 2017, the organization formed an estimated obligation to pay for regular vacations of employees in the amount of 7,458,000 rubles, the number of unpaid vacation days is 67, the due date is 2019.
The allowance for doubtful debts was formed in the amount of 600,000 rubles. in connection with the presence of an overdue and unsecured debt of Girya LLC in the amount of 522,000 rubles.
The reserve for the decrease in the cost of inventories in 2017 was not created in the organization, since the inventories do not have signs of depreciation.
7. Salary
As of December 31, 2017, payables for wages for the organization as a whole amounted to 3,876,400 rubles. (payment for December 2017, due: 01/12/2018). Staff turnover in the reporting period amounted to 14.88%. The headcount as of December 31, 2016 is 165 people. The average monthly salary is 25,675 rubles.
8. Other information
(In this section, you need to describe all extraordinary facts in the economic and economic activities of the organization for the reporting period, describe their consequences. You can also describe all other material facts that affected the balance sheet in general and, in particular, major transactions and counterparties can be listed on them for the reporting period, as well as write a forecast or events that have already happened after the reporting date and are material.)
Director of Horns and Hooves LLC /signature/ Ivanov I.I. 03/19/2018.
When compiling an explanatory note, special attention should be paid to information about affiliated persons. It is desirable to issue these data in a separate section, as required by paragraph 14 of PBU 11/2008. By law, it is necessary to disclose information not only about the founders of the organization itself, but also about persons related to them, therefore, if there is a legal entity among the founders (as in our example), its participants or shareholders must be indicated. In addition, information should be provided on transactions with related parties made in the reporting period, as well as, regardless of the transactions, for those legal entities and individuals who are recognized as affiliates.
Obviously, the competent preparation of an explanatory note to the financial statements can save the manager and accountant from additional communication with regulatory authorities. It is important to remember that the detail of information in this document depends only on its originator - on the intention of the organization itself to disclose certain indicators for the year or not. The main and only requirement that the legislator makes to this document is that the information contained in the explanations must be reliable. The person who signed the document is responsible for its correctness.
Annual report for 2017 with the help of ConsultantPlus
All the necessary expert materials for the preparation of accounting and tax reporting for the year can be found in. It contains a special material on this topic - the Practical Guide to Annual Reporting 2017, which thoroughly analyzes all aspects and nuances, provides examples and step-by-step instructions, as well as samples of filling out all forms and forms.
The main purpose of compiling an explanatory note is to decipher the financial statements, in particular, the balance sheet (form 1). A well-written explanatory note will put the inspectors close to your company, greatly facilitate the delivery of the balance sheet and reduce the likelihood of an extraordinary tax audit.
Who does not provide an explanatory note?
Non-profit organizations and associations that do not have commercial activities are not required to draw up a document. However, if in some period they nevertheless received a profit from any side activity, they will have to provide an explanatory note. An example of such activity would be the sale of retired equipment. If it was simply written off, this will not be considered a commercial turnover.
Individual entrepreneurs may not bother to draw up an explanatory note. In addition, they do not represent the balance sheet at all. Enterprises that are on a simplified taxation system draw up a document in a simplified version.
It is worth remembering that if something important or significant happened in the company over the past year - the type of activity has changed, a large long-term loan has been received, significant damage would have been caused by a natural disaster, then these events must be reflected in the explanatory note.
How to write an explanatory note?
The form of the document is not regulated, that is, each taxpayer draws it up at his own discretion. However, PBUs impose strict requirements on what should be contained in the explanatory note.
The document must include:
A brief summary of the current activities of the company.
Any qualitative changes in property or finances (a large loan was taken, a large block of shares in another company was acquired) that affected the performance of the enterprise should also be reflected. Immediately it is worth explaining the reasons for what happened (market expansion, the need for additional funding).
Factors that strongly influenced the change in the financial condition of the company.
Management decisions made following the results of the reporting period.
Changes that have taken place in the distribution system of the financial result.
The main sections of the explanatory note
General information
Tell us about your company: form of ownership, name, number, management system and founders. If licenses have been obtained, indicate which and in what areas. At the end of the section, it is worth providing data on taxes paid for the period.
Accounting changes
Here are all the changes in the accounting policy. This section is worth filling out if you have set for yourself a non-standard calculation scheme for any indicator. You also need to justify why your scheme more accurately reflects the state of the company.
Assets and liabilities
In this section, it is worth describing in detail each block - for fixed assets, intangible assets, reserves, loans and credits, foreign exchange obligations.
For assets such as fixed assets and intangible assets, be sure to disclose depreciation and write-down information. For loans, it is worth describing the terms of their repayment and the operating expenses arising from them. For foreign exchange liabilities - exchange rate differences on financial results.
Balance sheet structure and profit dynamics
Here, show your ability to pay - for now and for the near future. It would be appropriate to calculate liquidity and financial stability indicators, as well as profitability.
Income and expenses
The purpose of this section is to show in detail your financial flows. Describe sales volumes (preferably in detail and in several sections - by type of product, by region), production costs, various distribution costs, the amount of financial reserves.
Business activity
Describe your indicators of business activity - the geography of sales, the degree of implementation of plans, the efficiency of using your own resources. If in any area you experienced a decline, indicate its reasons.
opening balances
Specify their size and the reasons for the changes (reorganization, changes in the law on accounting).
Affiliates
These are companies and persons that are dependent on you or control your company. These include your subsidiaries, parent organization, founders, shareholders. List them all, describe what kind of business relationship you have.
Conditional facts of economic activity
This includes unresolved cases and unestablished obligations. For example, if you have a court case on causing damage to a client, then the amount of compensation is still an unestablished, conditional fact. Or do you have warranties for your products? Describe such facts, the reasons for their uncertainty, the amount reserved for them.
Cooperative activity
Such activities include operations under simple partnership agreements. List the types and total number of such contracts, the amount of turnover on such operations and financial results on them.
Branches and divisions
If your company has subsidiaries, list them and give a general summary for them. As a result, indicate the cumulative share of divisions in the total value of your net income.
Budget aid
Perhaps your company received a budget loan or funding? Describe the amount and nature of the funds received.
Promotion Information
If your company is a joint-stock company, then in this section it is worth describing the number of issued shares, the degree of their payment (partially, in full), the size of the block of shares owned by your enterprise. If you had an additional issue, tell us about its reasons and size.
Tax assets
This section is governed by the provisions of PBU 18/02. Reflect in it changes in conditional income and expenses for income tax, tell us about the formed permanent and temporary differences, tax losses, deferred assets.
Terminated activity
When your company terminates any type of activity or activity in any area, write about the reasons and amounts of assets and liabilities being disposed of. Expand the financial flows for this type of activity and how their liquidation will affect the general condition of the company.
Other indicators
Here, summarize, show the expediency of the existence of the company, its usefulness.
Your explanatory note does not have to contain all of these sections. Write about what happened specifically with your company. The most detailed and understandable explanatory note will remove all unnecessary questions from your tax inspector!
You can download a sample explanatory note below.
Download a sample explanatory note to the balance sheet for freeAll forms
- explanatory note_sample.doc
Until 2013, the explanatory note was part of the financial statements. But after certain legislative changes, it ceased to be part of the reporting, although the law states that taxpayers can provide additional information that they consider useful.
According to the current legal regulation, financial statements also have applications. As attachments, you can specify a statement of changes in equity, a statement of the intended use of funds, explanations for and. And what features have explanations and how should they be compiled?
General provisions
As mentioned above, they are part of the annual financial statements. At the same time, they may not be presented by non-profit organizations and public associations that are not engaged in entrepreneurial activities and do not have turnover for the sale of products or goods.
Explanations can be presented both in text form and in tables. At the same time, companies have the opportunity to independently determine the content. But in the corresponding order of the Ministry of Finance of the Russian Federation (N 3 of 07/02/2010) recommended forms are presented.
During their registration, certain requirements must be met:
- all must be numbered;
- the number must be indicated in the column on the appropriate lines.
You need to be aware that, according to the current legal regulation, they are not considered a separate reporting form, but are only an appendix to the financial statements. In fact, this is a decoding to it. Explanations to the balance sheet and income statement consist of certain sections.
These include:
- financial investments;
- estimated liabilities;
- production costs;
- reserves;
- securing obligations, etc.
Each section consists of one or more tables. Explanation lines are to be encoded. Compilation of explanations can be carried out using the word program.
The legislative framework
According to the current legislative requirements, the financial statements must reflect reliable data that make it possible to draw up a provision on:
- the financial position of the enterprise;
- financial results of its economic activity;
- during the reporting period.
This sphere of legal relations received its regulation in the Federal Law “On Accounting”.
When compiling explanations, it is necessary to take into account the relevant provisions of RAS 4/99 (paragraphs 24-27). It is also necessary to be guided by the norms of other accounting provisions and subparagraph “b” of paragraph 4 of order No. 66n.
For example, in the explanations it is necessary to disclose information that relates to the accounting policies of organizations. Basically, they relate to the numerical indicators of financial statements.
At the same time, it is necessary to take into account the fact that the financial statements do not include information that is related. The composition and content of such information are provided for in paragraph 39 of PBU 4/99. In particular, an enterprise may provide additional information if, in the opinion of its executive body, such data is useful to interested parties.
Related information may include information such as:
- the dynamics of the financial performance of the enterprise;
- planned development of the company;
- proposed investments;
- risk management policy, etc.
The Law “On Auditing Activities” states that audit procedures are also carried out in relation to explanations. And additional information, as a rule, is not subject to evaluation.
An example of registration of explanations to the balance sheet by sections
The explanations are divided into several sections.
In particular, there are the following sections:
| Section 1 | Dedicated to intangible assets and expenses of the enterprise for R&D, including those for operations in progress. |
| Section 2 | This part contains information on fixed assets, profitable investments in tangible assets, and other non-current assets. |
| Section 3 | Dedicated to the financial investments of the enterprise. |
| Section 4 | Contains information about the company's inventory. |
| Section 5 | It discloses information about the accounts receivable and accounts payable of the enterprise. |
| Section 6 | Dedicated to production costs. |
| Section 7 | It contains information about estimated liabilities. |
| Section 8 | Dedicated to securing obligations. |
| Section 9 | Dedicated to data related to government assistance. |
These are the main sections that must be completed. To have a better idea of how to fill them out, you can see an example of the design of explanations for the balance sheet.
Required information
There is certain information that must be filled in without fail. What information should be filled in?
| First section |
|
| Section 2 | It is necessary to indicate information on fixed assets, profitable investments in material assets, as well as on other non-current assets. In this case, the data must be indicated both for the current and the previous reporting period. |
| Section 3 | Data on the initial cost of long-term and short-term investments, as well as their changes, must be filled in. It should also reflect information about investments that are pledged by third parties. |
| Section 4 | Dedicated to the costs of the enterprise. In this case, it is mandatory to indicate information about unpaid reserves, as well as about those objects that are the subject of pledge. |
| Section 5 | Is quite large and is dedicated to receivables and payables. It must disclose information about:
The section should contain information about doubtful debts. At the same time, it is also necessary to indicate data not only at the end of the year: it is also necessary to reflect changes for the reporting period. |
| Section 6 | Dedicated to production costs. It contains information about the cost of sales, selling expenses, etc. Data must be specified both for the reporting and for the previous period of time. |
| Section 7 | It is necessary to reflect data on the amounts of estimated liabilities. In this case, it is necessary to indicate data both at the beginning and at the end of the reporting period. It is also necessary to provide information on the amount of recognized, settled and excess liabilities. |
| Section 8 | Dedicated to securing obligations. Here it is necessary to fill in data on both received and issued security obligations. In this case, it is necessary to fill in these data for each type of collateral (pledge, guarantee, etc.). |
| Section 9 | Dedicated to state aid. Here you need to disclose data on the received budgetary funds. At the same time, their intended purpose must be indicated. Data must be filled in for both the current and previous reporting periods. |
These are the basic details that must be filled in. In addition to them, you can specify additional information that is not included in the financial statements, but which may contain useful data.
Below is a description of several tables by section.
Section 1 consists of 5 tables that are dedicated to:
And section 2 consists of the following tables, which are devoted to:
- the presence and movement of fixed assets;
- capital investments in progress (lines 5240, 5250);
- change in the value of fixed assets (lines 5260, 5270);
- other use of fixed assets (line lines 5280-5286).
For example, section 4 consists of tables devoted to:
Each section of the explanations has its own tables with certain lines that must be filled in in accordance with the requirements of the current legislation. A sample of filling out explanations in 2019 can be viewed on the Internet.