What Is a Certified Financial Statement? (And How to Get One)

Certified financial statement — the short definition

A certified financial statement is a set of audited financial reports that an independent certified public accountant (CPA) has examined and signed, providing reasonable assurance that the numbers are free from material misstatement.

The package typically includes four core statements: 

• Balance sheet (statement of financial position)
• Income statement (profit and loss statement)
• Statement of cash flows (operating, investing and financing activities) 
• Statement of equity (changes in ownership accounts). 

Together, these documents give a complete snapshot of your company’s financial position and performance. Primary users include commercial lenders (who need assurance before extending credit), equity investors and private equity firms (during due diligence), government agencies (for regulatory filings or grant compliance) and partners or buyers in merger and acquisition transactions.

Certified vs. reviewed vs. compiled (what you actually need)

Not every financial statement engagement carries the same weight. The table below breaks down the three common levels of assurance you’ll encounter when working with a CPA.

When choosing between these options, consider your specific requirements. If your bank loan covenant explicitly requires “audited” or “certified” statements, a review won’t suffice. However, if you’re seeking preliminary investor interest or applying for smaller credit facilities, a review engagement might meet your needs at roughly half the cost of a full audit. Always confirm the required level of assurance with the requesting party before engaging a CPA firm.

When you need a certified financial statement

Most small businesses operate for years without an audit. Certified statements become necessary only when an external party demands independent verification of your numbers. Here are the most common triggers:

• Loan covenants: Many commercial credit agreements require annual audited financials to monitor debt-to-equity ratios, working capital floors or other financial covenants.
• Investor due diligence and M&A: Private equity firms, venture capital funds and strategic buyers almost always request audited statements before closing. Quality of earnings reports often build on audited figures.
• Grants and tenders: Government contracts and grant programs frequently mandate audited financials to ensure compliance with spending restrictions and reporting rules.
• Regulatory filings: Certain industries (e.g., insurance, finance, healthcare) face statutory audit requirements from state or federal regulators.
• Contract requirements: Franchise agreements, partnership buyout clauses or supplier contracts may specify annual audits as a condition of doing business.

If none of these apply to you today, revisit the question annually. Growth, new credit facilities and ownership changes all create audit triggers that catch business owners by surprise.

How to get a certified financial statement (step-by-step)

Obtaining audited financials isn’t as simple as handing your books to an accountant. The process is methodical, collaborative and heavily documented. Here’s how it unfolds:

Step 1: Confirm the required assurance level with the counterparty.

Before you engage an auditor, ask your lender, investor or regulator whether they will accept a review or truly require a full audit. Request any specific scope items in writing, such as single-audit compliance for federal grants or agreed-upon procedures for certain loan covenants. This saves you from paying for more assurance than necessary or discovering mid-engagement that your CPA’s standard scope won’t satisfy the requirement.

Step 2: Select an independent CPA or audit firm.

Independence matters. The CPA firm cannot have bookkeeping, payroll or controller-level responsibilities for your company during the audit period. Look for firms with experience in your industry; a CPA who audits manufacturing companies will move faster and catch risks a generalist might miss. Check that the firm undergoes peer review every three years, a quality-control requirement for all audit practices.

Step 3: Complete the kickoff meeting and PBC list.

Once you sign the engagement letter, the audit team will send a provided-by-client (PBC) list – a detailed request for documents, schedules and supporting evidence. We’ve included a comprehensive checklist later in this guide. Schedule fieldwork windows around your calendar; auditors often need two to four weeks of access to records, systems and key personnel. Blocking those dates early prevents delays.

Step 4: Navigate the audit procedures.

The auditors will test account balances, send confirmations to banks and customers, observe inventory counts (if applicable) and review contracts, board minutes and legal correspondence. They’ll document control weaknesses, propose adjusting entries for errors and request management explanations for unusual transactions. Your job is to respond promptly and provide clear support. The faster you close open items, the faster the audit wraps.

Step 5: Receive the auditor’s report.

At the conclusion, the CPA issues an opinion letter – typically “unqualified” (clean), “qualified” (clean except for specific issues), “adverse” (material misstatements) or a “disclaimer” (insufficient evidence). An unqualified opinion is what lenders and investors expect. The final package includes the signed opinion, footnoted financial statements and any required supplemental schedules.

Cost and timeline — what drives both

Audit fees vary widely, and firms rarely publish rate cards. A microbusiness with clean books might pay $8,000 to $15,000 for a straightforward audit, while a $20 million revenue company with multiple entities, significant inventory and complex revenue recognition can easily spend $40,000 to $100,000 or more.

Several factors push costs up or down:

• Size and complexity: More revenue, more locations and more product lines mean more testing and more hours.
• Industry risk: Construction, healthcare and financial services face tighter scrutiny (and higher fees) than service-based businesses with simple revenue models.
• Data quality and ERP maturity: Companies running on spreadsheets or patched-together software take longer to audit than those on integrated accounting platforms like NetSuite or QuickBooks Online.
• Number of entities: Consolidated groups require intercompany elimination schedules and separate legal-entity work.
• Prior audit history: First-year audits cost more because the team must understand your systems from scratch and often restate opening balances.

The timeline depends on responsiveness. If you deliver a complete PBC package at kickoff and answer follow-up questions within 48 hours, fieldwork can wrap in two to three weeks. Delays in providing bank statements, contracts or reconciliations stretch the calendar and often trigger hourly overruns.

Document and prep checklist

Auditors will send their own PBC request, but assembling these items in advance demonstrates readiness and accelerates the engagement. Actual requests vary by engagement type (audit versus review), entity structure and industry.

Entity and engagement setup

• Legal name(s), employer identification number (EIN), addresses, ownership structure and capitalization table
• Organizational documents (articles of incorporation, bylaws, operating agreement)
• Board or management meeting minutes and resolutions
• Prior year financial statements and auditor or reviewer reports
• Trial balance (current year) and prior-year comparative trial balance
• Accounting policies memos (revenue recognition, capitalization thresholds, etc.)

General ledger and closing

• General ledger detail for the period (exported to Excel or CSV)
• Chart of accounts
• List of manual journal entries above a materiality threshold with supporting documentation
• List of significant estimates (bad debt reserves, inventory obsolescence, warranty accruals)

Cash and banking

• Bank statements for all accounts covering the full period
• Bank reconciliations at period end with outstanding items detailed
• Debt covenant compliance calculations (if applicable)

Receivables and revenue

• Accounts receivable aging at period end and rollforward schedule
• Top customers and significant new contracts (with payment terms)
• Revenue recognition schedules (including variable consideration, deferrals, performance obligations)
• Subsequent cash receipts listing after period end

Inventory and cost of sales

• Inventory listing by location, SKU and valuation method
• Physical count procedures and results (or cycle count documentation)
• Standard cost build-ups and bills of materials (if applicable)

Fixed assets and leases

• Fixed asset register and rollforward (additions, disposals, depreciation)
• Supporting invoices for material additions
• Lease agreements and ASC 842 schedules (right-of-use assets and liabilities)

Payables and expenses

• Accounts payable aging at period end and rollforward
• Vendor statements and reconciliations for key vendors
• Subsequent disbursements after period end
• Expense capitalization versus expense policy (including threshold)

Debt and equity

• Debt agreements, amortization schedules and compliance certificates
• Convertible notes, warrants and significant terms
• Equity rollforward (issuances, repurchases, stock options)

Payroll and taxes

• Payroll registers and year-end filings (W-2, 1099)
• Income and franchise tax returns and assessments
• Sales and use tax filings and correspondence

Other disclosures

• Related-party listing and intercompany agreements
• Contingencies and legal letters (attorney confirmations)
• Insurance policies and significant claims
• Subsequent events (material transactions after period end)

Confirmations (audits only)

• Customer accounts receivable confirmations (contact information)
• Bank and debt confirmations (contact information)
• Attorney letters (law firm contacts)

Management representations (final)

• Draft management representation letter (to be finalized at conclusion)

Organize these items in a shared folder (e.g., Google Drive, Dropbox, SharePoint) with logical subfolders. Label files clearly and version-control anything updated during fieldwork. This structure not only speeds the current audit but also builds a reusable framework for future years.

Who can certify your statements?

Only an independent CPA licensed to practice in your state can issue an audit opinion and certify your financial statements. Independence is non-negotiable: the firm cannot perform bookkeeping, prepare your tax returns or hold any financial interest in your company during the audit period.

When selecting an auditor, prioritize these criteria:

• Industry experience: A CPA who has audited dozens of software-as-a-service (SaaS) companies will navigate ASC 606 revenue recognition far faster than a generalist.
• Peer review status: Every CPA firm that performs audits must undergo a peer review every three years. Ask to see the most recent report and confirm it was a pass with no deficiencies.
• Client references: Request contact information for two or three audit clients in similar industries and revenue bands. Ask about responsiveness, value-added insights and billing transparency.
• Technology compatibility: If your company uses specialized ERP or data analytics platforms, confirm the auditor has experience extracting and testing data from those systems.

We recommend interviewing at least two firms before signing an engagement letter. Compare scope, fee structures (fixed versus hourly) and cultural fit. The right auditor becomes a long-term advisor, not just a once-a-year compliance vendor.