An audit is a review of your financial records by an independent party to state what you already know for another party who does not trust your account of your business transactions.
That exercise costs a lot of money that could be spent on more productive activities. There are times when paying for an audit is unavoidable. However, there are times when it can be avoided.
When borrowing at the bank results in a demand for audited statements, the costs of preparing data for the auditor and the auditor's fees should be added to the cost of borrowing. Compare these costs with those of a competitive lender. Inform the untrusting banker that you're doing comparative shopping.
The tax department does not demand audited statements. It has the absolute power to visit your place of business for conducting its own audit. All you have to do is give them a place to do their work.
When you seek the services of many agencies (lenders, regulators, purchasers, etc.) there's a tendency for the server to demand vast amounts of information while showing little regard for your valuable resources of time and energy. In many cases, it appears the server is padding his/her report to make it look good to his/her superiors.
Challenge the request for a formal audited financial statement. Give it the old who, what, where, when and why treatment. You may humbly suggest that if the requester needs the audit, then, s/he should pay for it! You may not always win, but you'll save money and time when you do!
The federal government announced an assistance program for our industry. It provided seed money to a quasi government agency that would eventually recover its costs from members' fees. A bulk email from the agency announced the application for membership procedure including a demand for a certified check or money order for the membership fee in full. It was quite easy to identify the person responsible for this demand at the agency.
I asked one of my associates to call this person stating she was acting on my behalf. She was to ask for this person's professional qualifications along with some evidence this agency was a bonafide agent of the government and to specifically state, "Our President says he does not trust your agency because it is demanding a money order in advance for payment of an annual fee."
By the end of that day a bulk email was received announcing there was no need for a guaranteed deposit. A company check would be sufficient.
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