Notes to financial statement and auditors report help to clarify accounting procedures. It explains irregularities and inconsistencies seen in the records. It provides additional information that explains how an organization arrived at a figure, it reports details and additional information that was left out of a main financial document. It also carries important information on the accounting mythologies used for recording and reporting transactions.
The notes include talkingabout the financial conditions not covered in the financial statements. They explain the irregularities, if any, in the financial statements. Income sheet and balance sheets are also included in the notes. The notes are created separately because they otherwise would have been very long and would have clouded the data in the financial statements.
Notes to the financial statements provide important details about the company's financial condition not reported in the actual financial statements, for example, explanations of accounting policies or the descriptions of fixed assets. The auditor's report presents an independent opinion on the financial statements of the company being audited. the report is important because it ensures that the company's financial statements are fair and have been prepared in accordance with generally accepted accounting principles.