What financial statement references are required at the bottom of financial statement pages? Is there a difference in the references in audited statements and those in compilations or reviews? What wording should be placed at the bottom of supplementary pages? Below I answer these questions.
First, let’s look at financial statement references in audit reports.
While generally accepted accounting principles do not require financial page references to the notes, it is a common practice to do so. Here are examples:
Accountants can also–though not required–reference specific disclosures on a financial statement page. For example, See Note 6 (next to the Inventory line on a balance sheet). It is my preference to use general references such as See accompanying notes.
Audit standards do not require financial statement page references to the audit opinion.
Supplementary pages should not include a reference to the notes or the opinion.
Now, let’s discuss references in preparation, compilation, and review engagements.
The Statements on Standards for Accounting and Review Services (SSARS) do not require a reference (on financial statement pages) to the compilation or review report; however, it is permissible to do so. What do I do? I do not refer to the accountant’s report. I include See accompanying notes at the bottom of each financial statement page (when notes are included). This reference to notes, however, is not required, even when notes are included. (Notes can be omitted in compilation engagements.)
You are not required to include a reference to the accountant’s report on the supplementary information pages. Examples include:
What do I do? I include a reference to the accountant’s report on each supplementary page. But, again, it’s fine to not include a reference to the report.
Additionally, SSARS provides a nonattest option called the preparation of financial statements (AR-C 70). This option is used by the CPA to issue financial statements that are not subject to the compilation standards. No compilation report is issued. AR-C 70 requires that the accountant either state on each page that “no assurance is provided” or provide a disclaimer that precedes the financial statements. AR-C 70 does not require that the financial statement pages refer to the disclaimer (if provided), but it is permissible to do so. Such a reference might read See Accountant’s Disclaimer.
If your AR-C 70 work product has supplementary information, consider including this same reference (See Accountant’s Disclaimer) on the supplementary pages.
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Charles Hall is a practicing CPA and Certified Fraud Examiner. For the last thirty years, he has primarily audited governments, nonprofits, and small businesses. He is the author of The Little Book of Local Government Fraud Prevention and Preparation of Financial Statements & Compilation Engagements. He frequently speaks at continuing education events. Charles is the quality control partner for McNair, McLemore, Middlebrooks & Co. where he provides daily audit and accounting assistance to over 65 CPAs. In addition, he consults with other CPA firms, assisting them with auditing and accounting issues.
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Elizabeth, there are no differences (regarding the references at the bottom of the page) when there is a disclaimer of opinion.
Is there any difference in footnote requirements when there is a disclaimer of opinion ?
Ben, I too have seen this done. I think it’s fine either way. We just place the reference on the financial statement pages and not on the notes pages. Good question. Thanks.
What about the notes to the financial statements? Should they contain reference to the Auditor’s report a header or footer? I’ve seen it done both ways and I’m not sure which one is correct or maybe both are acceptable.