Audited accounts include a signed statement by the auditors that they have
reviewed the preparation of the accounts, and that in their opinion the
accounts have been prepared in a way that is consistent with the accounting
The purpose of the audit process is to check that the figures that are presented
are an accurate reflection of the transactions that actually occurred during the
The audit does not involve ma king judgements about the historical results or
future prospects of the business, and it does not generally asses the relevance
of the valuations applied to assets.
A separate director's declaration is required in some reporting situations. The
director's declaration is a signed statement to the effect that, in the director's
opinion, the company will be ab le to meet is debts as and when they fall due.
This declaration is intended for the use of lenders and creditors to the
company, as informat ion regarding the on -going viability of the business.
However, accounts are generally prepared quarterly or half-yearly, and the
informat ion may not become available for several month s.
In practice, a co mpany can change fro m a stable financial position to near
bankruptcy in a matter of months, and the director's declaration provides
litt le assistance to lenders.
The prima ry financial statements are the balance sheet, profit -and-loss
statement, and the cash flow statement.
188.8.131.52. Balance Sheet
The balance s heet records the assets and liabilit ies of the business at a certain
point in time .
The assets include all physical property such as land and buildings,
equipment, production facilities, and cash holdings.
In some cases, the value of intangible assets can also be included. The value
of a newspaper masthead, for e xa mple , can be inc luded as an asset within the