Accounting Outsourcing | How To Accountants Prepare Financial Statements
There are three different financial statements that accountants can prepare for their clients says accounting outsourcing. Different reasons why these different statements are necessary, plan, application of each month, in order to help them ask their accountant for the correct financial statement at the right time.
The first type of financial statement is the most common one and itís called the notice to reader financial statements. Accounting outsourcing says that this statement although untested, has been deemed arithmetically correct by the accountants. The accountant has gone through it to verify that balance sheet actually balances, and because of this the numbers are considered plausible. This is the most common financial statement that an accountant will prepare, and is the most efficient time wise and cost effective as well Canada revenue agency requires this type of financial statement at a businesses corporate year end, in order to file their taxes.
The second financial statement is a reviewed engagement. Accounting outsourcing says that this contains the same information as a notice to reader financial statement, but the accountant has tested numbers to verify the believability of the report. This additional testing Takes additional time, and additional cost. If chartered professional accountant is preparing reviewed engagement, there main duty is to the bank thatís requiring this financial statements. Which means while they are producing it, they must remain objective and unbiased. Because of that, they have limited contact with their client during the process.
The third type of financial statement is the audited financial statement and, is the most well known out of all of them says accounting outsourcing. These statements have been verified as hundred percent accurate by the accountant, because they confirm the numbers. Accountant will go to the bank and ensure the financial amounts are accurate, as well, the accountant will leave the Accounts Receivable report and send out statements, and called each client that owes money to ensure that the amount is still outstanding, and that it is still going to be paid off. It will also ensure all of the bills from the vendorís are accurate. Audited financial statements are regarded as percent accurate, and takes a significant amount of time for accountants to produce. The cost of producing and audited financial statement is quite large.
Generally, these days the only reason why business owners need to ask their accountant to prepare reviewed engagements or audited financial statements is when they need to borrow an extremely large amount of money, or if they are nonprofits. Accounting outsourcing says banks are starting to relax the requirements of the table financial statements they need to loan money. Because of this, many accountants have seen several million dollars be loaned to businesses based on a notice to reader financial statements says accounting outsourcing. Before an entrepreneur goes through the time and expense of having their accountant to prepare a reviewed engagements or audited financial statements, they should verify what is absolutely required of them to prepare in order to qualify for a loan.
Entrepreneurs often believe that because they required to get a reviewed engagement or and audited financial statement in order to qualify for a loan a few years ago, thatís still a requirements is accounting outsourcing. Banks have actually recently started to relax their requirements on what a business owner should provide them in order to qualify for a loan. The reason for this, is because banks are starting to understand the importance of seeing the current financial health of the business, instead of verifying the accuracy of the numbers from the previous years finances.
While it used to be very common for business owners to the financial statements to qualify for loans, many entrepreneurs still think thatís the case, or make the assumption that if they are borrowing extremely large sums of money, that they still need to provide reviewed engagements or audited financial statements. Accounting outsourcing says that this is actually not the case, and accountants have seen several million dollars be loaned based on a notice to reader financial statement.
Financial institutions are often asking entrepreneurs to provide a notice to reader financial statement as well as a good interim financial statement as well. These two reports are something that chartered professional accountants will be able to provide to their clients with no problem. Accounting outsourcing says that if the bank requires a reviewed engagements or and audited financial statement as well as a good interim statement, that may be more difficult. The reason for that is because when accountants are preparing reviewed or audited financial statements, their main fiduciary duty is to that financial institution and not their clients. Because of that, they have to remain unbiased and impartial and have limited contact with their clients, which means they cannot produce in terms statements as well. Not only do entrepreneurs need to keep this in mind, that banks should also be aware that if there asking for interim statements, that it may be difficult or impossible for business owner to also produce reviewed engagements or audited financial statements at the same time.
As banks and financial institutions relax their requirements on what a business owner needs to produce in order to qualify for a loan, business owners should keep in mind that they should not make assumptions based on what they used to have to provide in the past to qualify for loans. This assumption could be extremely costly, by forcing a business owner to have to get a second accountant if theyíre providing a reviewed engagement or and audited financial statement as well as good accountant prepared interim statements in order to qualify for their loan. Accounting outsourcing says that being aware of how things are changing, can help
and financial institutions, chartered professional accountants and business owners be clear on whatís needed, so that they can provide what they need in order to qualify for loans they need to grow their business.