Preparing Your Business for a Financial Audit or Review: Part 1

MoneyTips

With the tightening of the economy and business credit in recent years, more companies are facing the requirement for an annual financial audit or review. Either must be performed by a Certified Public Accountant (CPA) who is independent of your organization. CPA billing rates can be astronomical, so the more prepared you are, the more money you can save in audit or review fees.

The CPA firm will send you an engagement letter outlining the terms of the engagement including responsibilities of both the CPA and the organization’s management, timing of the engagement, and fees. Their fee arrangement may be a fixed fee or hourly rate. Even if it is a fixed fee, there is usually a stipulation that any time the CPAs are required to spend making adjustments or doing bookkeeping work is billed on top of that fee.

Why doesn’t my CPA help me with my bookkeeping? One of the core premises of performing an audit or review is that the CPA must be independent of the organi…

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