Audited Financial Statements and Doing Business in San Francisco

Filed in CPA Blog by on December 21, 2014
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Many San Francisco businesses come to us needing “audited financial statements.” They aren’t sure why, and sometimes they aren’t even sure what an “audited financial statement” is.  In this blog post, let’s discuss what “audited financial statements” are, and why your business might need them.  First, what are “audited financial statements?”

Audited Financial Statements

Well, nearly every business – big or small – has some bookkeeping and accounting function. This may be as simple as an Excel spreadsheet, or a Quickbooks file, or something much more complex if you have a larger business.  San Francisco has all sorts of businesses – new, old, big, small – so the type of accounting and bookkeeping records that you may have may vary. In many cases, these records are not subjected to an “official audit.” They are just used by you and your accountant to manage the business financial situation and to prepare the taxes for the Federal government or California. Quickbooks is a common system for many small businesses, for example.

Audited FInancial Statements, San FranciscoAudited financial statements, however, can be considered the next step. “Audited financial statements” imply much more due diligence on the part of your CPA (certified public accountant). Audited financial statements are prepared and certified by a Certified Public Accountant (the auditor). In the U.S., the auditor certifies that the financial statements meet the requirements of the U.S. GAAP. In other words, we verify that your accounting records and statements comply with the generally accepted accounting principles. Many public corporations have even more stringent requirements. In essence, “audited financial statements” mean that we are vouching on the accuracy of your financial records to a greater, or lesser degree, depending on how deeply the audit is performed.

When Audited Financial Statements are Required

Second, why then might you need audited financial statements? Essentially this need arises when you do business with another entity – either a private corporation or government agency – and they want to verify that you have the financial strength that you say you do. One common reason is when your business applies for a business loan. The bank or lending agency may require audited financial statements. Another is when you do business with the city of San Francisco, other cities in the San Francisco Bay Area, or elsewhere in California.

Whatever your need for audited financial statements may be, we can help. In fact we are one of the preferred accounting firms in San Francisco to provide this service.

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