Audited Financial Statements
A company’s Income Statement, Balance Sheet, Statement of Cash Flows, and Statement of Retained Earnings that have been thoroughly checked by CPAs to make sure they were prepared using Generally Accepted Accounting Principles.
CPAs also spot check transactions to try to ascertain the accuracy of the numbers. For instance, if a company shows that 100 people owe them money a CPA would contact 5 or 10 of these people to make sure they do indeed owe the company money. Although CPAs would not contact everyone on the list, they try to contact a representative sample in an attempt to detect widespread fraud.
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