As a small business owner, you're focused on running your company — not decoding accounting terms. But when it comes to preparing year-end financial statements, you'll likely hear terms like Notice to Reader (NTR), Review Engagement, or Audit. So what exactly is an NTR, and do you need one?
What Is a Notice to Reader (NTR)?
A Notice to Reader (NTR) is a type of financial statement prepared by a Chartered Professional Accountant (CPA). It's the most basic form of year-end reporting and is commonly used by small and medium-sized businesses in Canada.
With an NTR, the CPA compiles financial information provided by the client into standard financial statements — without auditing or verifying the details. In simple terms: an NTR is a formal presentation of your financials, prepared by a CPA, but not reviewed or audited.
NTR vs. Review vs. Audit
| Type | What It Is | Who It's For |
|---|---|---|
| Notice to Reader | Compilation of financials; no assurance provided | Small businesses, internal use, basic lender requirements |
| Review Engagement | Limited assurance; CPA performs analysis and inquiries | Businesses needing moderate assurance for lenders |
| Audit | High-level assurance with full verification of data | Larger businesses, publicly accountable enterprises |
When Do You Need an NTR?
You may need a Notice to Reader in several common scenarios:
- You're incorporated and need to file year-end financials
- Your bank or lender requires CPA-prepared statements for a loan
- You have outside shareholders or investors who want transparency
- You want professional financials for internal planning or tax filing
What's Included in an NTR?
A typical NTR financial statement package includes:
- Balance Sheet (Statement of Financial Position)
- Income Statement (Statement of Comprehensive Income)
- Notice to Reader Letter from the CPA
- Notes to the Financial Statements (if applicable)
These statements are compiled using information you or your bookkeeper provide. The CPA ensures proper formatting and presentation according to Canadian Accounting Standards for Private Enterprises (ASPE).
Do All Businesses Need One?
Not necessarily. If you're a sole proprietor or running a very small operation, you may not need formal financial statements. However, once you're incorporated, it's strongly recommended — and often expected by the CRA and financial institutions — to produce NTR financial statements annually.
Why Work with a CPA?
Even though a Notice to Reader doesn't involve full assurance, it still needs to be handled by a qualified CPA. A CPA ensures proper financial presentation, compliance with CRA and ASPE standards, timely and accurate filings for T2 corporate tax returns, and a reliable document for lenders, investors, and stakeholders.
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