Notes to financial statements are prepared by which party?

Notes to financial statements are prepared by which party?

• A. The CPA
• B. The Board of Directors
• C. The External Auditor
• D. The Management Team

Answer: (A)

Notes to the financial statements are prepared by the management team because management is responsible for the content and presentation of the financial statements, including the accompanying disclosures. These notes explain accounting policies, judgments, estimates, contingencies, and other information that helps users understand the numbers. The board of directors provides governance and approves the statements, but they don’t draft the notes. The external auditor (often a CPA) reviews the notes and the numbers and issues an independent opinion; they do the auditing, not the preparation.

Notes to the financial statements are prepared by the management team because management is responsible for the content and presentation of the financial statements, including the accompanying disclosures. These notes explain accounting policies, judgments, estimates, contingencies, and other information that helps users understand the numbers. The board of directors provides governance and approves the statements, but they don’t draft the notes. The external auditor (often a CPA) reviews the notes and the numbers and issues an independent opinion; they do the auditing, not the preparation.