Preparing Your Business for a Financial Audit or Review: Part 3


In preparing for a financial audit or review, it is important to take a look at your year-end income statement balances as compared to the prior year balances. If there were large fluctuations, be prepared with explanations that are well thought-out.

Pay particular attention to accounts comprising your gross margin. How was this year’s sales as compared to last year’s? How do your sales represent trends in your industry? Are there general economic trends affecting your industry? What do you anticipate in the next year? What are trends with your suppliers? Are your materials or labor costs rising, and if so, are you able to adjust your pricing so that margins are not being squeezed? How do you plan to meet changes in technology? New competitors? Have you done a SWOT analysis (Strengths, Weaknesses, Opportunities, Threats)? Your CPA wants to know that management of your business is looking over the horizon and preparing appropriately.

Your CPA will look …

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