Published or statutory accounts

Published accounts are in the public domain. They are the record of a company, its history; they reveal benchmarks and trends over years. They are records of governance and stewardship but also they are meant to have some forward-looking comments.

Published accounts are required by law, for good reasons explained in more detail in Chapter 4. Company directors, in particular, must understand their content as they are collectively signing up to them.

Executives need to comprehend what they contain and reveal about the business.

Links between published financial statements and financial strategy

Published accounts and other material, including promotional material, reveal, or sometimes obscure, strategies. There is the need to understand what has to go into published financial statements so that your strategies are clear (unless you wish to hide them!). Further, in the United Kingdom and the United States, legal or accounting standard requirements demand that you explain your business model or at least the risks the company faces in the future.

Looking at competitors or other benchmark entities, understanding their successful or failing strategies can be invaluable in fixing on your own strategies.

Content, order and logic of this chapter

Within this chapter we will cover the following topics:

- What extant accounting standards require

- Income statements and other comprehensive income

- Statements of financial position

- Notes to financial statements

- UK full financial statements

- Developments in financial reporting

- The strategic report

- Future developments

Order and logic

As published financial statements will to a greater or lesser degree reveal your financial strategy and tactics as they are executed, it is important to remember how financial reporting is perceived by accounting standard setters, company law and financial regulators. Financial statements are considered by many to be not simply 'accounts', a record of stewardship, but also a means of revealing executives' motives, their plans for the company, the business model and so on.

We are where we are - retreating to financial statements being merely a thoroughly reliable record of the past is unlikely, and thus we have to pursue the notion of accounts, financial statements, being 'decision useful'.

However, financial statements do still give a fair view of the entity's history and are useful as a measure of whether strategies have worked and how other comparative entities have performed with similar or alternative strategies.

Worldwide, the format and content of financial statements are evolving and examples are given of how content and disclosure might develop, all of which will in some way reveal more about companies' strategies.

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