The key to a smooth annual audit (or quarterly review) is preparation. 

Management is often in a difficult position.  Accounting rules are complex, and the time to prepare, audit, and file the financials is short. Auditors are demanding. A limited amount of resources are available, both in terms of cash and time.  

Auditors are also in a difficult position.  They are often presented with financial statements that are incomplete, or just plain inaccurate.  They know their work will in turn be reviewed by the PCAOB.  Before the Sarbanes-Oxley Act of 2002, an auditor could make adjusting entries, help write the footnotes, and essentially prepare the financial statements.  Auditors are now legally prohibited from doing this, as it is considered auditing their own work, which could lead to a conflict of interests.  

We can help.  

We have been in both roles: management and audit.  We have filed hundreds (if not thousands) of 10-K’s and 10-Q’s.  We have dealt with auditors, attorneys, and the SEC.   

Our typical client is  a closely-held, small publicly-traded company. Many recently became public via reverse merger. Many have creative, complex financing in place, such as convertible notes, S-8 stock plans, and significant warrant and option activity. Many use simple accounting software such as QuickBooks, and have a bookkeeper or administrative person  process checks, deposits, and payroll.

What you provide to us:

• Access to your accounting system, or certain accounting files;
• Reconciled bank statements;
• Payroll reports;
• Transfer agent control log;
• Copies of any contracts, including warrant agreements;
• Any other documents or files as appropriate.

We will take it from there.  We can do the following:

• Create a closing schedule for use in managing the process;
• Help create confirms and attorney letters;
• Develop audit schedules;
• Help create a draft of your financial statements and footnotes;
• Make all adjusting journal entries, such as depreciation, accruals, non-cash compensation;
• Perform Black-Scholes calculations for valuation of warrants, options, and convertible debt discounts;
• Calculate the beneficial conversion features of convertible notes;
• Work with the auditors in getting the audit completed; answering their questions, providing additional documentation as required;
• Develop and maintain control of the relevant SEC document: 10-KSB, 10-QSB;
• Circulate the working draft of the document, and incorporate changes by auditors, attorneys, management;
• Edgarize and file the SEC document.

We usually do not have to visit your office. We have developed efficient, effective methods which we can use from our office in Austin, Texas. We also often utilize our DOCCESS system to help streamline and coordinate the process.

Costs:  Our billing rates are about half that of your auditors. We usually can save significant audit hours, and reduce your audit fees.  Sometimes the savings we generate more than cover our costs.