Free consult & free copy of book

E-Myth – “Why most small businesses don’t work & what to do about it”

Contact Us


Most 5 star CPA Google reviews in Canada

Read Reviews

Chartered Professional Accountants E Myth

1 Fixed Monthly Fee - Planning | Accounting | Taxes | Consulting

Helping Canadian businesses beat the odds!

Accounting Outsourcing | What Type Of Financial Statements Do Banks Require

Often, business owners are required to apply for loans as they are needs arise says accounting outsourcing. Whether it is for leaseholder improvements, asset purchases, or other reasons business owners often have to apply for loans in order to help the business. Understanding the different requirements that banks have when they are applying for loans, can help business owners be ready to provide for correct documentation. Several years ago, banks required entrepreneurs provide reviewed or audited financial statements in order to get approved for loans. Many entrepreneurs who have been through that process, still assume that that is the process. Business owners need to realize that things have changed, and what they now need to provide the banks in order to get loans.

Thanks use to ask for audited financial statements, in order to confirm that the numbers were accurate in order to approve them for loans. Accounting outsourcing says banks and other financial institutions are quickly learning that itís not necessarily important to find out how financially viable the business was in its last year, but that currently the business is in good financial health. Because of this, banks are requesting entrepreneurs provide accountant prepared interim statements to verify that the health of their business is currently very good. A lot can happen to a business between the financial statements of the previous year and whatís current in the business, and because banks and realize that, they have started asking for these interim statements.

The reason why requesting interim statements might affect an entrepreneur fighting audited financial statements as accounting outsourcing, is because an accountant that is providing financial statements to the bank of the business owner must remain impartial and unbiased, in order to complete their fiduciary duty to the bank, therefore they are not able to provide interim statements. So if a bank requires a business owner to provide audited financial statements as well as interim statements, they are often forced into finding two different accountants to work with. This is difficult, costly and sometimes impossible for entrepreneurs to find an accountant who is willing to take the interim statements of a business that they are not familiar with on a job that is not likely to be repeating.

Since business owners no longer require providing the audited financial statements, they should understand that by providing notice to reader financial statements as well as good interim statements, theyíre both supplied by their chartered professional accountant, accounting outsourcing says that this is often all thatís required to qualify for loans. Business owners have been able to secure millions of dollars based on those requirements, so if an entrepreneur has been asked to provide more than this, they should question at the bank level, and ask their chartered professional accountant to check into that. Business owners should be able to provide the documentation they need in order to qualify for a loan without going through undue financial hardship.

When entrepreneurs are applying to their financial institutions for loans, they should understand that recently requirements have changed says accounting outsourcing. Businesses who assume that they are going to need to provide audited financial reviews may discover that this is no longer the case. If they have gone to their chartered professional accountant and got them to start preparing reviewed or audited financial statements, they could be creating a difficult situation for themselves.

The reason why it may be difficult on owners if they have already got their accountant working on recruiter audited financial statement in preparation of sending information off to get a bank loan, is because many banks have changed their requirements very recently says accounting outsourcing. Rather than requiring audited financial statements, banks are now asking business owners to provide good accountant prepared interim statements because they are understanding that itís much more important to check the financial viability of the business currently rather than in its previous year. Many things can happen to a business within one year, in order for a bank to be certain that the business is currently in great financial shape, they are placing less emphasis on the year-end financial statements, and are placing more emphasis on interim financial statements.

Accountants are already working on reviewed financial statements must remain unbiased and impartial since their fiduciary responsibility would be to the bank that is ultimately going to getting the statements. Because of the taxes accounting outsourcing, chartered professional accountants arenít allowed to provide both audited financial statements and interim financial statements. If the business owner has already got their accountant working on audited financial statements in preparation, they have just ensure that they are not going to be able to use the same accountant to provide interim statements. If they check with their bank first they would find that perhaps the bank would only require them to create notice to reader statements so that they could get some accountant to prepare good interim statements. Accounting outsourcing says that itís extremely important that business owners are aware of this before they start creating statements.

If a business owner does approach a bank, and they state that they need audited financial statements in order to qualify for loans, business owners should question why, and if they arenít able to get a good answer, they can ask their accountant, and the accountant can ask the bank. If the bank is going to require business owner to use two separate accountants in order to get audited financial statements as well as interim statements, the bank should be able to explain why.

I understanding that financial institutions requirements for loaning money to entrepreneurs has changed, business owners can talk to their accountant preparing the correct documents that they need says accounting outsourcing. For the most part, banks are no longer asking business owners to prepare audited financial statements, even when they are loaning several million dollars.