What is Supplementary Information in Accounting?

Supplementary information is any information presented in addition to the financial statements that is not necessary to fairly present the financial statements. This information may be presented with the financials or in a separate document. It should be derived from, and directly related to, the underlying records used to prepare the financials. The supplementary information should also relate to the same period covered by the financials. An example of supplementary information is an expanded table containing the details for any line item in the financials. Thus, a breakdown of the cost of goods sold could be presented, or a breakdown of the components of the fixed assets line item.

Types of Supplementary Information

There are many types of supplementary information that may be attached to an organization’s financial statements. Here are some of the more common types of supplementary information:

Schedule of operating expenses. This schedule provides a detailed breakdown of operating expenses, categorized by function or department. It supplements the income statement by offering transparency into where the company incurs costs. Such detail can help management and stakeholders evaluate cost control and efficiency across the organization.
Budget vs. actual comparisons. This information compares the actual financial performance against the budgeted figures. It highlights variances, helping users assess how closely the company adhered to financial plans. This can support accountability, forecasting accuracy, and internal decision-making.
Segment reporting schedules. Segment schedules disaggregate financial data by business unit, geographic region, or product line. This information allows stakeholders to assess the profitability and performance of different areas of the company. It’s especially useful for multi-division corporations to evaluate risk and allocate resources effectively.
Cash flow forecasts. These forecasts estimate expected cash inflows and outflows over future periods. While not a part of the required financial statements, they help assess liquidity and solvency. They are critical for planning, especially in industries with cyclical cash flow patterns.
Capital expenditure details. This schedule outlines major purchases of property, plant, and equipment during the reporting period. It supplements the balance sheet and statement of cash flows by giving insight into the nature and purpose of investments. It’s useful for understanding future depreciation and the company's growth strategy.
Debt maturity schedules. This information breaks down outstanding debt by maturity dates. It helps users evaluate the corporation’s long-term solvency and refinancing risk. Knowing when major obligations are due can influence investment, lending, and strategic decisions.

How to Audit Supplementary Information

When supplementary information is presented, the auditor's job is to determine whether the information is fairly stated in relation to the financials as a whole. This involves such tasks as making inquiries with management about the purpose of the supplementary information, understanding how the information was prepared, and reconciling it to the underlying records. If you find any issues, you should point them out to management and not approve the information until it has been changed to be in accordance with your findings.