January 14, 2011
According to the The Wall Street Journal’s Angus Loten, small businesses who hire a certified public accountant to audit their books, rather than having the Internal Revenue Service do it, improve their chances of getting a loan. Additionally, they have a better chance of acquiring a loan on much better terms than businesses with less scrutinized financial statements.
“Banks love when you have audited financials because they view it as a form of insurance,” says Buzz Rose, a certified public accountant in Pittsburgh. “But audits have become very expensive and to have one done ‘just in case’ would seem to be a waste of time and money.”
Based on data from more than 10,000 closely held companiesâ€”about half of which have less than 500 employeesâ€”a study by the University of Chicago Booth School of Business found audited businesses save an average of $6,900 for every $1 million in outstanding debt every year as a result of lower interest rates, which were more than half a percentage point below rates paid by nonaudited businesses. For a loan of $3.3 million, the average size of loans analyzed in the study, the savings was about $23,000.
To learn more and read the complete article go to: Audits Add Shine to Firms