Matt Denny, Santa Clarita CPA and partner at Denny & Company, explained why companies might wish to perform audits before restructuring ownership or seeking out investors and loans.

“The reason the word ‘audit’ scares people is because usually it’s something that’s done to you by a government to find out whether you’re cheating them,” Matt Denny of Denny & Company explained. However, that’s not the only kind of audit.

Denny & Company helps companies prepare for the aforementioned government audit, but they also help businesses perform third party audits for the purposes of showing potential investors, banks or lawyers in non-government related cases.

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“The kind of audits I’m talking about there is where we perform a set of procedures as an independent third party to take your financial statements as a business — your balance sheet, your PML, your statement of cash flows, statement of equity, that kind of thing, and we … make sure that your financial statements represent (the financial condition of your company) fairly according to generally accepted accounting principles in the United States,” the Santa Clarita CPA explained.

Denny noted that this sort of audit can be useful when discussing options with “a third party who might want to invest in your company or a bank that might want to loan you money.”

Furthermore, in the event that a business partnership dissolves, Denny said that audits can help “assure the court or the lawyers that everybody’s talking about the same thing and that one (business partner) is not cheating the other.”

“We do those kinds of procedures for personal financial statements as well, because often banks will want to know what your personal wealth is and make sure that it’s verified by an independent party,” said Denny.

Denny said that whether an audit is part of a government review or used to prove a company’s financial status to investors, banks or courts, they can be expensive. Those needing less thorough examinations of company finances can instead seek a review or compilation.

“An audit versus review versus compilation, those are levels of assurance,” the Santa Clarita CPA said. “A lot more work goes into an audit and there’s a higher level of assurance, therefore, to the third party that what they’re seeing is what’s actually going on.”

Denny contrasted this with reviews and compilations.

“(With) a review, there’s less checking, and the procedures are less odious,” he explained. Meanwhile, “a compilation is pretty much just putting together the financial statements for someone and making sure that the disclosures that are included include things that are required and are important to the bank.”

Denny noted that even though reviews and compilations are less involved than audits, it’s still important for a CPA to pay attention to the details when drawing up these documents.

“Just a balance sheet may not tell the whole story,” the Santa Clarita CPA explained. “There may be some disclosures notes (in) the financial statements … that explain different parts of it so that a third party user would be able to understand it.”

Those interested in having a personal or business audit, review or compilation performed, as well as those looking for a Santa Clarita CPA to handle other business and personal finance needs, can contact Denny & Company via their website or by calling (661) 286-8860.

Ed. Note: This article is a KHTS Community Spotlight based on a recent radio interview with Denny & Company, LLP.

The Santa Clarita CPA firm Denny & Company, LLP was established in 1984, and is a full-service firm of Certified Public Accountants in Santa Clarita, including Partners Matt Denny and Carolyn Denny. The Santa Clarita accountants work with small businesses and individuals, specializing in catering to each client’s unique needs and desires using a flexible approach. As a CPA in Santa Clarita, Matt Denny shares his knowledge and experience regularly on “Common Ground” on KHTS Radio. Those looking for the best CPA in Santa Clarita or a “CPA near me” can contact Denny & Company, LLP for more information today.

Denny & Company, LLP

23929 Valencia Blvd. Suite 304
Valencia, CA 91355

(661) 286-8860

Denny & Company, LLP – Valencia

https://www.youtube.com/watch?v=f2g686G81eY

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