The pros at SPOTON realize the least favorite word a business can hear is audit. In reality, an audit is only an examination of an entity’s financial statements and accompanying disclosures. This audit can be by an independent auditor, such as SPOTON Accounting. The result of this examination is a report by the auditor. This is an agreement to the fairness of presentation of the financial statements and related disclosures. The auditor’s report must accompany the financial statements when they are issued to the intended recipients. This is a good way to ensure your business or organization is being run correctly.
The purpose of a financial statement audit is to add credibility to the reported financial position and performance of a business. The Securities and Exchange Commission requires that all entities that are publicly held must file annual reports with it that are audited. Similarly, many lenders require an audit of the financial statements of any person, business or organization they have lent funds. Suppliers may also require audited financial statements before they will be willing to extend trade credit (though usually only when the amount of requested credit is substantial).
An audit is the most expensive of all the types of examination of financial statements. The least expensive is a compilation, followed by a review. Due to its cost, many companies attempt to downgrade to a review or compilation, though this is only an option if it is acceptable to the report recipients. Publicly held entities must have their quarterly financial statements reviewed, in addition to the annual audit. If you have any questions as to which type of examination you may need, please contact us at SPOTON Accounting.