The following presentations are considered part of the basic financial statements: descriptions of accounting policies, notes to financial statements, and schedules and explanatory material that are identified as being part of the basic financial statements.
For purposes of this section, basic financial statements also include an individual basic financial statement, such as a balance sheet or statement of income and financial statements prepared in accordance with a comprehensive basis of accounting other than generally accepted accounting principles.
Appendix A: Examples of Information and Sources of Information That May be Gathered During the Audit That Could Indicate That Related Parties or Relationships or Transactions with Related Parties Previously Undisclosed to the Auditor Might Exist[Superseded by Auditing Standard No.
17, Auditing Supplemental Information Accompanying Audited Financial Statements, effective for audits of fiscal years ending on or after June 1, 2014; see PCAOB Release No.
These transactions must be eliminated to avoid double-counting, once on the books of the subsidiary and again on the parent's books.
For investors, a company's financial statements offers insight into the health of the company.
Depending on the size of a company and the complexity of its business, the financial statements may be a bit confusing, particularly if the company has several subsidiaries with overseas operations.
An auditor's report on information accompanying the basic financial statements in an auditor-submitted document has the same objective as an auditor's report on the basic financial statements: to describe clearly the character of the auditor's work and the degree of responsibility the auditor is taking.
Although the auditor may participate in the preparation of the accompanying information as well as the basic financial statements, both the statements and the accompanying information are representations of management.