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Financial statements audit is an examination of an entity's financial statements by an independent auditor where an audit report is issued to opine on the fairness of the financial statements prepared under generally accepted accounting principles in the United States of America (US GAAP). This includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. An auditor's report is accompanied with audited financial statements that normally include company’s balance sheet, statement of operations, cash flows and detailed footnotes to the financial statements.
The Securities and Exchange Commission requires that all entities that are publicly held must file annual reports with gaap audited financial statements.
Lenders usually require audited financial statements to assess credibility of an entity’s financial stability and performance. Auditing financial statements are normally requested at the time of approving an initial credit facility or loan and to be submitted on an annual basis as part of debt covenants.
Suppliers may also require audited financial statements before they extend trade credit, especially when the amount of requested credit is substantial.
We have adopted a risk-based audit approach. Our work includes an understanding and testing of internal controls, interviewing accounting and non-accounting management personnel to understand the business objectives and risks, new business developments, review of new contracts and how business risks transpires as audit risks.
We document and test each significant business operating cycle such as treasury, accounts receivable and revenue recognition, accounts payable and expense accruals, accounting for inventory, payroll, fixed assets etc especially for gaap audited financial statements. Our work involves communication with third parties such as banks, external legal counsels and accounts receivable etc. We also perform inventory physical count observation and test counts.
Our audit tools include paperless audit software and applications, including detailed work programs to document the audit procedures performed and supporting documents such as copies of significant contracts, bank confirmations, investment balance confirmations, legal confirmation etc. Based on our findings, we issue a report on whether the financial statements are free of material misstatements and prepared in accordance with the relevant generally accepted accounting principles. Our risk based approach and paperless working environment has helped us work in a very efficient and effective manner, reducing the overall cost of an audit and improving our internal documentation and compliance with appropriate professional auditing standards. This is the best way to create US GAAP Audit reports.
Independent auditor seek to gather sufficient and, appropriate audit evidence to support an opinion about the fairness of financial statements. In developing an audit strategy, an independent auditor considers gaap internal controls & determines whether to rely on those controls for various components of the audit.
An auditor can perform a wide variety and combination of audit procedures at different stages of an audit to gather the evidence needed to support an independent opinion on the fairness of the gaap financial statements.
As the audit progresses, the audit team completes its tests and evaluates the results. An audit opinion can be unqualified, qualified, disclaimer or adverse.
The auditor then communicates the results of an audit to the audit committee members or the governing body of the entity audited, including internal control deficiencies noted during the audit.