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What Are Footnotes? Pick up any financial report and you'll always find references to the footnotes of the financial statements. The footnotes describe in detail the practices and reporting policies of the company's accounting methods and disclose additional information that can't be shown in the statements themselves.

Footnotes appear at the end of a company's audited financial statements. These disclosures provide insight into account balances, accounting practices and potential risk factors ? knowledge that's vital to making well-informed lending and investing decisions.

Footnote disclosures describe how the numbers in the statement of financial position, statement of activities and cash flow statements were determined and provide a sense of where the organization is going. Financial statements are required to provide full disclosure, including future contingencies and commitments.

The following three major financial statements are required under GAAP: The income statement. The balance sheet. The cash flow statement.

Below are a few examples of required disclosures that are oftentimes not considered, but are required for financial statements to be in ance with GAAP. Contingencies. ... Related-party transactions. ... Accounting changes. ... Risks and uncertainties.

Common Types of Footnotes Examples can include unexpected changes from the previous year, required disclosures, adjusted figures, accounting policy, etc. Footnotes may also contain notable future activities that are expected to have a significant impact on the company's future.

Footnotes should be numbered consecutively in the order they appear throughout your paper. Each note should have a unique number; don't use the same number again even if you cite the same source repeatedly. Footnote numbers are usually placed at the end of the relevant clause or sentence.

The exact nature of these footnotes varies, depending upon the accounting framework used to construct the financial statements (such as GAAP or IFRS). Footnotes are an integral part of the financial statements, so you must issue them to users along with the financial statements.