The document discusses disclosure requirements for an annual audit report. It states that the basic requirement includes a profit and loss statement, balance sheet, accounting policies, and notes. It notes that disclosures must comply with legal requirements like tax laws and accounting standards. Events not affecting financial statements but providing more context should be disclosed in footnotes, like collateral for loans. Speculative transactions should not be recorded but contingencies and losses should be disclosed following prudence.

1. Your audit client will disclose information only that you force it to disclose.
Solution
1.The basic requirement for disclosure in the annual report is a statement of profit and loss
account, a balance sheet, accounting policy and notes to the financial statement. The disclosure
will be covered by legal requirement as companies act, tax laws and accounting standards.
2. Event which do not effect the financial statement but carries more information about the
financial statement should be disclosed in the footnote. Example - The colateral relating to a loan
is required to be disclosed as it gives additional information about the assets mortgaged and the
rights of borrower on such assets.
3. Speculative transaction should not be accounted. But all losses or contingencies should be
disclosed following principle of prudence. Example - If there is a wage agreement in negotiation
which is not closed as on the Balance Sheet date this will not have any impact in the financial
statement. However a footnote is required to explain the staus and the probable financial effect
on settlement of the agreement.