With 2020 now behind us, it’s time for businesses to file their financial statements. And the 2020 season looks set to be somewhat eventful due to the impact of the coronavirus epidemic on company results. Although the deadlines for filing depend on various factors, in Italy joint stock companies usually have to approve their financial statements by April 30 or June 29 at the latest. However, everything must be finalised way in advance so the often lengthy documents can be translated. In some cases, it is mandatory to provide a translation of financial documents; in others it is optional, although always recommended if a company operates internationally. And if company directors aspire to having investors all over the globe, the importance of translation becomes only too clear.

With this in mind, we’ve gathered some financial statement terminology in some of the world’s most commonly spoken languages, helping readers plough their way through documents written in Italian, Spanish and English.

First of all, the Annual Report is the general document containing the various tables and reports; some are compulsory, others optional. In the Investor Relations section of company websites, look out for the relazione annuale for Italian companies or the informe anual for businesses operating in Spanish-speaking countries.

Setting aside the optional sections of the annual report (for example the Relazione sulla corporate governance/Corporate Governance Report/Informe de gobierno corporativo), a key part of the documentation is the bilancio – Financial Statements in English and cuentas anuales (always plural) in Spanish – and accompanying tables. The similarities between bilancio, Balance Sheet and balance de situación can lead to confusion: Balance Sheet and balance de situación are just one part of the financial statements, known in Italian as the stato patrimoniale. Alongside the balance sheet, another essential component is the cuenta de pérdidas y ganancias, Profit & Loss Account or Income Statement in English; the corresponding table is known in Italian as the conto economico. Other tables are el estado total de cambios en el patrimonio neto and el estado de flujos de efectivo, respectively the prospetto delle variazioni di patrimonio netto and rendiconto finanziario in Italian, or Statement of Changes in Shareholders’ Equity and Cash Flow Statement in English.

Another compulsory part of the annual report is the Nota integrativa al bilancio, Notes to the financial statements in English and Memoria correspondiente al ejercicio annual in Spanish. On the subject of ejercicio, the word esercizio also exists in Italian, while in English it is common to find year instead of the more specific financial year.

It is essential for investors to take a look at the opinion (Italian giudizio and Spanish opinión) given by what are known as (independent) auditors. The opinión is set out in a document entitled Informe de auditoría independiente de cuentas anuales, Relazione della società di revisione indipendente in Italian and quite simply the Independent Auditor’s Report in English.

If investors want to take a closer look beyond the numbers at how the company is managed, they will need to consult the relazione sulla gestione or directors’ report. As succinctly described on the Borsa Italiana (Italian Stock Exchange) website:

The directors’ report is a document accompanying the financial statements, written by the company directors, and included with the annual report. It is designed to enable shareholders to fully understand the results set out in the balance sheet and variations occurring during the year to the company’s capital and income statement. [our bold]

Known in English as the Report on Operations or Directors’ Report and in Spanish as the Informe de gestión o Informe económico y financiero, it is essential to understanding the figures given in the financial statements. Since it is a highly discursive part of the annual report, foreign investors should be provided with an accurate  professional translation so they can make appropriate investment decisions. This is where Arkadia’s team can meet the needs of companies and their investors. Since it started out in business, Arkadia Translations has been translating annual, half-yearly and quarterly reports for leading Italian and international concerns with its experienced, expert team of financial translators. Trusting an expert supplier is therefore essential to understanding company results, even more so in 2021 when many businesses will have to justify a loss.