If your business is gearing up to undergo a US GAAP audit, you’ll need copies of four essential financial statements. These four statements and their related disclosures are the basis of your GAAP audit or review engagement.
Depending on your business and its size, your statements may contain more information due to the number and complexity of transactions your business conducts on a regular basis. In this post, we’ll review the four types of financial statements you’ll need to prepare or have a qualified auditor prepare for a US GAAP audit.
The Four Basic Financial Statements
Financial statements are composed of four statements. An auditing professional will spend a significant amount of time preparing and verifying these statements during a review or audit, so it’s important to understand their meaning and purpose. Those documents are:
- Balance Sheet: A balance sheet describes your company’s assets, liabilities, and shareholder equity at a specific date. For example, if your fiscal year ends on June 30, your balance sheet will be as of that fiscal year-end date.
- Income Statement: An income statement explains your business’s revenues, expenses, and profits over a specific period. It is a good indicator of a company’s operational performance.
- Cash Flow Statement: As the name suggests, the cash flow statements track how cash flows in and out of your business. This statement can help explain your company’s liquidity and financial flexibility.
- Statement of Shareholders’ Equity: This statement describes changes in equity due to profits or losses and additional investments or distributions.
Why are these statements essential in a US GAAP audit?
The four basic financial statements help provide your management team, shareholders, and other interested parties with a complete financial picture of your company. During a US GAAP audit, your audit firm will look for misstatements in your documents and review your internal controls. An audit provides a high level of assurance, helping to create transparency within your company and building trust with your investors and stakeholders.
Having these statements prepared ahead of time helps your auditing professional easily review your company’s financials and determine whether your internal controls work as they should.
Complete Your US GAAP Audit with Assurance Dimensions
If you’re ready to schedule your US GAAP audit, Assurance Dimensions can help. Before scheduling your audit, spend some time ensuring your financial statements are up to date, or request a compilation from our auditing team to get started.
We have extensive industry experience in conducting private company audits that are fully GAAP-compliant. We offer competitive pricing with no hidden fees, and we’re ready to help your company conduct your audit as efficiently as possible with our onsite or remote auditing services. Contact us today to learn more about our audit and assurance services.