Notes to financial statements are considered an integral part of the financial statements."The objective of financial statements is to provide information about the financial position, performance and changes in financial position of an enterprise that is useful to a wide range of users in making economic decisions." Financial statements should be understandable, relevant, reliable and comparable.
The form to be filled out is determined by the organization supplying the loan or aid.But this may not be the case as determined by common law precedent.In Canada, auditors are liable only to investors using a prospectus to buy shares in the primary market.The rules for the recording, measurement and presentation of government financial statements may be different from those required for business and even for non-profit organizations.They may use either of two accounting methods: accrual accounting, or cost accounting, or a combination of the two (OCBOA).In consolidated financial statements, all subsidiaries are listed as well as the amount of ownership (controlling interest) that the parent company has in the subsidiaries.
Any items within the financial statements that are valuated by estimation are part of the notes if a substantial difference exists between the amount of the estimate previously reported and the actual result.
Notes to financial statements (notes) are additional information added to the end of financial statements that help explain specific items in the statements as well as provide a more comprehensive assessment of a company's financial condition. For example, if a company lists a loss on a fixed asset impairment line in their income statement, notes could state the reason for the impairment by describing how the asset became impaired.
Notes to financial statements can include information on debt, going concern criteria, accounts, contingent liabilities or contextual information explaining the financial numbers (e.g. Notes are also used to explain the accounting methods used to prepare the statements and they support valuations for how particular accounts have been computed.
In the United Kingdom, they have been held liable to potential investors when the auditor was aware of the potential investor and how they would use the information in the financial statements.
Nowadays auditors tend to include in their report liability restricting language, discouraging anyone other than the addressees of their report from relying on it.
Results of the audit are summarized in an audit report that either provide an unqualified opinion on the financial statements or qualifications as to its fairness and accuracy.