Issuing Financial Statements
without Reports
and Using Safe Harbor Language
The Idaho Accountancy Act and Rules permit Idaho licensees to issue financial statements for third party reliance in one of two different categories.
The first category is financial statements without a report. These are sometimes referred to as 'plain paper' financial statements. When issuing this type of financial statement, a licensee cannot attach a report indicating that the information has been 'compiled' in accordance with Professional Standards. Instead, the licensee must attach a letter using the Safe Harbor Language, which is contained in Section 54-226, Idaho Code.
The Safe Harbor Language reads: "I (We) have prepared the accompanying (financial statements) of (name of entity) as of (time period) for the (period) then ended. This presentation is limited to preparing in the form of financial statements information that is the representation of management (owners). I (We) have not audited or reviewed the accompanying financial statements and, accordingly, do not express an opinion or any other form of assurance on them."
The second category of financial statements includes compilations, reviews, or audits. A licensee must attach a report, as defined in AICPA Professional Standards, to these financial statements.
Please note that a firm cannot issue financial statements in both of these categories. It is an 'either-or' situation. If you elect to provide compiled, reviewed, or audited financial statements that is the level that all your work must be done at. The work is subject to Peer Review.
If you elect to provide 'plain paper' financial statements to your clients for third-party reliance, that is the level that all your work must be done at. The work is not subject to Peer Review.
Written by Barbara Porter, Executive Director, State Board of Accountancy
Click here for the Idaho Accountancy Act Official Safe Harbor Language.
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