Accounting, 3rd Edition

Chapter 12

The annual report

‘It is a yearly struggle: the conflict between public relations experts determined to put a sunny face on somewhat drearier figures, and those determined to tell it like it is, no matter how many “warts” there are on the year's story. The annual report is a vital instrument designed – ideally – to tell the story of a company, its objectives, where the company succeeded or failed, and what the company intends to do next year.’

Kirsty Simpson, ‘Glossy, expensive and useless’, Australian Accountant, September 1997, pp. 16–18.

Learning Outcomes

After completing this chapter you should be able to:

• Explain the nature of the annual report.
• Outline the multiple, conflicting objectives of the annual report.
• Discuss the main contents of the annual report.
• Evaluate how the annual report is used for impression management.

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Chapter Summary

• The annual report is a key corporate financial communication document.
• It is an essential part of corporate governance.
• It serves multiple, and sometimes conflicting, roles of stewardship/accountability, decision making and public relations.
• It comprises key audited financial statements: income statement (i.e., profit and loss account), ...