What is a Certified Financial Statement?

Certified Financial Statement

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Certified Financial Statement

A Certified Financial Statement is a set of financial statements that have been audited, reviewed, and validated by an independent certified public accountant (CPA) or a public accounting firm. The purpose of having financial statements certified is to provide credibility, assurance, and reliability to the information presented in the statements.

Certified Financial Statements typically include:

  • Balance Sheet: A snapshot of the company’s assets, liabilities, and equity at a specific point in time.
  • Income Statement: A report that shows the company’s revenues, expenses, and net income over a specified period, usually a quarter or a year.
  • Statement of Cash Flows: A report that details the cash inflows and outflows from operating, investing, and financing activities during a specified period.
  • Statement of Shareholders’ Equity: A report that shows the changes in the company’s equity, such as retained earnings and paid-in capital, over a specified period.

An independent CPA or accounting firm conducts an audit to examine the financial statements and supporting documents, tests the internal controls, and assesses the company’s compliance with accounting standards and regulations. If the auditor finds the financial statements to be fairly presented, they will issue an unqualified or “clean” opinion, indicating that the statements are free from material misstatements and in accordance with Generally Accepted Accounting Principles (GAAP) or other applicable financial reporting frameworks.

Certified Financial Statements are important for various stakeholders, such as investors, creditors, regulators, and management, who rely on the accuracy and reliability of the financial information to make informed decisions.

Example of a Certified Financial Statement

Let’s consider a hypothetical example of a company called ABC Corporation. ABC Corporation’s Certified Financial Statements for the year ended December 31, 2022, have been audited by an independent CPA firm, XYZ & Associates. The financial statements include the following components:

After a thorough audit, XYZ & Associates issued an unqualified opinion, stating that ABC Corporation’s financial statements are fairly presented and in accordance with GAAP. This certification provides assurance to stakeholders that the financial information presented by ABC Corporation is reliable and accurate.

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