Tuesday, July 21, 2009

What are audited financial statements ? Part I

Have you ever wondered what audited financial statements are and who needs them?

Audited financial statements, which are prepared by an independent Certified Public Accountant (CPA) for a business, are the reports used by a company to show how the business is doing and prove that the numbers are correct. All businesses, whether privately held, publicly owned, or nonprofit should prepare statements on their financial performance. These statements also enable management to make business decisions, enable banks to see if they want to loan the business money, and provide individuals who may want to buy a part or the whole business with the information they need to make a good decision.

The financial documents used by an accountant to prepare audited financial statements are provided by the company. The CPA will examine the documents to verify they support figures within the financial statements, assess the way numbers where calculated, and evaluate the overall financial statement presentation. In addition the CPA will evaluate the companies internal control system. An internal control system is the way that a company makes sure that the business is safe from people cheating the business and or giving out false numbers.

In my next blog post I will explain what I add to the financial statements given to me when I audit them.

If you have any question about this post or how you can your companies financial statements audited please email me : cpa@post.com or call my toll free phone number (866) 559-6434.

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