How important are financial statements?
To investors, financial statements are the last line of defense in protecting their investment. Financial statements are very often the only opportunity that investors are given to assess both an organization’s viability and its life expectancy. To creditors, financial statements represent the ability of an organization to repay debts. Creditors gravitate towards financial statements because they generally like to function under the principle of reciprocity: if they give it, they would like to eventually get it back. To government, financial statements are a two-fold issue: they determine how much the IRS can levy and they also create a burden on the powers that be, through the Securities and Exchange Commission (SEC) and other similar entities, to prevent the collapse of capitalism. To accountants, financial statements represent both a source of ongoing fees and a Pandora’s box of potential liability. If financial statements issued by a CPA or a CPA firm are eventually exposed as misl
