Rakesh Kapila offers some helpful insights into understanding financial statements
- Key aspects can affect the value of a set of financial statements to the user.
- It may be important for solicitors to consult forensic accountants for their expertise in interpreting and investigating financial statements before deciding on the extent to which such statements can be relied upon
Financial statements summarise the performance of a business over an accounting period, usually a year, and its financial position at the end of that accounting period. They are prepared by the management of a business or others, such as accountants, acting on their behalf. It is common for financial statements to be referred to colloquially as ‘accounts’, but ‘financial statements’ is the technical term used by the accounting profession.
Limited companies and limited liability partnerships (LLPs) must comply with detailed statutory requirements covering the form and content of financial statements. There are no such requirements in relation to sole proprietorships and other types of partnership. Financial statements for an unincorporated business are therefore prepared solely for the benefit of the proprietors of the business,
