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Sharpe CPA  /  Footnotes  /  General footnote

Note 1: the summary of significant accounting policies.

Every set of GAAP statements opens its notes with it, and it is the first note a reviewer reads. Answer the questions and the note writes itself — worded for a private-company audit under AICPA standards, or for an issuer audited under PCAOB standards. There are versions built for fuel jobbers and for contractors. Free, and it runs in your browser.

Use at your own risk. This free tool is provided as is, without warranty, and is not accounting, legal or tax advice. All of the work a CPA performs is subject to that person’s or firm’s judgment. Do your own research and verify that the checklist or protocol you are using is valid and up to date. Built from public sources — see the sources and the terms of use.

The entity

Finish the sentence “The Company …”.
The date subsequent events were evaluated through.

The policies

Tick the ones that apply. Each carries the choices the note has to state.

Highlighted text is still to be filled in or checked. The wording is a starting point: the policies have to describe what this entity actually does, and the CPA who signs the report owns every word.

Who requires it

GAAP writes the note. Both audit standards test it.

The disclosures themselves come from the FASB Codification, and for an issuer the SEC adds its own. What the AICPA and the PCAOB require is that the auditor evaluate whether the statements, notes included, are adequately disclosed — so this is the note both kinds of audit read first.

Private company — AICPAIssuer — PCAOB
The accounting policiesASC 235 requires them to be disclosed, preferably as the first note. ASC 275 adds the nature of operations, the use of estimates, and concentrations.
The auditor’s dutyAU-C 700: evaluate whether the statements, including the related notes, achieve fair presentation and adequately disclose the significant accounting policies.AS 2810: evaluate the presentation of the financial statements, including the disclosures, as part of evaluating the audit results.
Subsequent eventsASC 855: disclose the date through which they were evaluated, and whether it is the date the statements were issued or available to be issued. AU-C 560 governs the auditor’s work.An SEC filer evaluates through the date the statements are issued but does not disclose the date. AS 2801 governs the auditor’s work.
Going concernASC 205-40 disclosure when substantial doubt is raised; AU-C 570.ASC 205-40 disclosure; AS 2415.
New standards not yet adoptedCommonly disclosed.Expected by the SEC staff (SAB Topic 11.M).

Issuers

The SEC’s general notes: Rule 4-08 of Regulation S-X.

An issuer’s statements also carry the general notes Rule 4-08 lists, wherever they apply. They are not part of Note 1, but they belong on the checklist alongside it.

References are to the FASB Accounting Standards Codification, the AICPA’s clarified auditing standards, the PCAOB’s auditing standards and 17 CFR 210.4-08. Check them against the current text before relying on them.