Top reasons a small business needs a financial statement audit

Small business owners, controllers, CFOs, and CEOs often ask whether their company needs audited financial statements.  Many times the answer is not a simple yes or no: it depends.

Here are some of the top reasons you may need an audit:

  • Required by your lender.  Bank debt, lines of credit, or other types of bank loans may require audited financial statements.  In certain situations, companies in need of capital may find lenders more receptive if they have audited financial statements.  The statements may be needed to get a loan and can make a difference in the interest rate offered.
  • Required by Partnership or LLC agreement.  Today’s investors have heightened expectations.  Complete and accurate financial information are a vital part of meeting these expectations.
  • Looking to sell company.  Audited financial statements are a good idea if you think you are going to try to sell your company or it is already being acquired.  A history of audited financials can help you achieve a higher selling price and a smoother process.
  • Good business practice.  Smart investors and owners consider audited statements good business practice.  Having a track record of audited financial statements sends a strong message to other potential investors, lenders, employees, the government and any other interested parties.

Considering the need for audited financial statements is a decision that warrants careful evaluation. Some important questions need to be answered, such as: Who are the intended users of the financial statements and what are their needs?

In some situations there may be less costly options that may get you were you want to be.  Either way it is important to keep solid financial records and document your processes and controls of all of your transactions.

Looking for a Columbus accounting firm to perform a financial statement audit? If you need to discuss your options or have questions, please contact J.W. Wilson, CPA at jwilson@claruspartners.com or 614-545-9100 x40.

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