What is Financial Attestation?
Financial Attestation refers to a professional service in which a licensed Certified Public Accountant (CPA) audits and reviews a company’s financial statements based on established accounting and auditing standards. The CPA then issues an attestation report affirming the credibility of the financial information.
Through this process, the CPA provides an independent, third-party professional opinion on the accuracy, fairness, and compliance of the financial statements, thereby enhancing their credibility and transparency.
Financial statement attestation is a vital component of Taiwan’s financial ecosystem. It ensures compliance with regulations, enhances investor confidence, supports good governance, and contributes to economic stability. As Taiwan continues to grow as a global business hub, the importance of accurate, reliable, and transparent financial reporting cannot be overstated.
Who Needs Financial Attestation in Taiwan?
1. Companies with Paid-in Capital of NT$30 Million or More
Under Taiwan’s tax regulations, companies whose registered capital reaches or exceeds NT$30 million are required to undergo financial attestation. This ensures that large entities uphold a standard of financial transparency in their tax declarations and reporting.
2. Companies with Annual Revenue Exceeding NT$100 Million
Enterprises with annual operating revenue over NT$100 million must also obtain financial attestation. This threshold reflects the government’s focus on monitoring larger-scale businesses that may have greater tax and financial implications.
3. Listed and Public Companies
All companies listed on the Taiwan Stock Exchange (TWSE), Taipei Exchange (TPEx), or designated as publicly held by the Financial Supervisory Commission (FSC) are legally obligated to submit CPA-audited financial reports. This rule enhances investor protection and market integrity.
4. Companies Applying for Initial Public Offerings (IPO)
Enterprises preparing for IPOs must provide multiple years of audited financial statements as part of the listing application and prospectus documentation. This helps regulators and potential investors evaluate the financial viability of the company.
5. Entities Receiving Government Subsidies or Engaged in Public Projects
Businesses that receive government funding, R&D grants, or participate in government procurement projects are often required to submit audited reports. Financial attestation ensures that public funds are utilized properly and in compliance with project agreements.
6. Companies Subject to Tax Authority Requirements
Taiwan’s National Taxation Bureau may require financial attestation as part of its oversight, particularly when companies meet certain size or complexity criteria. This includes companies in industries with higher audit risk profiles or significant cross-border transactions.
7. Foreign-Invested Enterprises and Branches
Foreign-invested companies or Taiwan branches of overseas corporations must often submit CPA-attested financial statements to the Investment Commission of the Ministry of Economic Affairs (MOEA) and tax authorities for annual filings and remittance approvals.
8. Businesses Seeking Loans or Investment
While not mandated by law, many companies voluntarily pursue financial attestation when applying for bank financing, seeking private equity, or entering strategic partnerships. Taiwanese banks and investors often require attested statements as part of risk assessment and due diligence.
9. Companies with Transfer Pricing Obligations
Businesses that engage in significant related-party transactions and fall under transfer pricing regulations must often prepare consolidated reports and documentation—frequently supported by CPA-audited financials—to comply with the arm’s length principle.
10. Voluntary Attestation by Small and Medium Enterprises (SMEs)
Some SMEs, even if not legally obligated, opt for financial attestation to enhance creditworthiness, improve internal controls, or prepare for future expansion. This practice is especially valuable when preparing to scale operations or engage with institutional stakeholders.
Benefits of Financial Attestation
1. Enhances Credibility of Financial Statements
A financial attestation performed by a certified public accountant (CPA) greatly enhances the credibility of a company’s financial statements. It assures stakeholders—such as investors, lenders, and regulatory bodies—that the figures presented are accurate, fair, and compliant with recognized accounting standards.
2. Facilitates Access to Financing and Investment
Lenders and investors are more inclined to extend credit or invest capital in companies that have audited financials. A CPA-attested report serves as a trustworthy reference point for assessing the financial health and risk profile of a business.
3. Demonstrates Good Corporate Governance
Frequent financial attestation demonstrates a company’s dedication to integrity, transparency, and compliance. This proactive approach strengthens corporate governance and builds confidence among board members and external stakeholders.
4. Reduces Risk of Regulatory Scrutiny
An attested financial report often leads to reduced risk of tax audits or regulatory interventions. Since the data has been reviewed by a qualified CPA, tax authorities may regard the information as more reliable, potentially lowering the likelihood of penalties or disputes.
5. Supports Strategic Decision-Making
Attestation provides an accurate, third-party assessment of the company’s financial position. Management can use this verified data to make more informed decisions on budgeting, investment planning, and operational improvements.
6. Improves Operational Transparency
Financial attestation enhances the overall transparency of financial operations. This is especially advantageous for businesses with intricate structures, international transactions, or subsidiaries that need consolidated reporting.
7. Builds Trust with External Parties
Suppliers, customers, and joint venture partners are more likely to collaborate with companies that uphold transparent financial practices. An audited financial statement serves as a mark of reliability and ethical business conduct.
8. Serves as a Requirement for Government Grants and Projects
For companies participating in government-funded programs or public tenders, audited financials are often a mandatory requirement. Financial attestation becomes an essential gateway to securing public sector opportunities.
9. Assists in Risk Management and Fraud Prevention
Through systematic examination of accounts and internal controls, the attestation process helps identify anomalies, control weaknesses, or signs of fraudulent activity. This adds a valuable layer of risk mitigation to the company’s financial management framework.
10. Strengthens Internal Controls and Financial Discipline
The process of preparing for financial attestation encourages companies to establish and maintain sound accounting systems, robust documentation, and disciplined reporting routines—all of which contribute to sustainable financial health.
Conclusion: Financial Attestation as a Certificate of Trust and Transparency
In today’s increasingly transparent and globally integrated financial environment, financial attestation has become a vital instrument for demonstrating a company’s integrity and accountability. Whether a company is listed, a fast-growing SME, or a startup seeking funding, professional attestation builds a solid financial foundation that paves the way for long-term growth and investor confidence.
For companies seeking further assistance in preparing financial statements, arranging attestation workflows, or selecting a suitable CPA firm, professional advisory services tailored to industry-specific needs are highly recommended.
