Audits are the Worst… Or are they?

I’ll admit many financial audits are actually the worst, especially when the purpose is to identify underpayments to some insurance or taxing authority, but then there are some audits that are only marginally the worst. I’m talking about financial audits, those performed on your financial statements. If you have a loan or a sophisticated investor base you probably go through this stick in the eye process every year. However if you don’t have audits performed today, eventually you may want to have one completed for your own sanity.  So I write this article on the heels of my own annual audit, which I am still having  mild PTSD episodes from, but in the end , once it is complete, I do have some comfort that my company’s financial statements are in good order.  And while I can’t stand the audit process and I secretly want to jump off a building every time they ask me another question about our revenue, I do want correct financial statements.

The truth is, no matter how good your team is or how diligent you are in your processes, you will miss things, most small, a few large, and it is the audit firm’s job to help you identify the issues so that the end product is a strong set of usable and reliable financial statements.  If you are planning on going public make sure you are using one of the top firms, you’ll need three or four years of audited numbers from them to go out. If you have no intention of going public you can utilize a regional firm for a lower fee and they are often more helpful in providing you with insight and “on the job training” as to why certain accounting treatments are utilized.  If you’re not a large company expect to pay between $15K and $40K for an audit depending on the complexity of your financials and the firm you select. You often can find a local firm who will provide an even lower fee the first year to get your business. So if you’d like some comfort and a little torture then by all means get an audit performed.