There are many uses of audited financial statements. Some of the common uses include submitting to the relevant authority such as company commission and tax offices. These are the two interested parties of these statements. Other interested parties include investors, creditors of the company, and shareholders as well.
So, what are the purposes of audited accounts and why is it has to be audited before presenting or submitting to the relevant interested parties? Let us discuss some of the reasons as follows.
One of the main purposes of audited accounts is to provide the accountability, accuracy as well as financial credibility of a business. This is because all entities whether they are public owned or privately owned have to prepare a complete of accounts on their financial performance and position.
An unqualified audited report indicates that the financial statements prepared for a business are free from material misstatements, found to be correct, and presented fairly according to generally accepted accounting principles.
Another important reason for having your accounts audited is that it gives interested parties such as bankers and shareholders an unbiased opinion with regard to the credibility and accuracy of the accounts prepared by a company.
Interested parties especially bankers use audited financial statements to assess the financial performance and position of a business for loan approval purposes. Therefore, it is always mandatory for a business to submit its audited financial statements to the banks if they need assistance from the banks.
In a nutshell, audited financial statements are used by many parties. Thus, it is important for a business to keep its accounting records properly and in a timely manner.