Audited financial statements are official financial reports that have been reviewed and verified by an independent external auditor. The auditor examines the municipality's accounting records, tests transactions, and assesses whether financial statements fairly present the organization's financial position according to accounting standards. After completing their review, auditors issue an opinion—usually 'unqualified' (clean) meaning statements are fairly presented, or 'qualified' if there are concerns. Audited statements provide assurance to taxpayers, creditors, and other stakeholders that reported financial information is reliable. Provincial legislation typically requires municipalities to have their financial statements audited annually.