Understanding Key Financial Statements and Audits
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Financial Statements Components
Financial Statements: Include the balance sheet, profit and loss account (income statement), cash flow statement, statement of changes in equity, and the annual report (memory).
Accounting Framework and Auditing
- PGC (Plan General de Contabilidad): Establishes the legal and technical framework for accounting standards. It ensures that fundamental economic and financial information reported by companies is reliable and comparable.
- External Audit: A review of annual accounts conducted by independent professionals applying accepted legal standards.
- Internal Audit: Performed by company personnel to verify the existence, implementation, and effectiveness of the organization's internal controls.