Introduction
Leveraging Large Language Models (LLMs) can significantly speed up the process of drafting notes to financial statements. By reducing the time accountants spend on initial drafting, LLMs allow professionals to focus on areas requiring judgment and critical review. Below is a prompt sequence of prompts that can help obtain good quality drafted notes.
Step 1: Preparation and Contextual Understanding
Begin by allowing the LLM to familiarize itself with the prior period’s annual report. This step is crucial for the LLM to understand the key terminology and identify any potentially missing disclosures. Uploading the full financial statements with notes is ideal, but if the document is too large, providing the primary financial statements and the relevant note that will need to be drafted should suffice. We will use the example of “Tangible Assets” note.
Prompt 1
You are now a seasoned accounting expert in IFRS and financial reporting. You are drafting the notes to the annual financial statements prepared under IFRS. In the first step, I will provide you with the previous year’s financial statements. You will read and understand these financial statements to gain more information and a broader context, so that your subsequent work is more accurate.
Additionally, with a focus on the Tangible Assets note, also please list any disclosures that could be potentially missing under IAS 16.
<Upload the previous year financial statements with notes>
Step 2: Drafting the Notes
Provide the LLM with key data and instruct it to draft the notes for the current year. Emphasize the importance of maintaining consistency with past disclosures while ensuring that the current year’s data stands out. For comparative data, request a slightly more succinct presentation. Below is just an example, of the disclosure included – such as draft sentences regarding additions, disposals, impairments, and other. This disclosure should always be tailored according to what you ordinarily disclose in that section of the notes to the financial statements.
Prompt 2
In the second step, your task is to draft the notes for the current year. For the disclosures, please use the same level of detail as in the past. Try to use consistent formulations to ensure alignment with the previous year’s report. For the comparative period disclosures, make them slightly more succinct, as the current year’s disclosures should stand out and be more prominent. Below is the key information for the current year’s disclosure (for example, when drafting a note on Tangible Assets):
- Additions of XXX, related to YYY.
- Disposals of XXX, related to YYY.
- Impairment of XXX, related to YYY.
- Assets held for sale of XXX, related to YYY.
- Transfers of XXX, related to YYY.
- Etc.
Here is the information from the Tangible Assets note from the prior year, that should be disclosed as well:
<Copy the disclosure from the previous year’s Tangible Assets note>
Step 3: Review and Refinement
Once the LLM generates the draft, review it from professional perspective, as to whether it contains all appropriate disclosures and in appropriate form. This is where your professional input is crucial in refining the output. Subsequently, prompt GPT to check errors, inconsistencies, and grammatical mistakes.
Prompt 3
In the third step, please review the disclosures for errors, inconsistencies, and grammatical mistakes. As applicable, please list these issues and also directly correct the disclosures as appropriate. The current version of the disclosure is below:
<Copy the current draft version of the Tangible Assets note>
At this point, the English version of the Tangible Assets note should be finalized.
Step 4: Translation
If the financial statements need to be published in another language than English, upload the translated prior year’s financial statements. This helps the LLM understand the relevant accounting terminology and ensures consistent translation. Let’s assume, in this, that translation to Ukrainian is needed.
Prompt 4
In the fourth step, I am providing you with the previous year’s financial statements in Ukrainian. You will read these financial statements to understand how the accounting terminology and financial statements line items are translated. This will be then relevant for the next step, where I will provide you with the final disclosures in English that will need to be translated to Ukrainian.
<Upload the previous year financial statements with notes in Ukrainian>
Step 5: Translation Execution
Instruct the LLM to translate the English disclosures into the desired language, maintaining alignment with the original meaning and using consistent accounting terminology.
Prompt 5
In the fifth step, please translate the following disclosures from English to Ukrainian. When translating to Ukrainian, please use the accounting terminology consistent with the previous year’s financial statements in Ukrainian, and align the Ukrainian translation as closely as possible to the English original. The final English disclosure is below:
<Copy the final version of the Tangible Assets note in English, from the Step 3>
Step 6: Final Review
Conclude by reviewing the translated disclosure for grammatical errors and making necessary corrections to ensure accuracy and clarity.
Prompt 6
In the sixth step, please review the translated disclosure in Ukrainian for grammatical errors. As applicable, please list these errors and also directly correct these errors in the disclosure as appropriate.
<Copy the draft version of the Tangible Assets note in Ukrainian, from the Step 5>
Prompt 7
In the final step, compare the Ukrainian and English versions to check for consistency. Ensure that nothing is included in the English version that is missing in the Ukrainian version, and vice versa.
<Copy the draft version of the Tangible Assets note in Ukrainian>
<Copy the draft version of the Tangible Assets note in English>
At this point, you should have both version of the Tangible Assets note, in English, and in Ukrainian.
Conclusion
By following these steps, accountants can maximize efficiency in drafting notes to financial statements, leveraging the capabilities of LLMs. It is crucial to use versions of LLMs that offer enterprise-grade security and privacy to ensure that sensitive data remains protected and is not shared.