Preparing for a Financial Audit in SaaS
Every business dreads a formal financial audit– so much that many companies avoid preparing for one completely. But the pain and inconvenience of a financial audit can be significantly decreased by regularly performing internal audits yourself-- particularly if you are a SaaS provider.
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Why Do Companies Get Audited?
Financial audits create an objective picture of the health of your company. They can prove your tax standing and inform shareholders about whether you’re a good investment or not.Formal audits are usually performed by one of three third-party entities:}
- The Internal Revenue Service (IRS):
The IRS typically audits businesses with questionable financial records or tax filings, but they will occasionally randomly audit companies.}
- Independent firms:
Interested parties can request an audit if they want deeper information on a company’s finances.For example, interested buyers may request an audit if a company is preparing for sale.
- Stakeholders:
Sometimes, a CFO or other internal stakeholder will hire an auditor to perform a health check and identify areas that could be cut or improved.
