Home
Columnists
Editorials
Cartoon

Personal details
Change password
Purchases
Sign out

Home
News
Business
Opinion
Science & Health
Magazine
- Commodities
- Market News
Sports
- Commodities
- Market News
Rest of Africa
- Commodities
- Market News
Kusi Ideas
- Commodities
- Market News
Podcasts
Videos
Sponsored

Services
- Our Brands

Common pitfalls to avoid while preparing financial statements

Sunday, March 17, 2024 — updated on September 18, 2024 - 2 min read

Financial reporting has undergone significant changes in recent years. PHOTO | SHUTTERSTOCK

Awodumila

By Akinyemi Awodumila

Partner

PwC

Thank you for reading businessdailyafrica.com

Financial reporting has undergone significant changes in recent years. The IASB (International Accounting Standards Board) has introduced several new financial reporting standards in the past five years, such as IFRS 9 (Financial Instruments), IFRS 16 (Leases), IFRS 15 (Revenue from contracts with customers), and IFRS 17 (Insurance Contracts).

With more standards like IFRS 18 (Presentation and disclosure in the financial statements) on the horizon, including those on rate-regulated activities, the financial reporting landscape is set to evolve further. In light of this, it's crucial for financial statements preparers to understand the perspective of the users.

This understanding is critical to maintaining and enhancing the utility of the financial statements. Therefore, it's essential for preparers to steer clear of common pitfalls when preparing financial statement disclosures.

Related

Columnists

AWODUMILA: Financial statements can expose greenwashing by organisations

Nov 12, 2023 - 2 min read
Columnists

AWODUMILA: Why ESG impact should be part of corporate financial statements

Jun 18, 2023 - 2 min read

By avoiding these pitfalls, preparers can ensure that their disclosures are well-prepared, thereby increasing the utility of the financial statements for users, enhancing transparency, and building trust with stakeholders.

One key aspect to note is the limited size (pages) of financial statements. This limitation necessitates that organisations are deliberate in their inclusion of information and its placement. This approach ensures that disclosures focus on material matters, preventing immaterial matters from obscuring them.

A focus on material accounting policies and disclosure is crucial as it directs attention to what is important for the users of the financial statements. Another pitfall to avoid is the use of boilerplate disclosures. Disclosures should be bespoke and tailored to an organisation. It can be frustrating for financial statement users when disclosures fail to convey an organisation’s unique story, potentially eroding stakeholder trust.

A scattered approach to disclosures is another pitfall to steer clear of. This approach occurs when information on balances, amounts, or transactions is scattered across different notes in the financial statements.

The better approach is to ensure that information on balances, amounts, and transactions is provided once and in one place.

This approach simplifies navigation of the financial statements and enhances understanding of the details related to balances, amounts, and transactions. As the disclosure requirements for financial reporting increase, how organisations apply them will be crucial in aiding users’ understanding and building trust with their stakeholders.

Akinyemi Awodumila is a Partner at Deloitte East Africa. He is an author who writes and speaks widely on corporate reporting topics.

Login to join the discussion

Don't have an account? Register

Get it First!

Get Breaking News Delivered to your Inbox.

Conflict

Companies

Telkom billions trail fades on multi-country barriers

Sep 19, 2024 - 5 min read
Columnists

Inside the investors’ safety nets in Kenya’s new privatisation plan

Mar 18, 2024 - 3 min read
Companies

Cytonn fails to secure more time for funds compliance

Mar 18, 2024 - 4 min read
Columnists

Essentials for sustained economic growth in Kenya

Mar 18, 2024 - 4 min read

Latest

Meta

Frequently Asked Questions

Sep 25, 2024 - 4 min read
Meta

Cookie Policy

Sep 24, 2024 - 5 min read
Meta

Terms and Conditions

Sep 24, 2024 - 15 min read
Companies

Telkom billions trail fades on multi-country barriers

Sep 19, 2024 - 5 min read

In the headlines

Companies

US think-tank taps Kenya's outgoing UN envoy

Mar 19, 2024 - 3 min read
Meta

Frequently Asked Questions

Sep 25, 2024 - 4 min read
Meta

Cookie Policy

Sep 24, 2024 - 5 min read
Meta

Terms and Conditions

Sep 24, 2024 - 15 min read

Oops

We're sorry, we couldn't load the article

If you have an Ad-blocker please disable it and reload the page or try again later.

Follow us

Apps

Support

Contact Us
Frequently Asked Questions

Tools

This Week's ePaper
News Feed
Events

Legal & Privacy

Terms and Conditions
Privacy Policy
Cookie Policy
Our Blog Rules

Nation Africa
The Citizen
Nairobi News
Mwananchi
NTV Kenya
Mwanaspoti
NTV Uganda
Business Daily
Daily Monitor
Nation Media Group

Nation Media Group © 2026