Section 7: Notes to the Financial Statements (AASB1061_04-26)

This section sets out the information to be presented in the notes to the financial statements and how to present it. Notes contain information in addition to that presented in: 

(a) the statement of financial position; 

(b) whichever of the following statements are presented: the statement(s) of financial performance, the statement of income and retained earnings, and the statement of changes in equity; and 

(c) the statement of cash flows.

Notes provide narrative descriptions or disaggregation of items presented in those statements and information about items that do not qualify for recording in those statements. In addition to the requirements of this section, nearly every other section of this Standard requires disclosures that are normally presented in the notes.

The notes shall: 

(a) present information about the basis of preparation of the financial statements and the accounting policies used, in accordance with paragraphs 7.6–7.7; and 

(b) disclose material information that is not presented elsewhere in the financial statements and either specifically required by this Standard or otherwise relevant to an understanding of any of the financial statements.

An entity shall, as far as practicable, present the notes in a systematic manner. An entity shall cross-reference each item in the financial statements to any related information in the notes.

Examples of systematic ordering or grouping of the notes include: 

(a) giving prominence to the areas of its activities that the entity considers to be most relevant to an understanding of its financial performance and financial position, such as grouping information about particular operating activities; 

(b) grouping information about items measured similarly, such as assets measured at fair value; and 

(c) following the order of the line items in the statement of financial position, the statement(s) of financial performance, the statement of changes in equity, the statement of income and retained earnings and the statement of cash flows, such as: 

(i) statement of compliance with this Standard (see paragraph 2.3); 

(ii) material accounting policy information (see paragraph 7.6); 

(iii) supporting information for items presented in the various statements, in the order in which each statement and each line item is presented; and 

(iv) other disclosures, including: 

(1) contingent liabilities (see paragraph 19.15), contingent assets (see paragraph 19.17) and unrecorded firm commitments; and 

(2) non-financial disclosures, if any.

An entity shall disclose material accounting policy information. Accounting policy information is material if, when considered together with other information included in the entity’s financial statements, it can reasonably be expected to influence decisions that the primary users of general purpose financial statements make on the basis of those financial statements.

An entity shall disclose in the notes the judgements, apart from those involving estimations (see paragraph 7.8), that management has made in the process of applying the entity’s accounting policies and that have the most significant effect on the amounts recorded in the financial statements.

An entity shall disclose in the notes information about the key assumptions concerning the future, and other key sources of estimation uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next reporting period. In respect of those assets and liabilities, the notes shall include details of: 

(a) their nature; and 

(b) their carrying amount as at the reporting date.

An entity shall disclose fees to each auditor or reviewer, including any network firm, separately for the following services performed during the reporting period: 

(a) the audit or review of the financial statements; and 

(b) all other services. 

An entity shall disclose the nature of those other services.