What are financial reports? Legal regulations on financial statements you need to know

Financial reports are an important part of an enterprise’s economic and financial information system, providing information about the enterprise’s financial situation, business operations and cash flow. The law requires all businesses to prepare and present financial statements in accordance with current accounting standards and accounting regimes. Below are the legal regulations on financial statements that businesses need to master to comply with the requirements.

What are financial reports?

According to the provisions of Clause 1, Article 3 of the Law on Accounting 2015, financial statements (FS) are a system of economic and financial information of an accounting unit, presented according to the form prescribed in accounting standards and accounting regimes. This report aims to provide information on the financial situation, business situation and cash flows of the enterprise.

Through financial reports, businesses can provide information about:

• Asset;
• Liabilities;
• Equity;
• Revenue, other income, production and business expenses and other expenses;
• Profit, loss and division of business results;
• Cash flows.

In addition, businesses need to provide additional explanatory information in the notes to the financial statements to explain the indicators reflected in the consolidated financial reports.

Necessary information for a financial report for a business

Financial reports include many necessary components to provide complete information about the financial situation of a business. According to Article 100 of Circular 200/2014/TT-BTC, an enterprise’s financial report includes the following basic parts:

• Balance sheet: Situation of assets, liabilities and equity.
• Report on business performance: Revenue, costs and profits.
• Cash flow report: Cash flow in and out of the business.
• Financial statement notes: Explain in detail the indicators on the financial statements and applied accounting policies.

In addition to the above main components, the enterprise’s financial statements also need to reflect other information such as the status of performing obligations to the State, transactions related to asset transfers, and special items.

Regulations on deadlines for submission of financial reports

The deadline for submitting financial reports is an important factor for businesses to ensure compliance with legal regulations.

For state-owned enterprises

Deadline for submitting quarterly financial reports:

• Accounting units of state-owned enterprises must submit quarterly financial reports no later than 20 days from the end of the quarterly accounting period.
• For parent companies and State Corporations, the deadline for submitting quarterly financial reports is no later than 45 days from the end of the quarterly accounting period.
• The accounting unit under the enterprise or State Corporation must submit quarterly financial reports to the parent company or Corporation according to the deadline prescribed by the parent company or Corporation.

Deadline for submitting annual financial statements:

• Accounting units of state-owned enterprises must submit annual financial statements no later than 30 days from the end of the annual accounting period.
• For parent companies and State corporations, the deadline for submitting annual financial statements is no later than 90 days from the end of the annual accounting period.
• Accounting units under State Corporations must submit annual financial statements to the parent company and Corporation according to the deadline prescribed by the parent company and Corporation.

For other types of businesses

Deadline for submitting annual financial statements:

• Accounting units that are private enterprises and partnerships must submit annual financial statements no later than 30 days from the end of the annual accounting period.
• For other accounting units (other than private enterprises and partnerships), the deadline for submitting annual financial statements is 90 days at the latest.

Affiliated accounting unit:

• The affiliated accounting unit must submit its annual financial report to the superior accounting unit according to the deadline prescribed by the superior accounting unit.

CSPL: Article 109 Circular 200/2014/TT-BTC.

The role of financial reporting in businesses

Financial reports play an important role in helping managers and stakeholders better understand the financial situation and business operations of an enterprise. Specifically:

• Assess financial situation: Financial reports provide economic and financial indicators to identify the financial situation, solvency, and business performance of the enterprise.
• Economic decision making: Investors, banks, and creditors use financial statements to make decisions about investing, lending, or transacting with businesses.
• Improve business strategy: Based on information in financial reports, businesses can analyze and improve business strategy, improve capital efficiency and sustainable growth.

Financial reports not only support business management but are also an important tool for communicating with external audiences such as government agencies and business partners.

Consulting services for preparing financial reports according to current law

At Long Phan we provide consulting services on regulations and procedures for preparing financial reports. Consulting services help businesses:

• Consulting on regulations on preparing financial reports in accordance with standards and regulations.
• Consulting to ensure financial reports accurately reflect the financial situation and operations of the business.
• Consulting on policies suitable to the business activities of the enterprise.
• Consulting on other regulations and procedures related to business operations.

Financial reports are an essential tool for businesses to monitor their financial situation and make effective business decisions. Preparing and submitting financial reports in accordance with regulations not only helps businesses comply with the law but also brings transparency and ease in mobilizing capital and attracting investment. If you need support in preparing accurate and timely financial reports, please contact us via the hotline 0906735386 to receive in-depth consultation.