What describes the summary of significant accounting policies (SSAP)?

The summary of significant accounting policies (SSAP) serves as an essential component of financial statements, providing insights into the specific accounting principles and methods applied by an entity in preparing its financial statements. By being formatted as either the first note or as a separate presentation, the SSAP ensures that users of the financial statements can easily understand the fundamental bases on which the financial information is prepared, facilitating transparency and comparability.

This flexibility in presentation is crucial for users, such as investors, creditors, and regulators, who need to grasp how accounting estimates and policy choices might affect the reported financial positions and results. Clearly identifying significant accounting policies at the outset helps in contextualizing the financial data that follows, allowing for better analysis of the entity's financial health and operational performance. The emphasis is on the clarity and accessibility of this information, rather than strictly adhering to a specific format, as this can vary by reporting entity and regulatory framework.