What Is It? Financial statements preparation is the process of creating reports that reflect the client's financial position, income, and expenses. These reports typically include the balance sheet, income statement, cash flow statement, and other essential financial statements. Why Is It Important? Financial statements clearly show the client's financial situation and are crucial for their future planning. The reports play a vital role in fulfilling tax obligations, obtaining loans, and other financial matters. Accounting firms help clients prepare these statements accurately and on time.