Audited Financial Statements
An audit engagement provides the highest level of assurance on the client's financial statements and only some CPA's are licensed by the California State Board of Accountancy to perform audited financial statements. Ms. Jones has many years of experience performing audits of client financial statements in California for various industries. She has considered and evaluated the internal control systems of such companies including testing the effectiveness of these systems. She performs tests of the underlying documentation and gets third party confirmation to support the account balances. Based on the findings, she will then issue a report on her opinion of whether the financial statements are presented fairly, in all material respects, in conformity with the applicable financial reporting framework. She will also make recommendations for improvements to the accounting system and internal controls.
In an audit, the auditor is required by auditing standards generally accepted in the United States of America (GAAS) to obtain an understanding of the entity’s internal control and assess fraud risk. The auditor also is required to corroborate the amounts and disclosures included in the financial statements by obtaining audit evidence through inquiry, physical inspection, observation, third-party confirmations, examination, analytical procedures and other procedures. The auditor issues a report that states the audit was conducted in accordance with GAAS, the financial statements are the responsibility of management, provides an opinion that the financial statements present fairly in all material respects the financial position of the company and the results of operations are in conformity with the applicable financial reporting framework (or issues a qualified opinion if the financial statements are not in conformity with the applicable financial reporting framework. The auditor may also issue a disclaimer of opinion or an adverse opinion (if appropriate).