An Audited Financial Statement is a set of financial documents that have been examined and verified by an independent auditor to ensure their accuracy and compliance with accounting standards. These statements provide a comprehensive overview of a company's financial position, performance, and cash flows over a specific period.
Audited Financial Statements typically include:
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Balance Sheet: Presents a snapshot of the company's financial position at a specific point in time, showing its assets, liabilities, and shareholders' equity.
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Income Statement: Summarizes the company's revenues, expenses, gains, and losses over a specified period, resulting in its net income or net loss.
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Statement of Cash Flows: Shows how the company generates and uses cash during a specific period, categorized into operating, investing, and financing activities.
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Statement of Changes in Equity: Tracks changes in the company's equity accounts, including contributions, distributions, and changes in retained earnings.
How to Prepare Audited Financial Statements for BIR Compliance:
Preparing audited financial statements for BIR compliance involves several steps:
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Engage an Independent Auditor:
- Hire a qualified and independent auditor to conduct the audit of your financial statements.
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Provide Documentation:
- Furnish the auditor with all necessary financial records, including ledgers, journals, bank statements, invoices, and supporting documents.
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Audit Process:
- The auditor will perform various audit procedures, including tests of transactions, verification of account balances, review of internal controls, and assessment of accounting policies.
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Draft Financial Statements:
- Based on the auditor's findings, draft the audited financial statements, ensuring they accurately reflect the company's financial position and performance.
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Include Auditor's Report:
- Attach the auditor's report, which provides an opinion on the fairness and reliability of the financial statements.
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Submit to BIR:
- Submit the audited financial statements, along with other required tax filings, to the Bureau of Internal Revenue (BIR) as part of your annual tax compliance.
Key Points for BIR Compliance:
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Accuracy and Completeness:
- Ensure that the financial statements are accurate, complete, and prepared in accordance with applicable accounting standards (e.g., Philippine Financial Reporting Standards).
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Transparency:
- Disclose all relevant financial information, including any significant accounting policies, estimates, and contingencies.
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Compliance with BIR Regulations:
- Ensure that the audited financial statements comply with BIR regulations and guidelines, including those related to tax reporting and disclosure requirements.
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Timeliness:
- Submit the audited financial statements to the BIR within the prescribed deadline to avoid penalties and ensure compliance with regulatory requirements.
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Retain Supporting Documentation:
- Retain all supporting documentation and audit trails used in the preparation of the financial statements for future reference and audit purposes.
By following these steps and considerations, you can prepare audited financial statements that meet BIR compliance standards and provide an accurate representation of your company's financial position and performance.
Income Statement for PBC
For the Period January to March 2024
Particulars | Amount (PHP) |
---|---|
Revenues | |
Sales Revenue | 3,000,000 |
Service Revenue | 500,000 |
Total Revenues | 3,500,000 |
Cost of Goods Sold (COGS) | |
Beginning Inventory | 200,000 |
Purchases | 1,000,000 |
Less: Ending Inventory | (300,000) |
Total COGS | 900,000 |
Gross Profit | 2,600,000 |
Operating Expenses | |
Salaries and Wages | 500,000 |
Rent Expense | 150,000 |
Utilities Expense | 75,000 |
Depreciation Expense | 50,000 |
Marketing Expense | 100,000 |
Total Operating Expenses | 875,000 |
Operating Income | 1,725,000 |
Other Income/Expenses | |
Interest Income | 10,000 |
Interest Expense | (20,000) |
Total Other Income/Expenses | (10,000) |
Net Income Before Tax | 1,715,000 |
Income Tax Expense (30%) | 514,500 |
Net Income | 1,200,500 |
Balance Sheet for PBC
As of March 31, 2024
Assets | Amount (PHP) |
---|---|
Current Assets | |
Cash | 1,000,000 |
Accounts Receivable | 750,000 |
Inventory | 300,000 |
Prepaid Expenses | 50,000 |
Total Current Assets | 2,100,000 |
Non-Current Assets | |
Property, Plant, and Equipment | 1,000,000 |
Less: Accumulated Depreciation | (50,000) |
Net PP&E | 950,000 |
Total Non-Current Assets | 950,000 |
Total Assets | 3,050,000 |
Liabilities and Equity | |
Current Liabilities | |
Accounts Payable | 500,000 |
Salaries Payable | 100,000 |
Unearned Revenue | 50,000 |
Total Current Liabilities | 650,000 |
Non-Current Liabilities | |
Long-term Debt | 200,000 |
Total Non-Current Liabilities | 200,000 |
Total Liabilities | 850,000 |
Equity | |
Common Stock | 1,000,000 |
Retained Earnings | 1,200,000 |
Total Equity | 2,200,000 |
Total Liabilities and Equity | 3,050,000 |
Cash Flow Statement for PBC
For the Period January to March 2024
Cash Flows from Operating Activities | Amount (PHP) |
---|---|
Net Income | 1,200,500 |
Adjustments for: | |
Depreciation Expense | 50,000 |
Changes in Working Capital: | |
Increase in Accounts Receivable | (750,000) |
Increase in Inventory | (100,000) |
Increase in Prepaid Expenses | (50,000) |
Increase in Accounts Payable | 500,000 |
Increase in Salaries Payable | 100,000 |
Increase in Unearned Revenue | 50,000 |
Net Cash from Operating Activities | 1,000,500 |
Cash Flows from Investing Activities | |
Purchase of Property, Plant, and Equipment | (1,000,000) |
Net Cash Used in Investing Activities | (1,000,000) |
Cash Flows from Financing Activities | |
Proceeds from Long-term Debt | 200,000 |
Payment of Interest | (20,000) |
Net Cash from Financing Activities | 180,000 |
Net Increase in Cash | 180,500 |
Cash at Beginning of Period | 819,500 |
Cash at End of Period | 1,000,000 |
These statements are based on recorded transactions and amounts. The actual financial statements should be prepared using the actual financial data of PBC for the period of January to March 2024.
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