Businesses have to deal with tons of financial transactions on daily basis. The result of these transactions during an accounting period are outlined in various statements namely- balance sheet, income statement, and cash flow statement. An external CPA firm audits the financial statements of most companies every year. For some entities such as publicly-traded companies, an annual audit is a legal requirement. However, lenders also typically require the results of an external audit annually as part of their debt covenants. Therefore, most organisations will have annual audits for one reason or another.