In compliance with the provisions of the Financial Reporting Standards (NIF), the notes to the financial statements should include explanations that expand on the origin and meaning of the items presented, as well as the impact of the accounting policies adopted and any relevant changes.
Among the essential aspects that must be revealed are: bases for preparing financial statements and the important accounting policies applied by the entity.
These disclosures allow users of financial information to better understand the company's situation, assess compliance with accounting regulations, and facilitate comparability with other entities.
Furthermore, the NIFs state that accounting policies must be adapted to the specific characteristics and operations of each company, avoiding the use of standardized information that does not reflect the specific reality.
Minimum recommended content
According to the NIF, the note on the basis of preparation and significant accounting policies must include, among other aspects:
- Regulatory framework and presentation currency.
- Express declaration of compliance with NIF.
- Description of the nature of the entity's operations.
- Summary of the accounting policies applied.
- Date of authorization for issuance of financial statements.
- Relevant information on contingencies, commitments and related parties.
Application example
The following describes, as an example, a model that can serve as a reference for the preparation of this note in the financial statements of an entity:
1. Basis for preparing financial statements
The financial statements have been prepared in accordance with the Financial Reporting Standards (NIF) issued by the Mexican Financial Reporting Standards Council (CINIF), including the specific NIFs and the Conceptual Framework.
The presentation currency is the Mexican peso, and figures are presented in thousands of pesos, unless otherwise indicated.
The preparation of these statements requires the use of critical accounting estimates and judgments by management, reviewed on an ongoing basis and based on historical experience and reasonable expectations about future events.
2. Compliance with NIF
Management declares that the financial statements fully comply with IFRS, achieving a fair presentation. Any deviations will be promptly disclosed in the corresponding notes.
3. Nature of the operations
The Entity is dedicated to [describe the main business, for example: the provision of business and tax consulting services in the national and international markets], starting operations in [year].
The registered office is located in [address or city], carrying out activities mainly in [country or region].
4. Important accounting policies applied
4.1 Cash and cash equivalents – These include cash, demand bank deposits, and highly liquid investments with original maturities of up to three months.
4.2 Financial instruments – Financial assets and liabilities are initially recognized at fair value and subsequently measured in accordance with IFRS C-2.
4.3 Accounts receivable – They are recorded at their realizable value; the allowance for uncollectible accounts is determined based on historical experience and recovery analysis.
4.4 Inventories – They are valued at the lower of cost or net realizable value, using the [FIFO / average cost] method.
4.5 Property, plant and equipment – They are recorded at acquisition cost plus directly attributable expenses; depreciation is calculated using the straight-line method based on estimated useful lives.
4.6 Leases – They are classified as financial or operational according to the degree of transfer of risks and benefits.
4.7 Revenue recognition – They are recognized when control of goods or services is transferred to the customer and when economic benefits are likely to be obtained.
4.8 Provisions and contingencies – They are recognized when there is a present obligation arising from a past event and it is probable that an outflow of resources will be required.
4.9 Employee benefits – They are recognized in accordance with NIF D-3, distinguishing between short- and long-term benefits.
4.10 Income taxes – They are determined in accordance with NIF D-4, including current and deferred tax.
5. Additional relevant information
- Date of authorization for issuance of financial statements: [day/month/year].
- Authorizing body or officials: [name and position].
- The Entity (is / is not) a Public Interest Entity (PIE) in accordance with NIF A-3.
- Additional disclosures: contingent assets and liabilities, contractual commitments, risk management policies, and names of direct and ultimate controlling companies.
This model must be adapted to the characteristics and operations of each entity, ensuring that the accounting policies accurately reflect the manner in which relevant transactions and events are recorded, presented, and disclosed.
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