Cutting clutter from a client's notes
How a preparer removes immaterial disclosures from a client's notes, keeps what users need and avoids broken note references in the set.
By Achekam · · 4 min read · For Accountants & audit firms in South Africa, Nigeria, Kenya
A small trading company's financial statements run long, and most of the length is notes: policies for biological assets it does not own, a financial instruments note that lists every category in the standard, a segment note for a business with one shop. The one thing a lender would want to know, that the company depends on a single supplier and has a loan covenant due for renewal, is a single sentence near the back.
That is clutter, and it is common. It usually comes from good intentions: a template that covers everything, a fear of leaving something out, a review checklist ticked line by line. The result is statements that technically say a great deal and practically communicate very little.
Two ways materiality can fail
IFAC's article Making Sense of Materiality, written by the then IASB Chairman Hans Hoogervorst, explains the idea behind trimming: materiality means that only information important to investors needs to be included in the financial statements, and information about trivial matters can be excluded.
The same article warns that when materiality is not applied properly, the result can be too much information, sometimes called clutter, or too little. Both are failures. Clutter hides what matters; omission leaves it out altogether. Cutting disclosures is not the goal in itself. The goal is notes where every paragraph earns its place and nothing a user needs is missing.
Why the checklist approach produces clutter
IFAC's article states that companies which use IFRS requirements as a checklist instead of exercising judgement produce statements that comply with the accounting requirements but do not communicate effectively with investors.
Checklists are useful for making sure nothing is forgotten. They become a problem when they decide what goes in. A disclosure checklist asks "does the standard require this?", not "would a user of this client's statements miss it?" For a small, simple entity, the honest answer to the second question is often no.
The framework matters too. The IFRS Foundation states that the IFRS for SMEs Accounting Standard requires substantially fewer disclosures than full IFRS Accounting Standards. A client correctly reporting under IFRS for SMEs should not carry disclosures borrowed from full IFRS templates.
Notes that small clients often carry for no reason
Look for these when reviewing a draft:
- Policies for transactions the client does not have. Leases as lessor, investment property, biological assets, government grants, hedge accounting.
- Standards issued but not yet effective, listed in full with "no material impact expected" against each, including ones that could never touch the client.
- Generic risk notes that describe credit, liquidity and market risk in textbook terms without saying anything about this client.
- Breakdowns of immaterial balances into many tiny lines.
- Repeated text, where the same policy appears in the policy note and again in the related note.
- Nil notes that exist only to say there is nothing to report, where nothing requires that statement.
And look for what clutter often crowds out: concentration of customers or suppliers, covenant terms, going concern judgements, related party balances, commitments and events after the reporting date.
Removing notes in the Studio without breaking the set
In Achekam's Studio, notes take their figures from the mapped trial balance, and facts the trial balance does not hold are left as "[to be completed]". A statement line carries a note reference only when that note is in the set. So when the team decides a note does not belong, the line that would have pointed to it does not carry a reference to a missing note.
Three related facts help when tidying:
- Policy wording. The Studio's standard accounting policy wording is based on IFRS for SMEs and labelled for review before issue, and staff can write their own. The label is a prompt to read each policy against the client's actual transactions, not to accept the library whole.
- Combining lines. A firm can add its own statement lines and groups and change the wording of any row title, and later builds keep those choices. Each custom line still totals into a standard line, so notes, the cash flow statement and iXBRL tags stay consistent. That makes it practical to group several small items under one clear caption.
- Edits survive rebuilds. When the draft is rebuilt from the trial balance, a block a person edited is kept, so trimming done early in the job is not undone by a late adjustment.
A final read as a whole
Note-by-note review catches errors. It does not catch clutter. Before the set goes to the reviewer, someone should read the notes from start to finish as a user would, asking:
- What are the few things a lender or owner most needs to know about this client this year? Can they find them quickly?
- Is any note there only because the template had it?
- Does any policy describe something the client does not do?
- Is anything important said only once, buried in a long note?
- If a note were deleted, would anyone who relies on these statements notice?
Record the significant decisions on the file. When a disclosure is left out because it is immaterial, a short note of why helps the reviewer and next year's team.
For policies specifically, material accounting policy information explains the test that replaced "significant" policies. Note references and numbering covers keeping cross-references right as notes come and go, and aggregation and disaggregation under IFRS 18 looks at the principles that will govern grouping from 2027. Pick one client this season, read its notes as an outsider, and cut one note that nobody would miss.
General guidance only, not advice on your own circumstances. Tax and payroll rules change: check the current position with the authority or your adviser.
