Why is use of clear language important in financial statements?

Investor View ()


Investors often tell us they don’t necessarily want more information in financial statements but more useful information. They cite among their frustrations boilerplate accounting policies and a lack of useful commentary in the notes. In this ‘Investor view’, we look at the investors’ concerns and simple ways entities can address them.

We all know that there is some jargon inherent in financial reporting. But as many investors are not technical accountants, it can cause them some confusion.

If management can get ‘back to basics’ and explain the underlying economic substance of the accounting in the financial statements, it would significantly help investors in trying to analyse the entity’s performance.