What must be provided as part of financial statements?

• A. Audited financial statements.
• B. Unaudited statements.
• C. Tax computations.
• D. Management letter.

Answer: (A)

Auditing provides independent assurance that the financial statements are credible for external users. When financial statements are audited, an auditor examines the records and controls and issues an opinion on whether the statements fairly present the entity’s financial position and performance, free from material misstatement. This independent verification is why audited financial statements are the standard requirement for external reporting—the information is more reliable for investors, lenders, and regulators.

Unaudited statements, while they may be prepared for internal use or for smaller private entities, do not carry the same level of assurance and are not typically considered complete external financial statements. Tax computations are separate from the financial statements themselves, used for tax purposes, and a management letter is a separate communication to management about internal controls, not part of the financial statements.