Prepare For Audit

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Do I have to have audited financial statements?

Prepare For Audit

Some states require that the financial statements in your Uniform Franchise Offering Circular be audited. If you do need an audit, expect to spend 4-6 weeks and at least $3,000 having it prepared.

The audit is performed by an independent Certified Public Accountant. Normally your accountant does not perform your audit. Audits are done in accordance with generally accepted auditing standards and their purpose is to express an opinion about whether - or not - a company's financial statements have been presented fairly and without material misstatement.

Before beginning the process, the auditor will provide a retainer letter listing audit objectives, management responsibilities, audit procedures, administration and fees. You must agree to and sign this letter, so be certain you understand it.

At a minimum you will be expected to provide:

  • Electronic copies of your books
  • A copy of your Articles of Incorporation or Articles of Organization
  • Copy of board minutes
  • Copy of any promissory notes
  • Copy of year-end bank statements for all bank accounts
  • Copy of year-end bank reconciliation for each bank account
  • Copies of invoices for any purchases in excess of $2,000 of office equipment, office computers, office furniture or leasehold improvements
  • Copies of any leases entered into
  • A schedule of accrued accounts payable as of year-end
The more complete the information you provide and the more timely the manner in which you provide it, the less your audit will cost. It behooves you to work cheerfully and candidly with your auditor.

   

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