Looking Inside Financial Statement Reports

All business enterprises in the beginning takes the form of a sole proprietorship, partnership or corporation. However, regardless of its form, a detailed report of their transactions and companies over a certain period of time is required and verified by auditors to assess the financial performance of the company. This detailed report is called a financial audit report. Prepare to meet the different interests of all stakeholders in the company, including shareholders, potential investors, employees, suppliers, regulators and tax authorities. This set of documents aims to provide a complete picture of the profitability and provide a means to assess whether the company remains a profitable investment in the long run.

A report is generated at the end of each year, which may be the calendar year or a different exercise, depending on the management decision. Usually, the year is adjusted at the end of the month in which the turnover of companies is the lowest.

While U.S. public companies only in the United States are required to submit annual reports to regulatory agencies, the private sector to do the same. The authorized institution in the United States is the Securities and Exchange Commission, while its counterpart in the UK Registrar of Companies is responsible for overseeing the limited corporations and the public. In addition, the financial reports of public companies are expected to be reviewed by independent auditors, people who are tasked to test the reasonableness and accuracy of the information contained in the reports. Companies using the service of private external audit in compliance with this requirement. Among the documents prepared and reviewed are the following: a statement of financial position, a State Income, a Statement of Cash Flows, a Statement of Changes in Equity, Notes to the Financial Statements and Management's Discussion and Report.

Apart from the review and the analysis of the statements in the financial statements and management reports submitted, the external auditors are also involved in ensuring the adequacy and integrity of the enterprise systems of internal control. On the other hand, also have to discuss with appropriate personnel of business strategies, to try and manage the risks involved in their day to day operations. However, the performance of their duties, they are obliged to maintain their independence in order not to contaminate the opinions given at the end of each audit engagement.

In the United States, AICPA promulgates rules governing the audit profession, including the risk assessment to audit the financial statements. These rules direct the auditors in conducting an objective assessment and help in finding out falsehoods in the financial accounts. The opinions provided by an integral part of the financial reports of each company. The declaration of minimum financial and audit report are important to make an informed decision. If current or potential shareholders, current and retired employees, and creditors in the long term or short term, representing the audit reports are essential to make better financial decisions.



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