Looking to borrow money?
More than one-half of all small-business loan applications are being rejected by banks, according to the Biz2Credit Small Business Lending Index. In such a tough lending environment, companies in need of capital might find lenders more receptive if they invest in audited financial statements.
Want to Impress Current and Potential Investors?
An audited financial statement enables businesses to get external funding for boosting or enhancing their overall operations. These statements will serve as clear evidence to financiers that the particular institution is able to generate profits from its operations.
Academic research on the views of investors and other stakeholders in the financial reporting process indicates that such users rely on audited financial statements to determine what investments to make.
A few states have laws that require nonprofits that receive a certain level of state funding to submit independent audits to the state agency that provided the funding or to other state agencies. If your nonprofit receives any government funds --state or federal-- it is always a good idea to determine whether there is an accompanying audit requirement.
Many states (26) require charitable nonprofits to submit a copy of audited financial statements in conjunction with the process of registering the charitable nonprofit so that it is able to lawfully engage in fundraising activities in that state (commonly known as "charitable registration").
Foster Care Organizations
Foster Care Organizations are required to submit audited financial statements conducted by an independent certified public accountant annually. Audits must be conducted in compliance with Generally Accepted Accounting Principles (GAAP) and all federal audit requirements.
Many states require contractors to submit a Supplemental Schedule of Expenditures (SSE) completed in accordance with SSE instructions. The SSE shall identify actual costs incurred for services performed under this Agreement for the period covered in the annual financial audit.
Failure to submit the SSE with the annual financial audit may result in delay in payment or non-payment by the State’s Department of Human Services for administrative costs incurred or services rendered by the Contractor.
Public Corporations vs. Private Corporations
Publicly traded companies are required by law to issue audited financial statements. Public corporations are supposed to ensure all their statements are professionally audited in order to safeguard their investors’ money, as well of the interests of all external shareholders.
It is generally not a requirement for private corporations to provide financial statements that are audited. However, banks and other lenders may ask for them at a given period to find out if they are worthy creditors.