What is the importance of the notes to the financial statements and the auditors report?

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.