If you operate a small or medium-sized business in Alberta and have ever applied for a business loan, approached an investor, or been asked to provide financial statements to a landlord or supplier, you have likely encountered the term Notice to Reader. It is the most common form of financial statement compilation for privately held businesses in Canada, and understanding what it is — and what it is not — matters for how you use it.
What Is a Notice to Reader?
A Notice to Reader (NTR) — formally called a Compilation Engagement report under current Canadian accounting standards — is a set of financial statements prepared by a Chartered Professional Accountant based on information provided by management, without the CPA performing procedures to verify or test that information. The CPA compiles the statements into a formal financial report, adds a compilation report that explains the nature of the engagement, and signs it.
The notice on the compilation report explicitly states that the CPA has not performed an audit or a review, and therefore does not express any assurance about the accuracy or completeness of the financial statements. This distinguishes it from a Review Engagement and an Audit — both of which involve verification procedures.
What It Is Used For
Despite providing no assurance, the NTR serves several practical purposes for Alberta small businesses:
- Banks and credit unions frequently require compiled financial statements as part of a small business loan application
- Commercial landlords, suppliers, and trade creditors sometimes request financial statements before extending credit or signing long-term agreements
- Business owners benefit from having formal financial statements that clearly present revenues, expenses, assets, liabilities, and equity — essential for managing the business and planning for growth
What Is Included
A standard Notice to Reader package for a small Canadian business typically includes a compilation report, a balance sheet (statement of financial position), an income statement, a statement of retained earnings, and notes to the financial statements. The notes explain accounting policies used and disclose information that is material to understanding the statements.
How It Differs from a Review or Audit
A Review Engagement involves the CPA performing analytical procedures and making inquiries to obtain limited assurance that the financial statements are plausible and consistent with the information obtained. A review provides more credibility than an NTR but less than an audit.
An Audit is the highest level of assurance available. The auditor tests transactions, verifies balances, and obtains evidence to support an opinion that the financial statements are presented fairly and in accordance with applicable accounting standards.
For most Alberta small businesses, a Notice to Reader is sufficient for routine purposes. Reviews become necessary when lenders require a higher level of confidence or when the business is growing and taking on institutional financing. Audits are generally required only for larger companies, public companies, and not-for-profit organizations with audit requirements in their bylaws or governing documents.
When Does My Business Need One?
Consider having an NTR prepared if:
- You are approaching a bank or credit union for financing
- You are entering into a significant commercial lease or supplier agreement
- You are considering selling the business or bringing in a partner or investor
- You want a formal annual record of your business’s financial trajectory for planning purposes
Key Takeaway: A Notice to Reader is the right financial statement for most Alberta small businesses — it creates a professional, consistent record of your financial position without the cost of a full audit. The key is ensuring the underlying bookkeeping is clean.
Nguyen Scott LLP prepares Notice to Reader statements for businesses in Edmonton, St. Albert, Leduc, and Drayton Valley. Contact us at nsllp.ca/contact-us/ or call 780-458-5479.