An annual report is the organisation's primary mean of reporting on its activity and financial performance to the general public. Annual reports are intended to give stakeholders and other interested people information about the organisation which promotes transparency.The organisation should ensure that their report is fair, balanced and understandable and provide the information necessary for an assessment of the organisation's financial position, financial performance, business model and strategy.
The areas to be covered in the annual report typically include
- information about the body and its objectives
- achievements and performance against key targets as set out in the plan
- business prospects and corporate strategy
- financial statements and details on the organisation's internal control.
Audit Financial Statements
All organisations are required to prepare financial statements in respect of each financial year. The annual financial statements are prepared from the information contained in its accounting records and other relevant information and in accordance with its applicable accounting standards and legislation.
The financial statements must give a true and fair view of the income, expenditure (financial performance), assets, liabilities and capital (financial position) of the organisation as of the financial year end. Financial statements are subject to external audit before inclusion in the annual report.
Statement on Internal Control
In many public organisations, the Statement on Internal Control (SIC) is a public accountability document which describes the effectiveness of internal controls of the organisation and is personally signed by its Accounting Officer (often the Chairperson).
The SIC sets out the organisation's approach to, and responsibility for, risk management, internal control and corporate governance. It is important that the statement is tailored to reflect the size and complexity of the organisation in order to provide a full understanding of the procedures, which have been put in place by the Board, to provide effective internal control. The purpose of the statement is also to highlight weaknesses which existed in the internal control system within the organisation during the reporting period. Guidance on financial statements and the Statement on Internal Control for State bodies was published by the government, but is a useful guide for any public body wishing to publish a statement on internal control. The National Audit Office from the UK also has a guide on the Statement on Internal Control for Audit Committees.
Chairperson's Comprehensive Report
It is required that the Chairpersons of State bodies must furnish a comprehensive report, in the form of a letter, addressed to their parent Department. This report includes items such as affirmation that Government policy is being complied with, significant post balance sheet events, a statement on the system of internal control and an outline of all commercially significant developments affecting the State body in the preceding year.