three-statementlisted

# Three-statement integrity The three statements are one system, not three reports. Every figure on the cash flow statement is derived from a change on the balance sheet or a line on the income statement. When they stop articulating, the break is always locatable — this skill is the search order. Load `tie-out` first. Every check below emits a PASS/FAIL with a stated threshold. --- ## The four structural checks Run these in order. Do not proceed past a FAIL — a downstream check on broken inputs produces misleading results. ### 1. The balance check ``` Assets = Liabilities + Equity (both periods, exactly) ``` Threshold: **exact.** Not "within rounding." If your system carries cents, it balances to the cent. An out-of-balance balance sheet is never a materiality question. ### 2. Retained earnings roll-forward ``` Opening RE + Net income - Dividends/distributions +/- Prior-period adjustments = Closing RE ``` The `Net income` in this roll **must equal** the bottom line of the income statement for the same period. This single check catches most statement-linkage errors, because it is where the income statement physically connects to the balance sheet. If it fails, the usual causes are: an equity entry booked directly to RE without flowing through the P&L, an OCI item misclassified into RE, or a period-boundary mismatch. ### 3. Cash flow ties to the balance sheet ``` Net change in cash (per CF statement) = Closing cash (BS) - Opening cash (BS) ``` Threshold: *