Accounting Outsourcing | Do Entrepreneurs Need To Provide Audited Statements
Many entrepreneurs are being told that they need to provide reviewed or audited financial statements for their banks, and the art sure why says accounting outsourcing. While entrepreneurs used to have to provide reviewed or audited financial statements in order to qualify for loans, many banks are no longer requiring this of the business owners because they have relaxed their requirements. Before business owners approach their accountant saying that they need to provide reviewed or audited financial statements, they should verify that their bank.
Banks have relaxed their positions on loaning money to businesses based on notice to reader financial statements, but they havenít necessarily updated their loan applications in order to reflect this. This ends up with many bank managers thinking that entrepreneurs need to prepare reviewed or audited financial statements, even though financial institution longer requires that. If a bank has requested a entrepreneur provide reviewed or audited financial statements, it should be questioned says accounting outsourcing. And at the very least, business owners should ask their chartered professional accountant to verify whatís absolutely needed with their bank.
One of the reasons why it should be questioned, is because if banks require reviewed or audited financial statements as well as interim statements, but may be very difficult for a business owner to provide. The reason for this is accounting outsourcing, is because while chartered professional accountant is working on reviewed or audited financial statements for their client, the same accountant must remain impartial during the process, which means they cannot provide interim statements to the same client. If an accountant can explain that to the bank, they often will allow the chartered professional accountants to provide notice to reader statements as well is interim statements. This will save the entrepreneur a lot of time, money and hassle in trying to find a second accountant to work with.
Banks may actually still require entrepreneurs to get a reviewed or audited financial statement if they are applying for an extremely large loan in excess of several millions of dollars. Accounting outsourcing says that extremely large loans of several million dollars are currently being issued based on notice to reader financial statements along with good, accountant prepared interim statements, that only if the loan is extremely large, business owners should be reassured that reviewed or audited financial statements are not going to be mandatory.
While banks have relaxed their position on audited financial reviews, many nonprofits are still being required by their Board of Directors to get audited financial statements before their fiscal year ends. Accounting outsourcing says that this is often difficult and counterproductive for small month for profits simply due to the amount of work that goes into providing audited financial statements. Itís so time-consuming for an accountant to prepare, and therefore so costly, that it may cost a nonprofit a significant portion of their budget in order to provide audited financial statements. Board of Directors should review their bylaws, and figure out if nonprofits actually do need to provide audited financial statements for their charity status. most nonprofits would prefer spending the money that theyíve raised throughout the year on their charity rather than on your end financials.
If an entrepreneur has applied for a loan in a financial institution, there is a chance that they would be asked to prepare reviewed or audited financial statements says accounting outsourcing. However, itís becoming more and more commonplace that banks are relaxing their position on loaning money to businesses based on them providing notice to reader financial statements instead of reviewed or audited financial statements. Although this is starting to become more prevail and, any entrepreneurs that applied for a loan a few years ago for probably being told that they needed to provide an audited financial statement, therefore have made the assumption that thatís what they need to provide currently.
The reason why banks are starting to no longer require reviewed or audited financial statements and except notes to reader statements instead says accounting outsourcing, is because they are also requiring the business owner to provide extremely good interim financial statements. The level of interim financial statements that the banks are starting to require are a higher level than what entrepreneurs can provide themselves. Because of this, they need to get their chartered professional accountant to create the interim statements on their behalf. If a business owner has already got their accountant working on an audited financial statement for them, the accountant is not able to work on the interim statements. Accounting outsourcing says this is because an accountant must remain impartial and unbiased, because their fiduciary responsibility is to the financial institution that is requesting the audited financial statement. Because of that, an accountant who is working on the interim financial statements would not be considered as unbiased and unable to be objective.
If the bank requests a business owner get a reviewed or audited financial statement as well as interim financial statements, that puts the business owner in the position of being forced to find two accountants one to work on the audit, and the other to work on the interim financial statements. This is difficult, costly, and in some cases impossible for a business owner to find an accountant to work one time on a file their unfamiliar with. Accounting outsourcing says that this is some of the reason why they ask have relaxed their requirements.
Another reason that banks have relaxed their requirements, is because they have discovered that itís far more important to see the current financial health of the business, rather than the financial health of the business in its previous year. A lot can happen in a very short period of time to businesses, and banks want to ensure that the business is currently doing extremely well, which is the reason why they ask for accountant prepared interim statements. Business owners who can prepare those good interim statements, make their bank much more happy than ensuring that there last year financial statements have been verified to a higher degree.