Neil Rischall is the CPA behind the CPABookkeepers site which has a wealth of information about audited financial statements as well as all services provided by a Certified Public Accountant.
Audited financial statements, which have been prepared by an independent Certified Public Accountant (CPA), are used to provide financial credibility, accountability and accuracy for a business. There are specific procedures performed by the CPA during the audit process.
An engagement letter, which is a letter of agreement which stipulates the services to be performed by the CPA and the fees associated with such service, is signed by both the CPA and the company having the audited financial statement done. This letter is designed to prevent misunderstanding between both parties and to reduce the risk of law suits.
The accountant will request financial reports from the company to review. These reports include the income statement, balance sheet, and statement of cash flow along with financial documentation to support these reports. The auditor will review the company’s internal control system to determine what controls are in place and assess the control risk of the controls failing to detect or correct any material misstatements in the accounting records which could affect the financial statements, review specific financial statement items required by the AICPA Statements on Auditing Standards (SASs), and documentation about financial statement items they deem necessary. The auditor is also required to: confirm accounts receivable, observe the inventory count, inquire with client’s lawyers regarding any litigations, claims, or assessments, evaluate accounting estimates made by management confirm business activities and account balances with outside entities, assess the degree of risk that fraud will cause a misstatement in the financial statements, document the fraud risk factors, and detail the client’s response to these risk factors.
A client representation letter is provided to the company to sign at the conclusion of the audit. The purpose of this letter is for the client to take responsibility for the written statements explicitly or implicitly given to the auditor by management; such as management’s acknowledgment of its responsibility for the fair presentation of the financial statements, compliance with laws and regulations, assertion that they are unaware of any fraudulent activity and have implemented procedures to detect and prevent fraud.
From this information the CPA creates an audited financial statement which will include an opinion, either qualified or unqualified, about the nature of the financial documents. The intention of the audit of financial statements is to gather evidence that will ultimately produce and support an opinion about the audit as well as defend the auditor if a lawsuit resulted from reliance on the audit opinion. The goal of an audited financial statement for a company is to provide the CPA with a reasonable basis for an unqualified opinion that the financial statements are free of material misstatements or false/missing information. With an unqualified opinion, the audit is found to be accurate, complete and fairly presented to meet the requirements of the US GAAP (Generally Accepted Accounting Principles). A qualified opinion indicates that the CPA is not in agreement with aspects of the company’s financial statements or accounting procedures and is not confident in the accuracy of the financial statements.
- Related Articles
- Related Q&A
- Public Company Accounting Oversight Board Registered Auditors
- Public Company Accounting Oversight Board Registered Accountants
- Public Company Accounting Oversight Board Registered Certified Public Accountants
- Public Company Accounting Oversight Board Registered Certified Public Accountant Firms
- Public Company Accounting Oversight Board Registered Firms
- Accountants & Auditors - How to Stay on Top of Your Game
- Finding & Hiring the Perfect Accountant or Auditor
- Standard Setters on Record-Setting Pace for Issuance of Fair Value Accounting Guidance




Finance Accounting
By: Pinki Gupta | 29/11/2009Many investors are clueless when it comes to bright how to fashion. One reason for this is that they do not know the investment basics. Put added way, they regard no bag knowledge whence they consider no way to intelligently tiptop investments that fit their needs
Pay as You Earn
By: Brigette | 19/11/2009One of the major advantages of being self-employed is that it not only enables you to pay your tax annually and partially in arrears but it also allows many expenses as deductions when calculating the income on which your tax bill will be based. In contrast, the Pay as You Earn (PAYE) system, used for taxing employees, is a great advantage to any government.
One Small Step For Bookkeeping, One Giant Leap For Your Small Business
By: RightmyBooks Dotcom | 18/11/2009Online bookkeeping is exactly like doing the books on paper except it's done faster. It gives the small business owner the same standard set of bookkeeping reports a big company would get from an accounting firm. A basic bookkeeping report, when done correctly, should be able to answer these questions:
Outsource bookkeeping services to crush your competition?
By: Rekha Mohan | 16/11/2009Online virtual assistant and bookkeeping services are an outsourcing strategy that can be used to gain competitive advantage. As a result, they have shot to prominence and firms of various sizes are utilizing them. The recession has made businesses more prudent about how they spend their operating budgets making virtual assistants a hot commodity.
Penn West Announces Its Results for the Third Quarter Ended September 30, 2009
By: Market Wire | 16/11/2009PENN WEST ENERGY TRUST (TSX:PWT.UN) (NYSE:PWE) is pleased to announce its results for the third quarter ended September 30, 2009
Accounts Receivable Management Outsourcing: How it Can Help Your Business
By: Chris Kindrick | 12/11/2009Small business owners juggle many roles: sales, product development, customer service, marketing – not to mention bookkeeping and accounts management. Outsourcing management of payables makes good business sense for many business owners. If you are struggling with keeping your accounts up to date, here are some reasons to consider hiring a specialist to handle your accounts receivables
IRS Tax Attorneys – Can They Solve Your IRS Tax Issues
By: Kathleen Chester | 11/11/2009IRS tax attorneys are experts in such laws and can provide assistance to those who are facing liability penalties issued by Internal Revenue Service.
What's New in QuickBooks Pro and Premier 2010
By: Ruth Perryman | 10/11/2009For the second year in a row, the most exciting new feature is the Client Data Review tool found in the Accountants editions of QuickBooks Premier and QuickBooks Enterprise. I don't normally push my clients to upgrade unless their version is 3+ years old. But last year, Intuit introduced a new Client Data Review feature for accountants which allows us to troubleshoot and correct client data entry errors with a few clicks of a button.
What are Reviewed Financial Statements?
By: Neil Rischall | 01/10/2009 | AccountingAll organizations, whether private, public, or non-profit, need to prepare financial statements on their performance to provide fiscal accountability and accuracy to their stakeholders and people with an interest in the company. Reviewed financial statements provides limited assurance that the financial statements are free of material misstatements or false/missing information and are found to be accurate, complete and fairly presented to meet the requirements of the US GAAP.
What are Compiled Financial Statements?
By: Neil Rischall | 30/09/2009 | AccountingAll organizations, whether private, public, or non-profit, need to prepare financial statements on their performance to provide fiscal accountability and accuracy to their stakeholders and people with an interest in the company. In compiled financial statements, which offer the lowest level of assurance, the organization, not the accountant, is responsible for the accuracy and completeness of the financial statements.
Public Company Accounting Oversight Board Registered Certified Public Accountant Firms
By: Neil Rischall | 09/07/2009 | AccountingAll Certified Public Accountant (CPA) firms, in the US and foreign, that provide audited financial statements for public companies registered with the SEC (Securities and Exchange Commission) must be registered with the Public Company Accounting Oversight Board (PCAOB), sometimes referred to as Peekaboo. The PCAOB is a private-sector, nonprofit corporation that was created by the Sarbanes-Oxley Act of 2002 which is under the jurisdiction of the SEC.
Public Company Accounting Oversight Board Registered Certified Public Accountants
By: Neil Rischall | 09/07/2009 | AccountingAll Certified Public Accountants (CPA’s), in the US and foreign, that provides audited financial statements for public companies registered with the SEC (Securities and Exchange Commission) must be registered with the Public Company Accounting Oversight Board (PCAOB), sometimes referred to as Peekaboo. The PCAOB is a private-sector, nonprofit corporation that was created by the Sarbanes-Oxley Act of 2002 which is under the jurisdiction of the SEC.
Public Company Accounting Oversight Board Registered Auditors
By: Neil Rischall | 09/07/2009 | AccountingAll auditors, accounting firms and CPA’s in the US and foreign, that provide audited financial statements for public companies registered with the SEC (Securities and Exchange Commission) must be registered with the Public Company Accounting Oversight Board (PCAOB), sometimes referred to as Peekaboo. The PCAOB is a private-sector, nonprofit corporation that was created by the Sarbanes-Oxley Act of 2002 which is under the jurisdiction of the SEC.
Public Company Accounting Oversight Board Registered Accountants
By: Neil Rischall | 08/07/2009 | AccountingAll accountants, in the US and foreign, that provides audited financial statements for public companies registered with the SEC (Securities and Exchange Commission) must be registered with the Public Company Accounting Oversight Board (PCAOB), sometimes referred to as Peekaboo. The PCAOB is a private-sector, nonprofit corporation that was created by the Sarbanes-Oxley Act of 2002 which is under the jurisdiction of the SEC.
Who Needs Audited Financial Statements?
By: Neil Rischall | 08/07/2009 | AccountingAudited financial statements, which have been prepared by an independent Certified Public Accountant (CPA), are used to provide financial credibility, accountability and accuracy for a business. All businesses, whether privately held, publicly owned, or nonprofit need to prepare statements on their financial performance. These financial statements help provide a basis for various business decisions to be made within and regarding a company.