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Audited Financial Statements11/06/2009 by Nick Ganaway
There is no function more critical to success in construction than effective management of financial and other records. Professional expertise in the form of a certified public accountant is often required to design a company’s record-system—then periodically review it.
Who requires audited financials? Your banker may require them. Your bonding company certainly will. Some owners may. Here is a quick overview of what you need to know.
A set of audited financial statements bears the written and signed opinion of a certified public accountant, whose reputation and credentials are thereby at risk. The standards CPAs follow must be high so that lenders and other users of audited statements can confidently rely on them in making financial decisions related to the entity the audit represents. If a bank, for example, makes a loan to a company on the basis of its financial statements that turn out to be inaccurate, the CPA or CPA firm who put its signature on those financial statements may be liable.
If you must have audited statements as a requirement of your bonding company or bank, be prepared for your CPA and his staff to be probing. Although it's you who's paying them, they have a professional duty not only to you but to anyone who relies on their opinion of your financial circumstances. However, when not in conflict with their professional duties to others, you should expect them to place your interests first.
The author of this article, Nick Ganaway, was a successful general contractor for 25 years. He is a consultant in Atlanta, Georgia for contractors and other small business owners. Nick has described how to set up and manage a construction business that is profitable, enjoyable, and enduring in his book Construction Business Management: What Every Construction Contractor, Builder & Subcontractor Needs to Know.