Housing and Urban Development (HUD) accepted audited financial statements are used by Mortgage Broker, Lenders, and multifamily property business owners to provide financial accountability and accuracy to HUD and to ensure compliance with Federal Housing Administration (FHA) mortgage, business structure and operation requirements. Audited financial statements need to be provided to HUD in order to be able to receive mortgages and subsidies from HUD. Providing HUD with a company’s audited financial statements enables HUD to determine how the company operates financially and proves that the financial statements and accounting practices have been subjected to review, testing, and analysis. Based on the opinion presented in the audited financial statement, HUD can determine if a company’s financial statements are free of material misstatements or false/missing information or not.
An independent Certified Public Accountant (CPA) will prepare an audited financial statement using financial documents provided by the company. These documents will include various financial documents such as cash flow, income statement and balance sheets. The CPA examines the documents which support figures within the financial statements, assesses the overall accounting principles used, and evaluates the overall financial statement presentation. From this information the CPA creates an audited financial statement.
Within the audited financial statement, the certified public accountant provides an opinion, either qualified or unqualified, about the nature of the financial documents. An unqualified opinion in an audited financial statement indicates that the CPA is in agreement with the methods used by the organization to prepare their financial documents. The audit is found to be accurate, complete and fairly presented to meet the requirements of the US Generally Accepted Accounting Principles (GAAP), Financial Accounting Standards Board (FASB), and Internal Revenue Service (IRS). The audit provides the CPA a reasonable basis for their opinion that the financial statements are free of material misstatements or false/missing information.
A qualified opinion indicates that the CPA is not in agreement with aspects of the financial statements and/or methods used to prepare their financial documents. A qualified opinion indicates that the CPA is not confident that the financial statements are correct or accurate.
Occasionally an opinion will not be given within an audited financial statement. This could be due to the fact that there were insignificant documents available to properly prepare the audit, or there were issues that need to be addressed before evaluating the accuracy of the financial documents. A lack of opinion usually indicates that an organization needs to improve their accounting practices so they can meet the requirements of the US GAAP, FASB, and IRS.