Annual financial statements are the most valuable source of information regarding a company's affairs, yet most investors never even look at them.

Ignoring them is a big mistake, but investors need to be aware that different accounting rules apply in different jurisdictions and within one set of rules in particular there are a number of options. While it is difficult to extract the hard information from 130 odd pages of an average set of financial statements, it can be done.

The trick is to treat the financial statements as if they were a murder mystery and read the last page first, where you will usually find a GAAP reconciliation. Then look at the accounting notes; the related party transaction note is always worth a read, and in some companies is a mine of sometimes alarming information.

The pension note should be next. One of the eight methods of accounting for pensions removes most of the pension deficit from the balance sheet and some Irish companies have used this option, although most have not.

Skip over the note on financial instruments, the accounting standard on this is pretty tight and unlike the pension options noted above, gives the right answer. Now work sequentially back through the notes until you arrive at the cash flow statement. The line item "cash generated from operations" is the key figure. The income statement and balance sheet will now make more sense, because you understand the underlying assumptions and options used.

As for the information at the front of the annual report, while many chairman and directors reports contain insightful commentary, it would be safe to say that there will be a certain gloss put on the performance.

Some investors make decisions based on broker or newspaper reports rather than hard information, yet every company produces very detailed and enlightening financial statements that as an investor you should never ignore.

• Aidan Clifford is advisory services manager at the Association of Chartered Certified Accountants in Ireland