Companies incorporated under the Organization Law are required
to prepare the statutory report for authorization at the annual shareholders’ meeting, composed
of the following:
- Balance sheet
- Income statement
- Statement of changes in shareholders’ equity
- Business report
- Supporting schedules
Notes accompanying the balance sheet and income statement explain the accounting
policies and provide supporting details, as is common in other countries. The business report
consists of an outline of the business and it is internal control systems, and knowledge about
its operations, budget, and operating results. Anumber associated with supporting schedules
are also needed, separate from the notes, such as:
- Changes in bonds and other short- and long-term debt
- Changes in fixed assets and accumulated depreciation
- Collateralized assets
- Debt guarantees
- Changes in provisions
- Amounts due to and from the controlling shareholders
- Equity ownership in subsidiaries and the number of shares of the company’s stock held by subsidiaries
- Receivables due from subsidiaries
- Transactions with directors, statutory auditors, controlling shareholders and third parties that create a conflict of interest
- Remuneration paid to directors and statutory auditors
This information is prepared for a single 12 months on a parent-company basis and is audited through
the statutory auditor. The Company Legislation does not require a statement of cash or even funds flow.
Listed businesses also must prepare fiscal reports under the Securities and
Trade Law, which generally necessitates the same basic statements because the Company Law
plus a declaration of cash flows. However, underneath the SEL, consolidated financial statements,
not the actual parent-company statements, are the main concentrate. Additional footnotes and schedules
are also required. Financial statements and schedules submitted under the SEL must
be audited by independent auditors. Beginning in 2008, listed companies must issue quarterly
financial reports. Also beginning in 2008, managements of listed companies must
submit an annual assessment of the company’s internal controls and a letter certifying the
accuracy of the annual report. The internal control report must be audited.
A cash flow forecast for the following six months is included as additional information
in filings with the Financial services authority. Other forecast information is additionally reported, such as forecasts
of recent capital investments and manufacturing levels and activities. General, the amount of
corporate forecast confirming is extensive in Asia. However, this information is reported
within statutory filings and rarely seems in the annual report to investors.
