The type of financial statement preparation depends on the company’s size, ownership structure, and reporting requirements:

  1. Audited Financial Statements: Prepared with the highest level of assurance, audited statements are examined by an external auditor to ensure accuracy and compliance. Required for public companies and larger corporations.
  2. Reviewed Financial Statements: Offer moderate assurance, as an accountant reviews the statements to ensure they are plausible but doesn’t perform a full audit. Often used by private companies seeking loans.
  3. Compiled Financial Statements: Prepared based on data provided by the company, with no assurance from the accountant. Commonly used by small businesses for internal purposes.