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Critical Analysis of The Notes To Financial Statements of San Miguel Corporation

The notes to the financial statements of San Miguel Corporation were analyzed according to Philippine Financial Reporting Standards (PFRS). It was found that San Miguel Corporation follows PFRS appropriately in the presentation of its notes. The notes are presented in a clear, systematic order. While some additional details could be provided, such as the names of related parties, the notes enhance understanding by disclosing adoption of new standards, additional transactions, proposed dividends, and other relevant financial information. Overall, San Miguel Corporation's notes to financial statements meet PFRS requirements to inform readers.

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Rey Onate
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169 views

Critical Analysis of The Notes To Financial Statements of San Miguel Corporation

The notes to the financial statements of San Miguel Corporation were analyzed according to Philippine Financial Reporting Standards (PFRS). It was found that San Miguel Corporation follows PFRS appropriately in the presentation of its notes. The notes are presented in a clear, systematic order. While some additional details could be provided, such as the names of related parties, the notes enhance understanding by disclosing adoption of new standards, additional transactions, proposed dividends, and other relevant financial information. Overall, San Miguel Corporation's notes to financial statements meet PFRS requirements to inform readers.

Uploaded by

Rey Onate
Copyright
© © All Rights Reserved
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Rey Oñate Jr.

BSA-2

Critical Analysis of the Notes to Financial Statements of San Miguel Corporation

A note to financial statements is one of the integral parts of the financial statements. It
provides a narrative description and disaggregation of the items that are presented on the
financial statements and gives also information about the items that do not qualify for
recognition to enhance the understandability of the users of the statements. Today, we will
examine and analyze if San Miguel Corporation, one of the largest companies in the Philippines,
follows the appropriate standard set by the PFRS in writing notes to financial statements.

PAS 1, paragraph 113, provides that an entity shall, as far as practicable, present notes
in a systematic manner. As what I have observed in the notes of San Miguel Corporation, the
information is presented in an orderly organized and is well-systematized. In the matter of fact,
the corporation followed the order of presenting the notes (PAS 1, paragraph 114). It could be
seen on the first part of the consolidated notes of San Miguel Corporation, the statement of
compliance with PFRS and followed by the rest of the order in presenting the notes. Hence, the
entity provides an explicit and unreserved statement of such compliance -“The consolidated
financial statements of the Group have been prepared in compliance with the Philippine
Financial Reporting Standards (PFRS)” as what PAS 1, paragraph 16 requires. I have also
observed that the entity disclose the monetary unit that they are using in the statements as well as
the rounding off the amounts into millions, except when it is indicated in some data.

The entity discloses additional information about the adoption of the new amended
standards and interpretations by the PFRS and as well as those new and amended standards and
interpretations not yet adopted by the entity for it will change its accounting policies in some
areas. Wherein, according to PAS 1, paragraph 112, states that the notes to financial statements
shall disclose the information required by the PFRS that is not presented in the financial
statements and provide additional information which is relevant to the understanding of the users
to the financial statements. Hence, doing this disclosure will lead or assist the users in
understanding how transactions, other events and conditions are reflected in the financial
statements.
PAS 1, paragraph 138, provides that an entity shall disclose the domicile and legal form
of the entity, its country of incorporation, as well as a description of the nature of the entity’s
operations and its principal activities and name of the parent and ultimate parent of the group.
However, as what I have observed in the notes of San Miguel Corporation, there was no
disclosure of the “particular” name of the parent and ultimate parent of the group as well as their
certain subsidiaries. In lieu, there are terms and conditions presented, amounts owed by/owed to
related parties and by what means it is collectible as well as the transaction price of each parties.
Thus, this information presented is greatly helpful to enhance the understanding of the users in
relation to where those revenues and purchases coming from.

Furthermore, the entity also presented the amount of dividends proposed and declared by
the Board of Directors (BOD) to common and preferred shares including the classification of
dividends that is used as well as the amount of dividends per share. This disclosure of the entity
relates to PAS 1, paragraph 137, which states that entity shall disclose the amount of dividends
proposed or declared before the financial statements where authorized to issue. In addition, the
latter paragraph also provides that an entity shall disclose the amount of any cumulative
preference dividends not recognized. However, the entity did not disclose such thing instead
presented the amount of cash dividends to all preferred stockholders with the tabulation of the
dividends per share in every class of shares.

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