Financial statements are the fundamental means of communication between a company and its stakeholders. In order to transparently communicate, financial statements should contain relevant and faithfully represented information which is necessary for making good business decisions. Financial statements are prepared according to national laws and accounting standards. Disclosure requirements of accounting standards and national laws are frequently amended causing an increase in the administrative burden for enterprises. This is especially evident in the burden on micro and small enterprises. International accounting organizations, notably the IASB and the FASB, continuously conduct research and try to find solutions to existing problems. Some evidence that there is a problem in financial reporting is available in a survey conducted in 2013 by the IASB, according to which a significant proportion of respondents believe that there are problems related to the disclosure of information in financial statements reflected by insufficient disclosure of relevant information and excessive disclosure of irrelevant information. These problems cause non-transparent communication. Since 2013, in cooperation with numerous international organizations, the IASB has been conducting several projects under the leading initiative Better Communication in Financial Reporting. However, the improved disclosure requirements, transparent disclosure guidance, materiality principle examples of application, and other changes in the accounting standards are not sufficient if financial statement preparers do not use materiality judgment while disclosing information in financial statements. It is assumed that the same problem exists in the enterprises registered in the Republic of Croatia. Accordingly, the first research hypothesis states H1: Existence of irrelevant information in financial statements is consequence of non-appropriate usage of the materiality principle. It is assumed that the cause of excessive disclosure of irrelevant information is insufficient use of professional judgement by the managers so the first auxiliary hypothesis states H1a: Managers do not make the materiality assessment of the information in the financial statements in accordance with all the principles for the implementation of professional accounting judgments. The research was conducted using a survey method by a questionnaire on a sample of non-financial enterprises. The sample comprised 5,942 enterprises and was selected with an estimation reliability of 99% and a relative estimation error of 2.5%. The questionnaire was fully filled by 699 respondents, which gives a return rate of 11.76%. Most respondents agreed that accounting policies and estimates are clearly defined by the accounting standards and national legislation and are taken as default by the enterprise so there is no need for professional judgment. Most of them also agreed that managers do not conduct professional accounting materiality judgment because of the complexity of procedures, but rather apply the provisions required by the law. Additionally, the materiality judgment of the information in the financial statements is not carried out every year since it was established at the beginning of business. On the other hand, these results are contradictory to further statements. Most respondents agreed that managers (1) conduct the materiality analysis before disclosing the information; (2) conduct the materiality judgment according to internal procedures; (3) identify significant factors influencing the materiality judgment; and (4) collect significant, sufficient, and reliable data to carry out the materiality judgment. Conducting the One-Sample Proportion Test for each assertion, it was concluded that the hypothesis H1a cannot be fully accepted. Based on the respondents’ answers, managers conduct materiality judgment of the information in the financial statements in accordance with some, but not all, principles of the accounting judgment. In order to test the second auxiliary hypothesis H1b: The notes to financial statements contain significant amounts of irrelevant information, an analysis of the notes using the content analysis method was conducted. Using the list of 46 analysis points, analysis of 162 enterprises’ notes was conducted. Significant amount of irrelevant information was considered to be more than 20% of such information disclosed in the notes. Conducting the analysis, it was concluded that 88.89% of enterprises disclosed more than 20% of irrelevant information. One-Sample Proportion Test indicated that at 1% significance level the notes contain significant amounts of irrelevant information. At the end, the first hypothesis that the existence of irrelevant information in financial statements is consequence of non-appropriate usage of principle of materiality was partially accepted. It is considered that the unification of disclosure requirements of all accounting standards in one standard would greatly facilitate not only the publication, but also the control of the publication of all required information depending on its materiality. The second hypothesis states H2: Clearly defined and systematic disclosure principles contribute to the improvement of the financial reporting model. Analysing the respondents’ answers, the first auxiliary hypothesis H2a: Creating and applying a separate standard on the principles of disclosures in the financial statements contributes to enhancing the quality of formal and material aspects of financial reporting was tested. Most respondents agreed that (1) the creation and application of a separate standard would make all the other standards more understandable and easier to apply, while financial statements would become more consistent; (2) disclosure of relevant information would become improved and simplified; (3) the transparency would increase; and (4) the share of relevant information would increase, while the share of irrelevant information would decrease. Furthermore, most of them consider that (1) current disclosure requirements are too general and too broad which results in reporting difficulties; (2) there is a need to create clearly defined and systematic disclosure principles; and (3) the creation and application of such disclosure principles would contribute to the improvement of formal and material aspects of financial reporting. At 5% significance level, applying the One-Sample Proportion Test, the hypothesis H2a was accepted. Furthermore, most respondents agreed that the application of a separate standard would not significantly increase administrative costs since it would result in reducing the time for complying with the reports for all existing standards. Besides, respondents consider a separate standard would also reduce the time needed to prepare the notes without increasing the costs of reporting. The second auxiliary hypothesis H2b: Creating and applying a separate standard on the principles of disclosures in the financial statements does not affect the increase in the administrative costs of the preparers was accepted at 5% significance level. The improvement of the financial reporting models depends on the company size. Projects carried out by the IASB are primarily intended to improve the financial reporting of large companies applying the IFRSs. On the other side, Directive 2013/34/EU of the European Parliament and the Council enables an exception of micro enterprises from preparing the notes, among other simplifications. In order to examine whether there is a difference in financial statements quality depending on company size, the content analysis of notes was conducted. The hypothesis H3: Company size significantly influences the quality of information disclosed in the financial statements was tested using the regression model by the Ordinary Least Squares method. The control variables (namely: total assets, listing status, internationalization level, liquidity, and profitability) were also included in the model. The relative disclosure index included 46 items regarding the disclosure requirements of the Croatian Financial Reporting Standards and was analysed on the sample of 156 enterprises. At 1% significance level, it was confirmed that the company size significantly influences the quality of financial statements, while control variables did not show statistically significant influence. Micro and small enterprises disclosed significantly more irrelevant information and less relevant information than medium-sized and large enterprises and 78.97% of respondents agreed that standardization of notes in a table form would reduce time for their preparation and control while increasing their relevance and comparability. Accordingly, in accordance with the Directive 2013/34/EU, it is considered justified to facilitate the preparation of financial statements to micro enterprises. Standardized notes in table form, for which compilation would be automated, would improve their quality as well as comparability across enterprises. Based on that, the thesis proposes a model of systematic notes that would be primarily intended for micro enterprises, but could also be used by small enterprises. Conducted research described in detail as well as clearly explained results could be of great importance to both enterprises and regulators themselves. The Croatian Accounting Standards Board should certainly consider the possibility of reviewing the Croatian Financial Reporting Standards toward the creation of a separate standard for the principles of disclosure in the financial statements. Further consideration of the recommendations on the systematization of notes to micro, and preferably small enterprises, should lead to a final proposal for standardized notes. Prescribing the form and majority of the content of the notes for micro enterprises, which could also be used by small enterprises, would simplify and improve the financial reporting of micro and small enterprises. Medium-sized and large enterprises should persist in disclosing relevant information and omitting irrelevant information by using the professional accounting materiality judgments.