What is an audited account?
When the financial results which a company compiles have been checked by an accountant qualified to conduct an audit, known as an auditor, they are known as audited accounts. If all is well, the auditor will state that the accounts give a "true and fair" picture of the company's affairs.
Key takeaways
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Audited accounts are financial results verified by qualified auditors who state the accounts provide a "true and fair" company picture.
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Most jurisdictions require businesses, especially public companies, to have accounts audited by qualified accountants or accounting teams.
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In Common Law jurisdictions like the US and Britain, auditors verify accounts match business figures, not figure accuracy itself.
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Shareholders receive audited accounts of their investments, while preliminary profit or loss figures are released as unaudited results.
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Auditors face scrutiny after high-profile business failures and can be sued by shareholders in extreme cases of negligence.
Where have you heard about audited accounts?
Shareholders receive copies of the audited accounts of companies in which they have invested. By contrast, the 'preliminary' profit or loss figures released by companies are called 'unaudited results'. In the wake of a high-profile business failure, the performance of the auditor will often be called into question.
What you need to know about audited accounts.
In most jurisdictions, a business of any size, and certainly one offering its shares to the public, will be required to have it accounts audited by an accountant or a team of accountants. The legal status of the audit varies, but in Common Law jurisdictions such as the US and Britain, the principle has been that the auditor is required only to verify that the accounts tally with the figures generated by the business, not that those figures themselves are necessarily accurate. But in extreme cases, auditors who fall down badly on the job can be sued by shareholders.
Find out more about audited accounts.
To discover more about a company's performance see our definition of balance sheet and financial report.