Unaudited financial statements definition
/What are Unaudited Financial Statements?
An unaudited statement is a financial statement that has been prepared by an auditor, but for which a standard set of audit procedures have not been performed. In effect, the auditor has engaged in accounting services to prepare the statement, but has not conducted auditing services to examine the validity of the statement. Accordingly, the auditor must issue a disclaimer statement, specifically pointing out that he or she is not issuing an opinion on the statement. In addition, the statement must be labeled as unaudited.
An unaudited statement can also refer to a financial statement that was developed internally, but was not subjected to examination by an outside auditor.
Limitations of Unaudited Financial Statements
There are several limitations to the use of unaudited financial statements. First, this type of financial statement is more likely to contain errors, since it has not been reviewed by an auditor. It may also be based upon incorrect interpretations of the applicable accounting framework, which an auditor might have spotted. Second, and due to the lack of auditor verification, these statements will rarely be acceptable to outside parties, such as lenders, investors, and creditors; they usually insist on only seeing audited annual statements.