Accounting Best Practices, Fifth Edition

12–4. Write Financial Statement Footnotes in Advance

There are many footnotes that accompany a well-documented set of financial statements. These typically include an executive summary, notes on the accounting methodologies, the amount of long-term debt (as well as the years in which it comes due), a commentary on insurance coverage, any customers with a high preponderance of a company’s sales, and a historical comparison of the current results to prior years. Depending on the number of footnotes added to the financial statement package, this can be a considerable amount of work to update every period.

The solution is to separate them into two categories: boilerplate information that is rarely changed, and information that is closely linked to current financial results, requiring a great deal of updating. All footnotes in the first category should be clustered together to the greatest extent possible, reviewed prior to the end of the month, and even printed out and ready for inclusion with the remainder of the financial statements. By handling these items well in advance, there is less work to be done during the crucial period immediately following the end of a reporting period, when there is little time available for such work. Unfortunately, many footnotes do require updates based on current financial results and so cannot be completed in advance. In these cases, it is still possible to highlight those portions of each footnote that must be changed, either with different font ...