Explanatory note to the annual financial statements

Who is obliged to attach explanations to the financial statements?

An explanatory note is required as part of the annual reporting of all organizations that maintain full accounting records.

An exception is organizations entitled to simplified accounting:

• small businesses;
• non-profit organizations;
• participants of the Skolkovo project.

Such entities have the right to report on a reduced set of accounting forms and are not required to provide explanations, or provide them only in relation to the most important information, without which it is impossible to assess the financial condition of the company.

How to compose it

General recommendations on how to correctly write an explanatory note as a response to a requirement:

1. Please provide the request number and date.
2. Provide a breakdown or justification of the amounts about which the tax authorities have questions.
3. If you discover that there is an error in your return, you should submit an amended return instead of responding to the request.
4. When sending clarifications, please indicate the surname and initials of the employee who wrote the order. This will speed up the processing of your response.
5. The document should be sent as a scan with signatures and a seal, or the response should be signed with a qualified electronic signature.

If you receive a VAT request, a formalized response must be drawn up and attached to the message from the Federal Tax Service. In the Kontur.Extern system, the form of this answer looks like this:

Sample

There is no unified form of explanatory note. The message should be drawn up based on the information required by the tax authorities. Most often the letter is written in free form.

An example of a letter to the tax office about providing clarifications on the tax burden:

Often the accountant will write a note, which is a cover letter accompanying the list of documents requested.

In some cases, the tax authority requires an explanation of the reasons for the loss or discrepancy in the tax base in different reports (for example, in the DAM and the 6-NDFL declaration). For this purpose, a letter is drawn up in any form with explanations.

What data is included in the notes to the financial statements in 2021

The explanatory note must reflect information about the accounting policies, because its provisions establish the accounting rules for the enterprise. Additional data not included in the main reports helps assess the financial condition of the entity and the reasons for the current situation as of a specific date.

PBU 4/99 determines the content of the notes to the balance sheet and financial statements:

• data at the beginning and end of the year, as well as the movement of intangible assets, fixed assets, accounts receivable and payable, financial investments and capital;
• composition of income and expenses;
• composition of reserves;
• extraordinary facts of economic life and their consequences;
• conditional facts of economic life, events after the reporting date, etc.

Accounting 2

You can study this section only if you have a sample balance sheet in front of you.
It is located in Appendix No. 1. Prepare it for work, if you have not already done so, and place it in front of you. Look at the balance. As you can see, the assets and liabilities of the enterprise are displayed on the balance sheet on different halves: left and right.

This is done to ensure that the organization’s property and debts do not accidentally mix. Property should be in assets, debts - in liabilities. It cannot be otherwise.

On the left half of the balance sheet, the accountant records the value of all assets that the company has.

On the right half of the balance sheet, the accountant records the value of all liabilities that the company has.

However, if an accountant begins to list in the balance sheet all the assets and liabilities of the enterprise, then instead of a two-page report, you will have to send a thick book to the tax office.

For this reason, a long time ago, accountants divided all the assets and liabilities of an enterprise into several groups and called these groups balance sheet items .

Each item was given its own name and a separate line was allocated for it in the balance sheet. All balance sheet items look like special shelves on which the accountant lays out all assets and liabilities.

For example, on the shelf called CASH we will place the money that is stored in the company’s cash register, and that which is in the bank account, and all the other money that the company has. Find this article in the sample.

Please note: the balance sheet may contain items with the same names. For example, in assets we have two lines FINANCIAL INVESTMENTS. Find them in your balance sheet.

This is not a repetition or an error. The fact is that financial investments are divided into two types: those that will return to us no earlier than in a year (non-current assets), and those that will return to us within a year (current assets). You will learn to understand such similar balance sheet items gradually during the learning process. There are no difficulties here. In the meantime, let's continue our acquaintance with the structure of the balance sheet.

You have probably already noticed the leftmost column of the balance sheet, which is called “Explanations”. This column appeared in the balance sheet recently. Why is it needed?

The fact is that in addition to the balance sheet, the company also draws up other reporting documents that are designed to reveal in more detail the content of all balance sheet items. One of them is called “Explanations to the Balance Sheet” . Each explanation in this document is assigned a unique number. The accountant writes this number opposite the balance sheet item that the document “explains.”

Who is interested in explanations of financial statements?

Explanation of financial statement indicators is necessary for a fairly wide range of interested parties, including:

Individual points: content and main part

If we consider in more detail the individual points of the explanatory note, it should be said that its content should completely coincide with the content of the thesis. As for the main part, only the basic information and conclusions obtained are disclosed here. There is no need to describe the study.

Regarding the introduction, it is appropriate to explain why your choice fell on this particular topic. What's special about it and why are you interested in it? Don't forget to mention why the topic is relevant and valuable.

It would also be a good idea to mention the difficulties you encountered during the research. Tell us how you were able to cope with them and what helped you with this.

To correctly draw up an explanatory note, you must first develop a plan.

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What form is used to prepare an explanatory note for 2019?

Clause 4 of Order No. 66n of the Ministry of Finance of Russia dated 07/02/2010 provides for the provision of explanations in tabular or text form. These methods can be combined. The organization independently decides what data requires clarification, but must take into account the recommended forms from Appendix No. 3 to Order No. 66n.

The document is usually drawn up according to the following plan:

1. Information about the organization: location; Kind of activity; information about managers, founders and affiliates, etc.
2. Data on accounting policies: methods of evaluating products, inventories; methods of calculating depreciation, information about changes in accounting policies during the year, if any.
3. Financial indicators for the reporting year: revenue and costs by type of activity; It is possible to decipher large income and expense transactions.
4. Actually, explanations for individual balance sheet items.

The specifics of the company’s activities in each specific case determine which indicators should be excluded and which ones should be added.

What happens if you don’t provide an explanation to the Federal Tax Service?

If a request is received via TKS, and the receipt is not sent within six days, tax authorities have the right to block the current account (clause 2, clause 3, article 76 of the Tax Code of the Russian Federation).

For failure to submit or untimely submission of explanations and requested documents within the framework of counter checks, paragraph 6 of Art. 93.1 of the Tax Code of the Russian Federation establishes sanctions:

• 10,000 rub. for unsubmitted or late submitted documents;
• 5000 rub. for late reporting of information.

For violations in fulfilling the requirement within the framework of a desk or field audit of a taxpayer, a fine of 200 rubles is established. for each document not submitted (clause 4 of article 93 of the Tax Code of the Russian Federation).

Explanatory note to financial statements - sample in 2020

Explanations for the balance sheet can be formatted as follows:

4.2. MPZ

4.3. Accounts receivable

4.4. Accounts payable

4.5. Salary

There are no payables and receivables for wages as of December 31, 2019.

The average number of employees as of December 31, 2019 is 77 people.

General Director of LLC "Bread Factory No. 3" Saushkin O.N. Saushkin

22.02.2020