As part of your bookkeeping package, we’ll also prepare the following unaudited year-end financial statements for submission with your corporate tax return:

Balance Sheet

The balance sheet is the statement of financial position—assets, liabilities, and shareholders’ equity—at a specific point in time. For tax returns, this would be the fiscal year-end of the corporation.

Income Statement (P&L)

Whereas the balance sheet shows the financial position at a specific point in time, the income statement (P&L) shows the results of operations for a certain period. The income statement shows revenues, cost of sales, gross profit, operating expenses, and net profit.

Statement of Retained Earnings

The statement of retained earnings indicates the changes in a company’s retained earnings for a certain period of time. It shows the retained earnings at the beginning of the period and changes, such as net income or shares issued, during that period.

This statement reconciles the beginning and ending retained earnings for the period, using information such as net income from the Income Statement, and is used by analysts to understand how corporate profits are utilized.

Financial Statement Adjustments

Before finalization, certain year-end adjustments are required to your financial statements. These adjustments may include:

Income accruals.

This could include work in progress—income that has been earned but not yet invoiced for. An example would be labour hours for a project that hasn’t been completed.

Expense adjustments.

Some examples of expense adjustments are:

  • Hours worked by employees between pay periods
  • Vacation accrued by employees but not yet paid
  • Depreciation and amortization of assets
  • Inventory adjustments to reconcile the amount of physical inventory with the amount shown in the company’s books
  • Prepaid expenses – payments made in advance that are expected to be used in the future such as insurance, rent paid in advance, tax paid in advance (installments)
  • Year-end bank account reconciliation items

Financial Statements & Levels of Assurance

While the financial statements we prepare are suitable for internal use and for tax purposes, other external users of the financial statements, such as banks or other creditors, company shareholders, or prospective purchasers of a business, may require some degree of assurance that the financial statements are accurate.

Compilation (Notice to Reader)

A compilation (Notice to Reader or NTR) provides virtually no assurance, other than the fact that the financial statements were compiled by a CPA firm. The NTR generally states, “We have not performed an audit or a review engagement in respect of these financial statements and, accordingly, we express no assurance thereon.”

Even though there is no assurance given, financial statements compiled by a CPA firm may be sufficient for some external users of the statements.

Review Engagement

A review also does not provide any level of assurance other than:

  • The fact that the statements were prepared by a CPA according to Generally Accepted Accounting Principles (GAAP), and
  • The statement, “nothing has come to our attention that causes us to believe that the financial statements do not present fairly, in all material respects.”

Reviewed financial statements are generally sufficient for banks, other creditors, and some other external users.


Audited financial statements are in most cases only required by large, public companies or non-profits. They do provide a degree of assurance by stating, “In our opinion, the financial statements present fairly, in all material respects, the financial position of XYZ.”

Financial Statement Preparation

Our bookkeeping packages include the preparation of your tax-ready year-end financial statements. Contact us today to sign up for one of our packages, and let us handle all your bookkeeping headaches so you can breathe easy.