The IFRS Notes to the Financial Statements: A Checklist

The primary statements give the numbers; the notes make them intelligible. For most IFRS reporters the notes are the largest part of the annual report, and they are where auditors spend much of their time. This guide sets out the standard structure and what a reviewer expects to find.

How the notes are ordered

IAS 1 sets a systematic order that most entities follow. In broad terms the notes run:

1. a statement of compliance with IFRS;
2. the material accounting policy information;
3. supporting information for items presented in the primary statements, in the order each statement and each line appears; and
4. other disclosures, including contingent liabilities, commitments and non-financial disclosures.

Each line on the face of a statement is normally cross-referenced to its supporting note, so a reader can move from the balance sheet straight to the detail.

1. Basis of preparation

The opening notes establish the framework. An entity whose statements comply with IFRS makes an explicit and unreserved statement of compliance. This section also covers the measurement basis (typically historical cost, modified for items measured at fair value), the presentation currency, and the going concern assessment, disclosing any material uncertainties. Where relevant, it notes the basis of consolidation.

2. Material accounting policy information

Following the 2023 amendments to IAS 1, entities disclose material accounting policy information rather than "significant accounting policies". The shift is deliberate: boilerplate that simply restates the requirements of a standard is discouraged, and entities are expected to explain the policies that are material to their transactions — for example how revenue is recognised for their specific performance obligations, or how they measure a particular class of inventory. Policy information is material if, together with the amounts, it could reasonably be expected to influence users' decisions.

3. Judgements and estimation uncertainty

This is where auditors and regulators focus. IAS 1 requires two distinct disclosures:

• the critical judgements management made in applying accounting policies (apart from those involving estimations) that have the most significant effect on the amounts recognised — for example, whether control exists, whether a lease term includes renewal options, or whether an arrangement contains a lease;
• the sources of estimation uncertainty that carry a significant risk of a material adjustment in the next financial year — impairment testing assumptions, useful lives, provisions, expected credit losses and fair-value inputs.

Vague, unquantified statements here are a common audit finding. Reviewers look for the specific assumptions, the sensitivities and, where practicable, ranges.

4. Per-standard supporting notes

The bulk of the notes support individual line items, each driven by the relevant standard. A typical set includes:

• Revenue (IFRS 15) — disaggregation, performance obligations, contract balances;
• Property, plant and equipment (IAS 16) — a reconciliation of cost and accumulated depreciation by class;
• Intangible assets and goodwill (IAS 38 / IFRS 3) — movements and, for goodwill, impairment testing;
• Leases (IFRS 16) — right-of-use assets, lease liabilities and maturity analysis;
• Financial instruments (IFRS 9 / IFRS 7) — categories, fair values, and credit, liquidity and market risk;
• Income taxes (IAS 12) — the tax charge, a reconciliation to the statutory rate, and deferred tax by type of temporary difference;
• Provisions and contingencies (IAS 37);
• Employee benefits (IAS 19), related parties (IAS 24) and events after the reporting period (IAS 10).

Comparatives, consistency and navigation

Two structural expectations run through the whole set. First, comparatives: every note carries the prior-year figure unless a standard exempts it, and narrative comparatives are given where they aid understanding. Second, consistency: presentation and classification are kept the same from year to year, and any change is explained and applied to the comparatives. Good notes are also navigable — each face-of-statement line is cross-referenced to its note, and the financial-risk disclosures required by IFRS 7 (credit, liquidity and market risk, with sensitivity analysis) are gathered in one place rather than scattered. Capital management disclosures explain the entity's objectives, policies and processes for managing capital. Reviewers treat missing comparatives and orphaned line items as basic errors, so a final tie-out pass — every note agreeing to the face of the statements — is time well spent.

A practical drafting order

A reliable workflow is to let the numbers drive the notes: once the trial balance is mapped to the IFRS taxonomy, each populated line tells you which standard applies and therefore which note is triggered. Draft the basis of preparation and policies, then work down the primary statements line by line, then finish with the cross-cutting notes (financial risk, related parties, subsequent events). Review that every note ties to the face of the statements before anyone else sees a draft.

How it connects

The notes complete the set required by IAS 1. Two of the heaviest note areas have their own guides: IFRS 16 leases and the consolidation disclosures that follow from IFRS 10.