Accounting Outsourcing | Should Businesses Need Audited Reviews
Many business owners who are applying for loans are told by their bank set that you need to provide reviewed or audited financial statements to qualify as accounting outsourcing. The go to their accountant without understanding why they would need an audited or reviewed financial statement, or what the alternative is. Itís becoming less commonplace for businesses to need to provide reviewed audited financial statements, therefore they should always ask the question of why itís needed before going through the time and cost associated with getting audited financial statements.
Generally, the only time the business owner would need to provide audited financial statements, is that if it is requested by an external source. If a business has been audited by CRA, that would be one example, a bank requiring the review in order to qualify for a loan, or the Board of Directors from a nonprofit adhering to their bylaws. These are typically the only reasons audited financial statements would be required, and because there only needed for external sources, business owners should understand that if they ask their accountant to prepare reviewed or audited financial statements, the chartered professional accountants duty would be to ensure the numbers are accurate for those external sources and not the client.
Many business owners believe that since reviewed or audited financial statements have been prepared using more due diligence, and cost more, therefore they are better. Unfortunately says accounting outsourcing, this is not necessarily the case. Just because more testing and confirmation has been done on the reviewed and audited financial statements, doesnít make them better then notice to reader statements. In many cases, business owners are at a slight disadvantage when their accountant is prepared reviewed or audited financial statements. The reason for that is because the accountant must remain impartial and their duty is to the external sources that a requested the financial statements. Because of this, accountants must remain an arms length from their clients while they are working on the statements, and they arenít able to offer suggestions, strategies, or any advice.
Many entrepreneurs wonder when they will be requested to provide reviewed or audited financial statements, especially since itís not generally in the business ownerís best interest. Accounting outsourcing says typically the only time the bank would require reviewed or audited financial statements is if the business owner is going to be borrowing extremely large sums of money. Many businesses are able to secure large loans, in the amount of several million dollars, based on a notice to reader statement as well as good accountant prepared interim statements. Accounting outsourcing says so for the most part business owners should understand that unless specifically requested, they should always be providing notice to reader financial statements.
Notice to reader financial statements are generally regarded as accurate, chartered professional accountants have ensure that they are arithmetically correct and possible, and is quickly becoming what most banks require to loan money. If business owners understand this, they will be better prepared to know what a bank needs the next time they need to borrow money from their financial institution.
Business owners often assume that they need to provide reviewed or audited financial statements when they are applying for loans says accounting outsourcing. Because of this, they often approach their accountant but the request of getting these documents prepared, without understanding that it is not only not necessary anymore, itís also counterproductive as well.
Financial institutions are relaxing their positions more and more on what business owners need to provide in order to qualify for loans says accounting outsourcing. Although it wasnít that long ago that banks still required audited financial statements. . So unless business owners actually verify with their banks on what they need, they make the assumption that what they were asked to provide five years ago is what theyíre going to be asked to provide today. But this is not necessarily the case.
Not only is it time intensive to provide audited financial statements, itís also very cost prohibitive as well. The many business owners arenít aware that itís also counterproductive. As banks will ask their rules, they also are asking business owners to provide good interim statements there also prepared by their accountant. Business owners may not be aware that if an accountant is already providing an audited or reviewed financial statement for a business owner, they will be able to provide an interim statement says accounting outsourcing. Since the accountants duty is to be impartial in order to provide unbiased financial statements, they would not be able to provide the interim statements and remain impartial. So once an accountant is working on a reviewed or audited financial statement, they will be no longer available to provide interim statements. If a business owner has already asked them to work on reviewed or audited financial statement and itís not actually required, they can force themselves to have to hire a different accountant, one that is not familiar with their file to provide the interim statements. This can be costly for business owners.
Therefore, a business owner that is applying for a loan should always check with their financial institution on what is absolutely required, and then check with their accountant to ensure that what is being asked makes sense says accounting outsourcing. Since most financial institutions have been allowed business owners to provide notice to reader financial statements and interim statements, itís in the business ownerís best interest to stick with those two documents and save themselves a lot of additional hassle and money.
If for some reason, a business owner has been requested by a bank to their audited financial statements as well as interim statements, they should let their accountant to know up front that thatís the requirement, to see if their accountant has someone that they work closely with so that one can provide the audited financial statement, and the other can provide the interim statements. This may be a better option than a business owner trying to find to chartered professional accountants independent of each other to work on those documents.