When preparing financial statements for a new business with limited records, what is the CPA's responsibility regarding those records?

The CPA's responsibility when preparing financial statements for a new business with limited records is to prepare them based on existing records. This recognizes the reality that new businesses may not have extensive or fully developed records available. The CPA must use their professional judgment to assess the quality and reliability of the existing records, ensuring that financial statements are prepared in accordance with applicable accounting standards.

In this context, utilizing available information is essential because it allows the CPA to provide a fair representation of the business's financial condition, even when complete records are lacking. By focusing on existing records, the CPA can also identify any areas of potential concern, ensuring that the financial statements communicate relevant information.

This approach aligns with the principles of professional skepticism and the demand for reasonable assurance rather than absolute assurance, recognizing that achieving full completeness may not be feasible in every situation, especially for a new venture.