Audits and Reviews: How to, Process, FAQ's
People's first reaction to the word auditor are never pleasant. And why should they be? We can't make the process pleasant, it is inherently invasive, skeptical, requires digging up old records no one ever thought anyone would care about, and involves a great deal of work for a company.
Crowdfund CPA focuses on easing the process, making it less invasive, and using a common sense approach to reduce the administrative burden on the company.
So, how do these things work you ask? I'll start with determining what you need. Tier 2 Regulation A+ offerings require and audit of two years, as described here. Under Regulation CF (Title III) of the JOBS Act a company is required to have a CPA review prior to offering securities under the Title III if the raise is for more than $100,000. If the raise is over $500k and the issuer company has previously performed a Regulation CF offering, an audit is required. No attest (term for both audits and reviews) services are required by the Act for raises under $100,000.
An audit is testing of the financial statements produced under an established set of common rules known as GAAP (Generally Accepted Accounting Principles). The extent of testing is much greater than that of a review, which also tests financial statements produced under GAAP, just less extensively. Getting technical on you an audit requires the auditor to obtain reasonable assurance that the financial statement are free from material misstatements, while a review requires much less assurance. In English this means as your auditor I have to look at enough, but not everything, financial records and data to make a reasonable determination as to whether the financial statements are correct and not misleading. For a review, I basically am doing a smell test without getting too much into the detail - just making sure nothing big jumps out.
GAAP financial statements have requirements for just about everything, and the guidance to determine how to present your situation in appropriate accordance with GAAP is cumbersome and requires extensive accounting knowledge.
Once the financial statements are produced, the auditor will provide a list of financial records necessary to perform their testing. Crowdfund CPA allows its clients as much time as they need to produce this information, then begins the audit/review once all information is obtained. This serves to ease the rush for clients and increase the efficiency of Crowdfund CPA, allowing us to provide superior service at a competitive price.
Once the information is received, the auditor will test the information provided and will have follow-up questions and requests to get all the information and understanding necessary to obtain the necessary level of assurance to the accuracy of the financial statements. Once the auditor is satisfied with the financial statements, they will sign off on an "audit opinion" stating whether or not the financial statements are free from material misstatement. This isn't a pass/fail deal though, you will generally have unlimited opportunities to get the financials to a point where the auditor is comfortable signing a clean opinion - as long as you are willing to work at correcting the issues in the financial statements you can generally achieve a clean opinion.
That's it, you put the audit opinion in with the rest of the crowdfund requirements and are on your way to funding your business.
Crowdfund CPA focuses on easing the process, making it less invasive, and using a common sense approach to reduce the administrative burden on the company.
So, how do these things work you ask? I'll start with determining what you need. Tier 2 Regulation A+ offerings require and audit of two years, as described here. Under Regulation CF (Title III) of the JOBS Act a company is required to have a CPA review prior to offering securities under the Title III if the raise is for more than $100,000. If the raise is over $500k and the issuer company has previously performed a Regulation CF offering, an audit is required. No attest (term for both audits and reviews) services are required by the Act for raises under $100,000.
An audit is testing of the financial statements produced under an established set of common rules known as GAAP (Generally Accepted Accounting Principles). The extent of testing is much greater than that of a review, which also tests financial statements produced under GAAP, just less extensively. Getting technical on you an audit requires the auditor to obtain reasonable assurance that the financial statement are free from material misstatements, while a review requires much less assurance. In English this means as your auditor I have to look at enough, but not everything, financial records and data to make a reasonable determination as to whether the financial statements are correct and not misleading. For a review, I basically am doing a smell test without getting too much into the detail - just making sure nothing big jumps out.
GAAP financial statements have requirements for just about everything, and the guidance to determine how to present your situation in appropriate accordance with GAAP is cumbersome and requires extensive accounting knowledge.
Once the financial statements are produced, the auditor will provide a list of financial records necessary to perform their testing. Crowdfund CPA allows its clients as much time as they need to produce this information, then begins the audit/review once all information is obtained. This serves to ease the rush for clients and increase the efficiency of Crowdfund CPA, allowing us to provide superior service at a competitive price.
Once the information is received, the auditor will test the information provided and will have follow-up questions and requests to get all the information and understanding necessary to obtain the necessary level of assurance to the accuracy of the financial statements. Once the auditor is satisfied with the financial statements, they will sign off on an "audit opinion" stating whether or not the financial statements are free from material misstatement. This isn't a pass/fail deal though, you will generally have unlimited opportunities to get the financials to a point where the auditor is comfortable signing a clean opinion - as long as you are willing to work at correcting the issues in the financial statements you can generally achieve a clean opinion.
That's it, you put the audit opinion in with the rest of the crowdfund requirements and are on your way to funding your business.