Audited, accountant-reviewed and notice-to-reader financial statements

Audited, accountant-reviewed and notice-to-reader are three types of financial statements—documents that show the financial status of a company. All three are prepared according to International Financial Reporting Standards (IFRS). Privately held companies can choose to adopt Accounting Standards for Financial Enterprises (ASPE) or IFRS.

Audited financial statements require the most accountant involvement. Notice-to-reader statements require the least.

The differences between the three types of statements are as follows:

• Audited financial statements undergo a reasonable number of tests to make sure the assets and debts reported are accurate. The accountant preparing them also gives an opinion on the quality of the statement and lets the reader know the statement “fairly represents” the company’s financial status.
• Accountant-reviewed financial statements undergo fewer tests, focusing only on whether the statement is “plausible”—that is, likely to be accurate. The accountant preparing these statements does not give an opinion on their quality or accuracy.
• Notice-to-reader statements are simply compilations of information provided by the company. The information undergoes no tests and the accountant preparing them offers no opinion or assurance. Accordingly, they simply put the readers “on notice.”

The cover letter discloses what type of financial statement is being released. Any assumptions made in preparing the statement will be described in the notes to the financial statements.