Certified Financial Statement - Explained
What is a Certified Financial Statement?
Written by J. Mance Gordon
Updated at April 18th, 2024
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What is a Certified Financial Statement?
A certified financial statement is a financial statement that has been audited and approved by an independent auditor. After a company prepares its income statement, cash flow statement and balance sheet, they are presented to a certified auditor who examines the financial statement to be sure they are accurate and void of errors. A financial account that has been reviewed and signed by this independent accountant or auditor is called a certified financial statement. Certified financial statements are reliable documents that external parties can rely on when assessing the financial strength or health of an organization. Since a certified financial statement is approved by an independent auditor, accurate information about the valuation of assets of a company can be derived.
How is a Certified Financial Statement Used?
Checks and balances is a vital part of financial reporting, one of the ways to ensure the accuracy and genuineness of a financial statement it subjecting it scrutinization by external auditors before it becomes certified. Financial statements are unaudited cannot be relied on for accurate information, this is why it is important that companies financial statements are certified to enhance trustworthiness. Most publicly traded companies are mandated to certify their financial statements before they release them. A company can make use of an internal auditor nut most companies prefer an independent or external auditor. Cooking the books, lying in financial statements to defraud investors become impossible with certified financial statements.
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