A financial statement that has been examined by an independent auditor who has expressed an opinion on the financial statement based on an audit.
Some of the things an auditor looks at include: evidence supporting the amounts and disclosures in the financial statements; assessing whether the correct accounting principles are being used; and validity of management estimates. Auditing the statements is a way of evaluating the overall financial statement presentation and a way to obtain reasonable assurance about whether the financial statements are free of material misstatement. Audits are conducted in accordance with GAAP standards.
An audited statement represents a higher level of accountant involvement than a review statement or a compilation statement. Outside investors and banks frequently require companies to obtain audited statements as a condition to an investment or a loan.