For financial professionals, independent external audits of GAAP financial statements are an inescapable reality. For public companies, it’s a statutory requirement under SEC regulations and for many fast-growing private companies, it’s a necessity to meet the demands of lenders, VCs, and other stakeholders. There is even a possibility that the IRS could require a financial statement audit as part of a broader tax audit.
Ultimately, every audit boils down to the risk of a material misstatement in the numbers. The responsibility falls to you and your finance team to ensure that your financials present the lowest possible risk of such errors, thereby earning a “clean” (unqualified) opinion from your independent auditor.
To achieve a smoother process in preparing audit-ready financials, you need well-documented transactions, balances that are calculated accurately, and financial statements and backup documentation that can be produced in a timely manner.