Skip to main content
Fallback image
Guidance note

Understanding financial statements of state-owned enterprises

EITI Requirements 2.6, 4.2, 4.5 and 6.2

Guidance for multi-stakeholder groups (MSGs) on using SOEs’ financial statements as a starting point for public disclosures

Applicable EITI Standard
Related EITI Requirements


Financial statements provide an overview of the financial performance, financial position and activities of a company in a given period. Companies, including state-owned enterprises (SOEs), usually prepare four main financial statements on a monthly, quarterly and annual basis: the balance sheet, the income statement, the cash flow statement and the statement of shareholders’ equity for the period. These statements, along with documents containing significant accounting policies and other explanatory information, describe a company’s complete financial position.

In accordance with Requirement 2.6.b of the EITI Standard, SOEs are expected to publicly disclose their audited financial statements, or the main financial items where financial statements are not available. These complement the financial disclosures required by the EITI Standard which relate to state participation and SOEs. This note provides guidance to stakeholders, including EITI multi-stakeholder groups (MSGs), on locating information required by the EITI Standard in the standard financial statements of SOEsHideThe guidance provided in this note is based on the assumption that SOE financial statements are prepared in accordance with International Financial Reporting Standards (IFRS) issued by the IFRS Foundation and the International Accounting Standards Board (IASB). These aim to set internationally recognised accounting specifications and policies.  

Financial audits are conducted to obtain an independent opinion of whether a company’s financial statements provide a “true and fair” representation of a company’s financial performance. In most countries, audits of financial statements are mandatory in order to provide tax authorities and governments assurances that companies adequately calculate their tax base and payments. Financial audits also provide investors with assurances that the financial data is sufficiently reliable to adequately calculate risks associated with investing in the company.

EITI Standard
2.6 4.2 4.5 6.2