Accounting Outsourcing | When Are Audits Necessary
Often, entrepreneurs are asked by their banks to provide reviewed audited financial statements when they are applying for loans says accounting outsourcing. However, many banks are relaxing their positions on when reviewed or audited financial statements are required, and allowing business owners to submit notice to reader statements when they are applying for loans. Business owners should check with their bank and with their financial institution to find out when itís absolutely necessary for them to prepare reviewed or audited financial statements, and if they can submit notice to reader statements instead.
One of the reasons why financial institutions are relaxing their position on allowing notice to reader statements when loans are being applied for, is because itís becoming more and more important for banks to find out what the financial state of the business is currently, instead of what it was doing in the previous year. Accounting outsourcing says that because banks are requiring more and more that business owners provide good interim financial statements, that itís becoming less important to have audited financial statements in place of the interim ones.
It can also be very counterproductive to request a business owner gets audited financial statements as well as good interim financial statements. The reason for this, is because what business owners can provide in terms of interim statements are not good enough for their banks, and therefore they need to have a chartered professional accountants prepare the interim statements. Counting outsourcing says that if chartered accountants are preparing audited or reviewed financial statements as well, their main duty is to the financial institution, and are not considered impartial enough to prepare good interim statements as well. Because of this, if a bank requires an entrepreneur to have audited financial statements and good interim statements, that necessitates a business owner to sing to different chartered professional accountants.
If they business owner has been requested to prepare reviewed or audited financial statements, often is because the banks loan application has not been updated, and although they have relaxed their position on being allowed to accept notice to reader financial statements, their applications may still request reviewed or audited financial statements. A quick double check either by the business owner or the accountant can help a business owner determine if they actually need to prepare reviewed or audited financial statements, or if they can supply notice to reader statements along with good interim statements. Some financial institutions require reviewed or audited financial statements when there loaning a large sum of money, however itís becoming more and more commonplace for financial institutions to loan several millions of dollars on just the notice to reader financial statements.
Business owners can do some due diligence to ensure they can provide their financial institutions notice to reader financial statements as well as interim statements in order to qualify for loans Accounting Outsourcing. Very few businesses require reviewed or audited financial statements, especially when it comes to qualifying for loans for their business.
Many business owners often believe that when they are applying for a loan they require an audit or review, but they are not sure why says accounting outsourcing. While he used to be the standard, for business owners to prepare reviewed or audited financial statements in order to qualify for loans, that is becoming less commonplace in favour of much easier to produce notice to reader financial statements along with good interim statements. Even nonprofits that used to be required by their Board of Directors to have reviewed or audited financial statements, are having those regulations relaxed. If any entrepreneur or nonprofit has been told they need to prepare reviewed or audited financial statements, they should do their due diligence to ensure that that is absolutely necessary for their business.
Many entrepreneurs believe that when they have requested their professional accountants to prepare reviewed or audited financial statements, that their accountantís duty is to them. Unfortunately, this is not true says accounting outsourcing. The chartered professional accountant must remain impartial when preparing audited reviews, and their main duty is to the financial institution, or the organization that has required the audit. Because of this, it is often not in the business ownerís best interest to prepare audited or reviewed financial statements unless they are absolutely necessary. Many entrepreneurs believe that since there is a higher level of due diligence in preparing the reviewed or audited statements, but they are inherently better, but this is not the case. Notice to reader financial statements are generally more accepted by the banks than ever before, and the accountant is able to advise their clients while they are preparing them.
If chartered professional accountant typically will ask their clients if a reviewed or audited financial statement is absolutely necessary, when they approach the accountantís office a request to prepare the statements. Not only will it save the business owner time and money, they will also be able to use the expertise of their accountant in order to come up with financial strategies, and planning options.
If the bank has requested that a business needs to prepare an audited financial review as well as good interim statements, it may be absolutely necessary for a business owner to hire two different chartered professional accountants in order to prepare both statements says accounting outsourcing. The one accountant will prepare the audited review, and the other one will provide to the good interim financial statements. Although this may be more of a financial burden, if a bank requires an audit and interim statements, the business owner may not have any other options, they should check with their accountant to see if they have accountants that they work with that they can trust to help provide the good interim statements so that there regular accountant can work on the audited financial statements for them.
Whenever possible, itís in a business ownerís best interest to use notice to reader statements as well as good interim statements in order to qualify for loans, unless itís absolutely deemed necessary by their financial institution to prepare an audit.