At the end of each fiscal year, companies with public securities are required to provide shareholders with an annual report. The annual report includes financial statements such as the balance sheet and additional disclosures, which may include items such as relating to business conditions, risk factors, legal proceedings, stock performance, and internal control procedures. Also, disclosure notes explain data presented in financial statements themselves or provide information not directly related to any specific item in the statements. Some examples are Pensions Long-term Debt, Income Taxes, Property Plant and Equipment, Leases, Investments, Employee Benefits Plan. It must include a summary of significant accounting policies, descriptions of subsequent events, and related third-party transactions. Specific Disclosure Notes summary of Significant Accounting Policies. It conveys valuable information about a companys choices from among various alternative accounting methods. Subsequent Events occur after a companys fiscal year-end but before the financial statements are issued. Examples: Issuance of debt or equity securities, Business combination or the sale of a business, Sale of assets, Event that sheds light on the outcome of a loss contingency.

Noteworthy Events and Transactions some transactions and events occur only occasionally but are potentially important to evaluating a companys financial statements. In this category are Related-party transactionsTransactions between the company and owners, management, families of owners, etc. Errors and fraudMisstatements that are unintentional (errors) or intentional (fraud). Illegal actsBribes, kickbacks, illegal contributions to political candidates, and other violations of the law. The more frequent of these is related-party transactions.

Review the Disclosure notes to determine which items you think should be included and which items of the disclosure can be omitted. Remember who looks at these notes and who they are intended to benefit.