Statutory Financial Statements

What are Statutory Financial Statements?

Statutory financial statements are your company’s official financial statements that are submitted to the regulatory authorities, across jurisdictions.

Statutory financial statements are the annual, quarterly or bi-annual consolidated financial statements of your company. These statements provide information on the income, expenses, balance sheets, budgets, and are reviewed by a statutory auditor. The preparation and requirements of these statements vary across jurisdictions and industries.

These statements cover:

• Income Statement: Includes revenue from operations, business expenses, profit or loss, income tax and earnings per share
• Balance Sheet: Includes details of your company’s assets, liabilities and shareholder equity
• Notes to Financial Statements: Accounting policies as well as the assumptions and methods of calculating key figures in the financial statements
• Report of the Statutory Auditor: An audit verification document by a statutory auditor

Why is Statutory Financial Statements important for business today?

Statutory financial statements enable your company to:

• Track the financial health of your company and benchmark it against your peers
• Mitigate any legal and operational risks related to any regulatory non-compliance across jurisdictions
• Provide information on your company’s financial performance, investments, loans and executive compensation to your stakeholders and regulators
• Formulate effective strategies to achieve both short and long-term financial objectives
• Improve your company’s corporate governance

Why is it important for an event tomorrow?

Statutory financial statements are important for an event tomorrow, as they help:

• Evaluate current and future tax liabilities and other obligations of your company
• Validate the financial data published by your company, authenticated by a certified auditor
• Assess financial performance to understand the reasons for any volatility and estimate the future earning potential of your company
• Evaluate your company’s profitability and potential to scale
• Understand expenses that are critical for due diligence
• Benchmark the financial performance of your company against competitors
• Assess details of the accounting policies used to prepare these statements and ensure consistency

Pros of addressing Statutory Financial Statements

• A comprehensive and consolidated view of your company overall
• Aid in forecasting financial performance of your company by leveraging historical trends
• Transparency between regulatory authorities and your company
• Obtain funding and loans quicker by providing audited financial statements of your company
• Provision of up-to-date financial statements to internal and external stakeholders and regulators across jurisdictions

Cons of not addressing this topic

• Increase in exposure to risk of liabilities, fines and litigation due to non-submission of statements
• Hampering of transparency between your company and shareholders
• Increased time and cost of due diligence for both internal company management and potential investors