- Balance sheet
- Income statement
- Notes to financial statements
- Directors’ report
- Auditor’s report
The financial statements of all corporations and other limited liability companies above a certain size must be audited. Large companies must also prepare documents relating to the prevention of business bankruptcies and a social report, both of which are unique to France. There are no requirements for a statement of changes in financial position or a cash flow statement. However, the CNC recommends a cash flow statement, and nearly all large French companies publish one. Individual company and consolidated statements are both required, but small groups are exempt from the consolidation requirement. The Code de Commerce allows simplified financial statements for small and medium-sized companies. To give a true and fair view (image fidèle), financial statements must be prepared in compliance with legislation (régularité) and in good faith (sincérité). A significant feature of French reporting is the requirement for extensive and detailed footnote disclosures, including the following items:
- Explanation of measurement rules employed (i.e., accounting policies)
- Accounting treatment of foreign currency items
- Statement of changes in fixed assets and depreciation
- Details of provisions
- Details of any revaluations
- Breakdown of receivables and liabilities by maturity
- List of subsidiaries and share holdings
- Amount of commitments for pensions and other retirement benefits
- Details of the impact of taxes on the financial statements
- Average number of employees listed by category
- Analysis of turnover by activity and geographically
The directors’ report includes a review of the company’s activities during the year, the company’s future prospects, important post–balance sheet events, research and development activities, and a summary of the company’s results for the past five years. The financial statements of commercial companies must be audited, except for small, limited liability companies and partnerships.
Listed companies must provide half-yearly interim reports and the results of their environmental activities. Among other items, information must be given on:
- Water, raw material, and energy consumption, and actions taken to improve energy efficiency
- Activities to reduce pollution in the air, water, or ground, including noise pollution, and their costs
- Amount of provisions for environmental risks
French law also contains provisions aimed at preventing bankruptcies (or mitigating their consequences). The idea is that companies that have a good understanding of their internal financial affairs and prepare sound projections can better avoid financial difficulties. Accordingly, larger companies prepare four documents: a statement of cash position, a statement of changes in financial position or cash flow statement, a forecast income statement, and a business plan. These documents are not audited, but are given a limited examination by the auditors. They are submitted only to the board of directors and employee representatives; they are not made available to the shareholders or the general public unless provided voluntarily (such as the cash flow statement). Thus, this information is designed as an internal early-warning signal for management and workers.
Asocial report also is required for all companies with 300 or more employees. This report describes, analyzes, and reports on matters of training, industrial relations,health and safety conditions, wage levels and other employment benefits, and many additional relevant work-environment conditions. The report is required for individual companies, not consolidated groups.
See Also:
See Also:
