A financial statement audit is the examination of an entity's financial statements by an independent auditor. Independence is crucial to the success of an audit as it ensures that procedures are performed with objectivity and integrity. Professional standards require that we plan and perform tests in order to obtain reasonable assurance that the financial statements and related disclosures are free from material misstatement. Upon successful completion of an audit, the auditor issues a report stating an opinion that the financial statements are fairly presented according to generally accepted accounting principles.
Providing users, especially those who are external to the organization, of financial statements with assurance that they can rely on the statements is the primary reason why an audit may be needed. Several examples of external users who may require audited financial statements include financial institutions, bonding companies, and investors. Organizations can potentially benefit from undergoing an audit whether they are large, small, public, private, or even a nonprofit organization.
Depending on your needs, there are times when an audit may not be necessary; in those cases, there are several types of engagements available that provide a lesser degree of assurance. For example, reviews provide limited assurance that there are no material modifications that should be made to the financial statements. In addition, compilations assist in accurately presenting financial information but do not provide any assurance about the financial statements.
Do you think that your organization may need a financial statement audit or possibly another type of engagement? Baldwin CPAs, PLLC has a highly-trained, professional staff that is capable of assisting with your financial statement needs. Please call us at (859)626-9040
Posted by Andrew Hicks