Coffee Time with Marie Torossian CPA - Episode 35

The "Coffeetime with Marie Torossian" show has covered a plethora of topics geared towards new entrepreneurs and those with a few years of experience in business. Marie, an experienced certified public accountant, aims to provide valuable information specifically tailored for small business owners and self-employed individuals.

Key Points on Financial Audits: 

1. Purpose of Financial Audits: Financial audits add credibility to internally prepared financial statements. They offer confidence to shareholders, investors, and lenders. 

2. Requirement for Audits: 

• Banks may require audits due to lending requirements. 

• Vendors may request audits, especially if they extend credit. 

• Investors or private equity firms might require audits to protect their interests. 

• Silent investors or stakeholders who aren't involved in daily operations might request audits. 

3. Key Areas of Audit Focus: 

• Completeness: Ensuring all transactions have proper documentation. 

• Valuation: Ensuring accurate valuation of assets like receivables, inventory, and fixed assets. 

• Rights and Obligations: Confirming the company's rights and obligations related to transactions. 

4. Audit Process: Auditors employ various methods to validate information, such as confirmations from banks and accounts receivable, interviews, and analytical analysis. 

5. Preparation for Audits: Businesses should engage with auditors early in the process, maintain good record-keeping practices, and be prepared for an intense, thorough examination. 

6. Types of Audits: Apart from financial audits, other types of audits include compliance audits, internal audits, tax audits, forensic audits, and operational audits. 

7. Misconception: Auditors are not primarily looking for fraud during financial audits; their main aim is to ensure accurate financial reporting. 

Marie and Pedro emphasize the importance of hiring reputable CPA firms for audits and understanding the value audits bring to a business, building confidence among stakeholders and providing insights for improvement.