Entrepreneurship & Small Business

can your accountant also be your auditor

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  • May 15th, 2013 5:04 pm
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[OP]
Newbie
Apr 21, 2011
58 posts
Toronto

can your accountant also be your auditor

This is a newbie question, just wanted to find out:

1.) advantages of having an auditor.
2.) if your accountant can also be your auditor?
3.) Is not having an auditor a deal breaker when you want to seek equity investments from investors for example for expansion?
4.) Typical auditor service fees for small businesses.
5 replies
Deal Addict
Aug 21, 2007
4648 posts
214 upvotes
Markham
chibiks wrote:
May 8th, 2013 6:10 pm
This is a newbie question, just wanted to find out:

1.) advantages of having an auditor.
2.) if your accountant can also be your auditor?
3.) Is not having an auditor a deal breaker when you want to seek equity investments from investors for example for expansion?
4.) Typical auditor service fees for small businesses.
1. Not much - only that statements are considered to be more accurate essentially which banks and investors may have more comfort with (but a banker at RBC i dealt with told me notice to readers can get loans upto a million dollars if the numbers make sense.

2. No - auditors have to maintain independence - they can't do bookkeeping and compilation and also audit the statements.

3. Depends on the deal - an investor I deal with doesn't even look at proper financials lol...but serious deals would probably require proper statements...possibly not audited but reviewed.

4. Depends on company size, but I'd estimate for a small business about 5,000
Newbie
User avatar
Jan 25, 2013
66 posts
2 upvotes
VICTORIA
can your accountant be an auditor, in charge of purchase, and writing checks all in one proly yes but is it wise NO.
"The greatest deception men suffer is from their own opinions."Leonardo da Vinci
Deal Addict
Feb 5, 2009
2071 posts
274 upvotes
Newmarket
I would only add to what Adeel already said that the benefits of audit also depend on the size of the business, if you are a very small opeation and have a good handle on what goes in and out than you probably don't need anything other than notice to reader, however you could benefit from audit if your business is big enought the point where you can't control everything, have controlers, managers and so on, if any of the employees is doing anything illegal a proper audit may at the very least raise a flag.

If someone wants to invest in your busines than quite often they would want their own accountants to do the audit.
Newbie
May 7, 2013
20 posts
2 upvotes
Toronto
An audit is an entirely different level of "comfort" or assurance and very costly. I couldn't imagine you getting an audit opinion for less than $10k on anything. Just the time it takes a firm to do the basics regardless of size and volume you're looking at a bunch of ours.
The next level down is a review engagement were an accountant looks at what you have put together, does a little digging, might confirm the bank balances, some analytical work, but sees if it smells right.
The lowest is a Notice to reader or compilation. Most accounts can handle this. We take your info, and put together your financials based on what you give us. Come with a bunch of "don't use this info to make decision disclaimers usually" but more often than not if you have an accounting with decent qualifications put it together you'll get a good result and banks/investors will feel decent about it.

My advice, just get a notice to reader done for a reasonable fee. Investors will do their own due diligence if they are putting $$ in. If its that big of a $ deal, they can pay for the audit or split the costs.
Jones Cosman Chartered Professional Accountants
http://www.jonescosman.com/
Accounting - Tax - Bookkeeping
Deal Addict
User avatar
Mar 31, 2005
3115 posts
183 upvotes
Calgary
citylaith wrote:
May 9th, 2013 12:53 am
can your accountant be an auditor, in charge of purchase, and writing checks all in one proly yes but is it wise NO.
Not just not wise, but not allowed. At all. You can't have the same person who prepared your statements be the person who audits them. Like Adeel said, the auditors have to maintain full independence and be completely segregated from the accounting process.
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