Do Startups Need Audited Financial Statements?
By law private companies are not required to undergo an annual audit of financial statements required of public companies, however, startups can benefit from a financial statement audit.
Depending on your startup stage, some investors and lenders may expect to see an audit of financial statements of your business’ financials before they release funds. Having comfort that your financial statements have been audited builds trust with investors and lenders while giving your startup the best chance of receiving funding and securing future funding.
Investors want assurance that your business is in good financial health and the best method to demonstrate this is to have a financial audit to ensure that there are no material misstatements in your business’s financials, and to show that your business’s financials are accurate and its performance consistently meets expectations.
For startup leaders, an audit is an opportunity for insight to see deeper into their businesses and can provide helpful information when making vital decisions in areas such as compliance with new government regulations and accounting practices, improvements to your internal controls, and fraud prevention for the long-term success of your startup.