Audited Financial Statements

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:

1. Balance Sheet: Presents a snapshot of the company's financial position at a specific point in time, showing its assets, liabilities, and shareholders' equity.

2. Income Statement: Summarizes the company's revenues, expenses, gains, and losses over a specified period, resulting in its net income or net loss.

3. Statement of Cash Flows: Shows how the company generates and uses cash during a specific period, categorized into operating, investing, and financing activities.

4. 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:

1. Engage an Independent Auditor:

   • Hire a qualified and independent auditor to conduct the audit of your financial statements.

2. Provide Documentation:

   • Furnish the auditor with all necessary financial records, including ledgers, journals, bank statements, invoices, and supporting documents.

3. 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.

4. 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.

5. Include Auditor's Report:

   • Attach the auditor's report, which provides an opinion on the fairness and reliability of the financial statements.

6. 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:

1. 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).

2. Transparency:

   • Disclose all relevant financial information, including any significant accounting policies, estimates, and contingencies.

3. 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.

4. Timeliness:

   • Submit the audited financial statements to the BIR within the prescribed deadline to avoid penalties and ensure compliance with regulatory requirements.

5. 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.

The financial statements for PBC for the period of January to March 2024 involves preparing the Income Statement, Balance Sheet, and Cash Flow Statement. Below are the financial statements based on recorded transactions:

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.